The economic power of a healthy organisational eco-system

About five or six years ago I came across a quote that resonated with me. It was attributed to Chris Wright, chief executive of Catch 22, who said: “If I have learned anything in the past 30 years, it’s that Whitehall doesn’t have the monopoly on integrity, charities don’t have the monopoly on compassion, and businesses don’t have the monopoly on efficiency”.

I could just leave that there and let it speak for itself, but I’ve agreed a word count for this article, so I’ll expand.

Anything I write is going to be shaped by my own experiences and, like Chris, I’ve spent nearly 30 years working across different sectors. I’ve observed how people like to place sectors and organisations into neat boxes with simplistic expectations. How often do we see charities approaching big companies as if they’re just pots of money? How often do we expect government to solve all the complex challenges of health, education and society singlehandedly? And charities… well, they are expected to quietly pick up the pieces for all the areas where the system fails.

Many trends in my lifetime, from over-consumption and environmental degradation to inequality, have been negative. One trend that brings me hope though is the convergence around governance, organisational purpose and collaboration between sectors as a way to solve big challenges. And while there are more ways to set up your organisation now than I knew of 30 years ago (B-Corps, SCIOs, social enterprises to add to ltd’s, plc’s, llp’s etc) there is increasingly common expectations around what society expects from any organisation to give them a ‘social licence to operate’ in the UK.

These include meeting stakeholder obligations; operating sustainably and responsibly across environmental, social and economic dimensions; and being financially sound. Whether it’s the Environment, Social and Governance (ESG) expectations placed on large plcs, or charities being expected to fundraise responsibly and execute sound financial management, there’s a degree of commonality for what directors and leaders across all sectors need to consider. 

This makes sense to me. It’s not the responsibility of any one sector to achieve all the outcomes we need as a society, or even to solve one whole area. For me, that’s the outcome of a whole ecosystem that’s functioning effectively. In the industry I work in, financial services, we have a considerable degree of expectation placed on us in relation to the overall health of the economy and how people experience all financial aspects of their lives. But the reality is we can’t do it on our own and we rely on a range of other relationships and organisations to do it well and achieve our commercial and economic outcomes. Let me give you a few examples. 

Let’s start with the impact of financial and related professional services as an employer. In Scotland, somewhere in the region of 150,000 people work in the sector. Fundamentally, it’s a services sector and that means it’s built around people. We can’t deliver what we need to if we don’t have access to a broad talent pool. You’d be hard pressed to find an annual report or strategy document from financial services that doesn’t reference their people strategy as a key enabler of their business and commercial strategy.

And fundamental to delivering this is being able to attract, recruit and retain people from a wide talent pool. Traditionally people view finance as a career option for a white, male elite who likes numbers and spreadsheets. This perception does us no favours. To help us change this and reach a wider and more diverse group of potential employees I’ve worked with organisations including Career Ready, the Prince’s Trust, Officers Association, Poppyscotland, Black Professionals Scotland, Social Mobility Foundation, Future Asset and more. The expertise of these organisations is critical for us to achieve commercial aims – they help us reach talent we otherwise wouldn’t, help explain and share careers and opportunities available, and support and enable an effective transition into jobs.

And it’s not only at the recruitment stage – we also work with charities to improve equity and inclusion in the existing workforce. For example, who better to help us understand how we can improve the experience of being a young LGBT+ person in a Scottish workplace than LGBT Youth Scotland?

You’ll find another range of charity partnerships at work in relation to workplace culture and how you help your colleagues to be healthy and at their best. Right now, we’re involved in a long-term sector-wide project in partnership with SAMH and SeeMe to address mental health stigma and create mentally healthy workplaces. This is a core part of their strategy to reach people at a time when the need has never been greater, and it’s also an area where they can help us be more effective with our own aims.

SAMH and See Me have expertise and insight from what is, after all, their specialist area – and can approach it in a way that isn’t a pure employer-employee relationship, starting from a position of greater trust. There’s a clear commercial benefit for business too – the report we produced estimated the potential cost to our sector of absenteeism, presenteeism and days lost, just from those who self-reported mental health issues within the small sample surveyed, to be somewhere in the region £500,000.

The economic benefits of supporting people isn’t confined to our own colleagues, it also extends to customers. Financial services firms in Scotland work with charities like Turn2Us to support their customers to improve their financial security and resilience. This can be through understanding benefit entitlements and eligibility, in some cases off-setting the cost-of-living issues we’re facing. This advice reduces default rates, improves retention and delivers a direct commercial benefit. Financial services businesses work with charities to support vulnerable customers with access to information – using their advice and expertise to overcome accessibility challenges including dyslexia, sight and hearing loss, cancer and long-term health conditions, and more.

And as well as the point-in-time financial benefit supporting customers to engage with our sector and manage money, there are wider economic partnerships. I’ve been a long-term advocate of the living wage, and more recent developments like living hours and living pensions. I’ve worked alongside organisations like the Poverty Alliance, Living Wage Foundation and Joseph Rowntree Foundation for many years. And the final area I wanted to explore is the impact on the wider economic system.

Beyond the foundations of the welfare state, state pension and national insurance, the financial services industry is built on the ability of people and institutions to save and invest for the future, insure themselves against risks, and so on. If people don’t have secure and sufficient income, they won’t buy non-mandatory insurance or save into a pension. And without the buffer or protection that comes from insurance or savings, in the long term, they’re more vulnerable to financial shocks, and more likely to take on debt and become trapped in poverty. This is a rising concern given the cost-of-living crisis hitting us now, after an extremely challenging two years managing a global pandemic that already hit the poorest people hardest.

As a member of the Edinburgh Poverty Commission, I spent a lot of time listening to groups of people living in poverty across the city where I live. As a Commission, we heard how poorly paid, insecure work is responsible for other challenges people have with housing, childcare, family relationships, mental health, and more. This is where the wider economic point comes in. If people don’t have enough to live on, the costs don’t just disappear and evaporate into thin air. They manifest elsewhere – health, welfare, crime and addiction, the need for food banks, poor educational attainment. The list goes on.

Place2Be, the children’s mental health charity, worked with Pro-bono Economics to quantify this wider social and economic impact. The state sector cannot currently provide enough resources to meet the growing demand for children’s mental health services, but early intervention is an investment in the future that reduces spend elsewhere. For every £1 spent on Place2Be’s work in Scottish primary schools, the benefit to society is £5.50.

Many people will be aware of the Wellbeing Economy Alliance and projects such as the Business Purpose Commission. A healthy economy is about the whole system and how it serves people.

I’ve used the word ecosystem a number of times. I’m a lifelong lover of nature (fair work and responsible business came later!) and while it’s 30 years since I finished my Biology A-level, I hope I’m not the only one who remembers the concepts of food chains, healthy ecosystems and different relationships between organisms like mutualism, symbiosis and parasitism. A lack of balance where one species becomes overly dominant, or dependencies are created, is usually unhealthy. Much better when an ecosystem finds a sustainable balance that benefits individuals and the whole.

It may be a clunky, or ideological, analogy but there are parallels to the relationships between sectors. If we expect any one sector to dominate and hold all the power in a relationship – to have a monopoly on integrity, efficiency, or compassion; if we only expect economic impact from businesses or social impact from charities; we’re selling each group short and we’re missing a trick. We all have a part to play when it comes to creating a healthy society and a healthy economy that works for all, and the best solutions will come when we respect the full contribution that we each make to our shared success.