Better Capitalism in Action: Joe Garner and Leading for Mutual Value

Karen Kuykendall
Jun 13
10 min read

Periodically, we feature businesses and leaders who are striving for and attaining mutuality in their sphere of influence. One such leader is Joe Garner, who is currently serving as a CEO advisor, speaker, and author after being in the private sector for many years and working as a financial advisor to the British government.

His most public role was as the CEO of Nationwide Building Society, one of the largest and most prominent financial institutions in the United Kingdom. His leadership at Nationwide was characterized by a strong commitment to mutuality and a customer-centric approach, which aligned with the Society's foundational principles of serving its members rather than shareholders. Under his leadership, Nationwide posted record profits in 2022, the highest since the society was founded in 1884; it was also rated first in customer service during his entire tenue (2016-2023).

Garner is also deeply committed to social responsibility and sustainability. He has advocated for initiatives that promote financial inclusion, ensuring that a wider range of individuals have access to essential financial services. Garner believes that financial institutions have a vital role to play in addressing societal challenges, and he has actively supported various community initiatives aimed at improving financial literacy and economic well being.

Garner's leadership style is characterized by transparency and collaboration. His time as CEO of Nationwide Building Society was marked by a blend of technological innovation, a commitment to social responsibility, and a focus on employee engagement, all of which contribute to the Society's mission of being a trusted and customer-focused financial institution.

At a 2017 New City Agenda event, Joe Garner spoke on “Leading for mutual value.” Here are some edited excerpts from his talk:

Over the summer, the New York Times published an article titled ‘The Moral Voice of Corporate America’. It argued that in a world where division had become rife, it was the CEOs of some of America’s biggest businesses that were standing up for values, tolerance and inclusiveness. This struck a chord with me. It reminded me of earlier progressive business leaders. The William Levers, the Cadbury brothers, the John Spedan Lewis’s – people who championed their workers’ interests alongside, or sometimes ahead, of their own. And it resonated with me because as a mutual, championing and empowering the people that our founder termed “the industrious classes” has always been at the heart of our organization.

The mutual movement was born in the unequal world of the 18th century. It was an inclusive, self-reliant form of capitalism where people helped one another to get on.

And in a world where, right now, what divides us seems more prominent than what unites us, I believe mutuality has real relevance today. I personally believe that it is still true that people can achieve more together than any individual can alone.

In the last 50 years, I have felt that the general direction of travel–the dominant paradigm if you like–is that we are better off working together. And through this period, things have almost constantly improved:

Fifty years ago, 1-in-8 children died before the age of five globally. Today it’s 1-in-25.
Back then, about 60 percent of the global population lived in extreme poverty. Today, it’s less than 10 per cent. And that’s a reduction of 1.5 billion people in absolute terms, too.
Back then, only just over half of the global adult population was literate. Today it’s 85 percent.
Life expectancy has increased by 10 years over the period–both in the UK and globally.
And although the world has never been free of conflict, far, far fewer people have died in wars than in any recent preceding period.

Why is it then that the UN’s World Happiness Report found that happiness has declined in six of the G8 industrialized nations in the last decade? If we’ve never had it so good, why does it feel so bad? Well, while life is better in aggregate, on an individual level, many feel they are losing out. The result has been an increase in anxieties and a trust vacuum. It has also created acute divisions between people.

We are witnessing a similar polarization in attitudes towards business. Perhaps this is because although business can be a tremendous force for social good, it does not always choose to use it that way. Most obviously today, the rewards of business success are not shared fairly among the stakeholders in a business. While the 2006 Companies Act requires firms to take into consideration the interests of all stakeholders–and specifically calls out employees, suppliers and customers–it’s clear that shareholder interests are pressing and immediate.

If the economy creates rising living standards for a minority, leaving the majority behind, the system is by definition failing those it should be serving. A recent poll by the Legatum Institute found that the majority of Britons now view capitalism unfavorably, seeing it as ‘greedy’, ‘selfish’ and ‘corrupt’. People are questioning the validity of a system that has delivered, as the Prime Minister said a fortnight ago, “unparalleled benefits” to mankind. Whether this is truth or perception is now irrelevant. The polarization of attitudes is damaging our society and economy, so what can we do about it?

Well, I believe there are some thoughts we can draw from mutuality in four areas: Governance, Ownership, Purpose, and Leadership.

Mutuals were born out of the social needs of the industrious classes–the need to provide for themselves in times of disease, distress, and death; and to improve their lot in society. Mutuality underpinned the Friendly Societies of the seventeenth century, the first building societies of the eighteenth century, and the co-operative societies of the nineteenth century. Taking the example of Nationwide:

Governance

We’re not a bank. We’re not even a company, although we do follow best corporate governance practice. We are a building society governed by the Building Societies Act.

We are owned by and run for the benefit of our members, not shareholders. We have a duty to act in the best interests of all our members–investing and borrowing members and present and future. That our obligations are to future as well as current members, gives us not only a license to take a longer view, but an obligation to do so.

In balancing our responsibilities, we take as our starting point that we must be sustainable and successful over the long-term.

There is still a commercial imperative. We need to make a profit and be efficient. We must have the financial strength to ensure the trust of our members, and invest for the future. We need to offer value to our members and remain competitive. We aim to be exemplary in implementing all the standards associated with running a systemically important financial institution in 2017.

But although Nationwide is now a very large business, our primary purpose is still a social one. In the last year or so, we involved all 18,000 of our employees in a consultation which reinforced our deep commitment not to what, but to why we do the things we do. Indeed, we embraced the views of our members last week when we invited some into the boardroom to sit with the Board to share their perspectives.

Ownership

On top of that, our ownership binds our stakeholders in a mutuality of interest. Our members are our customers and our owners–there is no separation between them. Our employees are mostly also members, and therefore owners. This means that when we come to balance the interests of our stakeholders, they are in less competition with each other. Many of today’s issues arise from disputes about how different stakeholder interests are balanced.

Getting the balance of responsibilities right is not always straightforward–even for us. Our savers want high interest rates. Our borrowers want low interest rates. We need a big enough gap between the two to pay our people fairly and deliver legendary service.

By investing in our customers–our members–through better pricing and better service, hopefully they stay with us. And we believe loyalty leads to growth in thriving membership–not necessarily profit. Last year, Nationwide put an extra £500m in our members’ pockets through better rates and fees.

We also aim to be a fabulous place to work over the long term. We became an accredited Living Wage Employer and a Principal Partner of the Living Wage Foundation in January 2014. And last year we went a step further, by introducing a ‘living pension’ for our employees, increasing our employer pension contributions significantly. It’s important to me that our employee engagement is among the highest in the UK.

Social purpose

Next, our purpose: to co-operate and collaborate to improve the lives of ‘the industrious classes’–binds our interests with those of society more generally. We are very lucky in that we were founded not for a commercial, but for a social purpose. Examples of this are below.

Leadership

In light of the polarization of attitudes all around us, businesses need to ask themselves, what kind of business leadership is needed? I believe that business leaders, myself included, at times need to be tough, strong, determined, persistent, resilient, knowledgeable and thick skinned. But there is plenty of that around. In my experience, customers and employees don’t care how much you know, until they know how much you care. And it doesn’t matter how persistent and determined you are, if nobody trusts you. Putting the humanity back into a business world dominated by metrics and finance is necessary if we’re to regain trust in business.

Indeed, that’s why at Nationwide, we’re investing in a leadership program called Leading for Mutual Good, to equip our future leaders to marry our mutual values and heritage with running a successful business. Leadership is not the preserve of only the most senior people in an organization, which is why we include a broad cross-section of our employees in the program, not just senior leaders. We expose our leaders to a range of views, inviting external participants – like the NHS, John Lewis, and the police–to join the program. And we involve speakers from highly varied callings–a conductor, a philosopher, a psychologist, to give you just a few examples.

We encourage our current and future leaders to think through how we make our decisions, and how to ensure our values–our social conscience–is a part of that. It’s about logic, it’s about the law, but it’s also about love.

Putting our Values into Practice: Housing

We’re trying to improve people’s access to, and the quality of, affordable homes–whether owned or rented. Over the last five years, we’ve helped 1 in 5 of all first time buyers–275,000 in total–into homes of their own, enough to house the entire population of Derby and more.

We’ve helped protect homebuyers from punitive ground rents by refusing to lend on properties with a ground rent of over 0.1 per cent of a new build’s value. That means that on a typical home valued at £200,000, ground rent couldn’t be more than £200 a year.

We’re bringing new types of homes out of the more expensive specialist mortgage market into the mainstream. Nationwide continues to lead the work to support the large-scale acceptance and adoption of homes built with Modern Methods of Construction. We believe this is key to promoting lower cost and higher speed of new home building in the UK.

Recently, we’ve worked with a community land trust, just a few miles away in Mile End Road, to make their affordable homes meet the criteria for cheaper mainstream mortgages for the first time.

In the rental sector, we’ve heard the concerns over the price and quality of privately rented homes and taken actions both to support landlords and protect tenants. We’ve introduced minimum standards that rental properties must meet to qualify for a mortgage. And we’ve sought to help smaller landlords, who are struggling with a growing list of responsibilities, by creating a cross-industry partnership–which includes shelter, estate agents, landlord and letting agent associations–to monitor the health and development of the private rented sector and provide policy solutions to government.

On top of these commercial decisions, we’re also directing our social investment–the 1% a year of profits we give to charitable causes–towards helping people find a place fit to call home. Over the next five years, we’ll invest up to £21 million in community housing projects, chosen by a ballot of local members. An example application is from a community enterprise in the deprived area in the Northeast. They’ve applied for funding for a project to support older people and those with disabilities to live independently at home. They will create a one-stop shop where vulnerable people can access not just advice, but a handyman and gardener. The service will be needs based and could keep up to 1,800 people in their own homes. This is just one example–we will be supporting literally hundreds of housing projects over the next five years, to deliver better housing outcomes.

Vulnerability Agenda

Support for those that at risk, ‘relief in distress,’ is one of our founding principles. We are working hard to make sure we support our vulnerable members within the Society. Every member-facing colleague receives dedicated training to help them spot and deal sensitively with more vulnerable customers. And we have a specialist unit to deal with the complex needs of our most at risk members, which we’ve recently extended to include mental capacity and age-related problems. We work with multiple charities, so our support is as practical as possible, and we are equally happy to share the lessons we’ve learnt and our approach with other organizations.

We’re also delighted to be working with the government’s Inclusive Economy Partnership, which brings together business, civil society, and government to tackle some of the challenges faced by those on low and middle incomes today.

Conclusion

As we look around today, there are real choices about how we take our society and economy forward. If we are to make sure that business can benefit everyone, perhaps we could pay more attention to purpose and leadership. Perhaps to rekindle an out-of-fashion kind of leadership–one that is strong and determined, yes, but one that cares.

At Nationwide, we don’t get everything right, and we won’t get everything right in the future, but our aim throughout is to use our influence and purpose to drive better outcomes for society and for our building society…. Whether it’s making homes affordable for twenty-somethings, supporting people through hard times, or showing that a progressive business agenda is no barrier to success–we truly believe we can achieve more together than we can alone.

Our vision is to benefit society by transforming capitalism's current core ethic of 'maximize shareholder value' to the better core ethic of 'optimize mutual value.' We achieve our vision by impacting learning, opinion, beliefs and policy. Institute for Better Capitalism, Inc.

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