Responsible capitalism: a contradiction in terms?

http://www.ifb.org.uk/ I was an invited guest at the Prime Minister David Cameron’s speech on the market economy where he invoked a wish to see the rise of popular capitalism with a social conscience. His speech followed close on the heels of Vince Cable, Ed Milliband and Nick Clegg, all of whom have been calling for a commitment to responsible capitalism.

Nailing his colours to the capitalist mast the PM acknowledged that the pursuit of enterprise and opportunity are what lies at the heart of a thriving economy, where the most capable are rewarded for success. At the same time he wants to promote an economy where more people have a stake in the success of their business- this could be by way of share ownership, or as being part of a mutual co-operative. Deputy PM Clegg has talked in a similar fashion wanting to support more of a John Lewis style economy with employees participating in ownership.

But are the market and a social conscience compatible bedfellows? The general media frenzy around pay echoes a popular view that big business has tarnished its reputation, driven by unjustified bonuses and pay differentials and excesses that lead to the financial crisis.

Maybe the key to success lies less in whether employees have shares in their employer, but more about how companies are driven by the right set of values, creating great workplaces.

It won’t surprise readers to hear that family businesses are often the winners in terms of employee engagement and commitment - because the best firms stand out for their clarity of purpose and values. Recent research showed that family businesses inspire greater worker loyalty, and feelings of greater job security and inclusivity than all other employers in the public or private sector.

Family businesses rise to the challenge of the UK riots

http://www.ifb.org.uk/ The UK summer has been blighted by riots in London and other cities across the country. David Cameron has lamented the nation’s ‘broken society’. In some quarters citizens appear to no longer respect the importance of good neighbourly relationships. And in the midst of all this family businesses have also been in the spotlight.


The House of Reeves in Croydon was torched by rioters. Just a few hours later, this father and sons firm with 144 years of history was back in business, ordering new furniture from China to keep customers happy. The Reeves family, who are great exemplars of resilience, have been inundated with expressions of support and have set up a special fund to help to regenerate the area that was vandalised.

Carpetright, another retail organisation with over 500 stores in the UK and Europe had their Tottenham store destroyed by rioters in attacks that affected the tenants living above the store. The company Chairman Lord Harris of Peckham, reacted immediately by offering a helping hand to the tenants, even though he is not their landlord. He took the view that they had suffered unfairly because his store had been the target of the vandals attack.

Both these cases are prime examples of how the values of family businesses and their owners can help plug a nation’s social capital deficit. For these family businesses their communities are vital; the community and the business work hand in hand to mutual benefit. So when adversity strikes solidarity kicks in. The Harris and the Reeves stories are powerful examples of family business capitalism at its best and should receive our praise and support.

To donate to the House of Reeves see www.houseofreeves.com/fire-at-house-of-reeves/i60

Social enterprise - building the Big Society

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I witnessed social entrepreneurship in action last week when the IFB participated in a Business in the Community event visiting charities and social enterprises in London’s East End. The event showed how business can bring benefit to their own organisations, as well as wider society, by getting involved in these activities.

Social entrepreneurs are people who use their entrepreneurial can-do approach and creative mind to set up organisations that deliver social or environmental benefits and help change lives and society for the better. And among the enterprises I saw in the Seeing is Believing programme was Shepresa that offers support to Albanian’s who have fled violence or persecution to seek asylum in our country. There was also Bikeworks, in Tower Hamlets, which provides a range of cycling related services, including vocational training for people from homeless and other challenging backgrounds.

The leaders of the organisations are alumni of the School for Social Entrepreneurs (SSE) in Bethnall Green, an organisation at the forefront of this sector in terms of education. We saw first-hand how businesses can engage in the work that SSE does developing leadership and other business skills in budding social entrepreneurs.

This is all about putting, what David Cameron called, the Big Society into action - the Government has made a specific commitment to encourage social enterprises. There is a huge role for business to play, working with social enterprise to bring benefits back to our organisations through greater employee satisfaction and learning as well as strengthening social capital generally.

Family businesses can get involved in supporting social enterprise in a number of ways including investing in it and including it in the firm’s supply chain. There are also ways of involving employees, including offering opportunities for secondments, or providing mentoring to social entrepreneurs, as well as pro bono advice and expertise.

Election Puts the Spotlight on Social Capital

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As the UK general election nears, politicians have been seen at leading family firms for eye-catching picture opportunities, but their visits are not down to chance. During campaigning David Cameron made speeches at Fuller’s Brewery, in London, and Warburtons the breadmaker, in Bolton, while David Miliband tucked into a pork pie at MI Dickson, on Tyneside. No doubt both parties hoped for a positive response from the public by associating with these long-established UK businesses. These firms, all members of the Institute for Family Business, also share some other enviable qualities in the politician’s eyes as they are:

• Successful: their brands are highly regarded by consumers in their respective markets

• Good places to work: their success is driven by motivated and empowered work forces

• Caring about the community: each organisation cares about their local communities

These visits have put the spotlight on the importance of social capital in today’s business world. Successful family businesses have strong financial and other assets, but also at their best have solid foundations based on a strong set of corporate values.

In summary, they are beacons for UK plc and living evidence that family firms can lead the way, through long-term stewardship and stability, to deliver a valuable contribution to the nation’s wealth.

Building greater trust in our businesses and ensuring that social capital is valued strongly alongside financial and other capital will help secure a more sustainable economy, counterbalancing the element of shorter term capitalism that exists in a free market economy such as ours. Family firms add diversity to our economy and have a big role to play in securing our prosperity.