The Sunday Times June 5, 2022 3
alternative: the additional costs for the
business in having to arrange expensive,
inexperienced cover; the lost sales
because your customers are receiving
rushed service or aren’t getting served at
all; and the added stress for the
remaining staff — which, if they become
ill as a result, is a cycle of despair you
really don’t want. But add up these costs
anyway — you will be horrified.
3) Less shrinkage — the euphemism us
shopkeepers use for theft. This would
primarily be “internal” from your
workforce but also “external”, mainly
shoplifters but also sometimes
outsourced staff such as cleaners, who
rarely get paid the real living wage. (If
they can’t “live”, while not condoning
the practice, it is little surprise they feel
forced to steal.)
This saving can be huge. We turn over
about £200 million and the retail norm
for shrinkage is between 1 and 2 per cent
of sales, so our bill should be — year in,you three large piles of cash: less spent
on recruitment, less spent on training,
and sparing yourself the cost of losing an
experienced employee. Any bookkeeper
worth their salt can easily quantify these
— and you will be surprised how much is
involved.
2) A happy workforce working sensible
hours will take less time off for sickness.
You don’t want to think about theTreat workers well ... and ignore accountants at your peril
I have first-hand
proof that looking
after one’s staff is
good for business
Let’s now turn to the financial side of
whether we should invest in our people.
Lots of books suggest that looking
after one’s people is good for business,
but few of these authors have experience
of running businesses. And bosses are
normally too busy to write books, so
there is little evidence to corroborate
what the researchers advise. But I have
done both and I have first-hand proof,
beyond any reasonable doubt, that this
is indeed the case.
Over the weeks in this column, I have
repeatedly returned to this point. But
how do I persuade the naysayers, the
sceptics and — dare I say? — the few
accountants, if any, who remain
unconvinced?
This is where a little numeracy, which
hopefully we have learnt along the way,
comes in. So, for the record, the savings
accrued in black and white by treating
your people well are as follows:
1)Much-reduced labour turnover savesA
s a salesman, when I started, I
had little interest in admin/
bookkeeping/business
housekeeping — or anything
much apart from selling. If I
bought for £1 and sold for £2
and the customer was happy,
that was it: job done.
But I very nearly came a cropper soon
after starting my first shop because I
wasn’t watching the pennies. And two of
the things I did, which saved me, were
hiring a qualified accountant and
appointing a top external auditor/adviser.
From that point on, I took an interest
in financial matters in the business on a
broader scale — and thank God I did...
because there is a lot more to it than one
assumes. Two fundamentals spring to
mind: managing the cash, known as a
cashflow forecast, which predicts how
much you will have available each week
to pay your bills; and the profit and loss
account, which drills down to, “Are youactually making a profit or not, and if so,
how much?”
There is a third important one: a
balance sheet. It is much simpler — how
much do you have in your purse after
everyone you owe money to is paid off?
There isn’t much more to it than this,
but the devil is in the detail. Getting
those figures right is essential for
obvious reasons. And please don’t rush
your people doing this job or limit the
resources they need to do it, or you will
be sorry.
And, I would add, don’t forget to build
in resilience and security. The former
involves having cover should someone
go awol — ie, could your people carry on
if any one of them leaves? The latter
entails monitoring and deterring
someone from “having a laugh”. We
have had near misses with both of these
and a lot of stress could have been
avoided had we been better prepared, so
please learn from my mistakes.Julian Richer Sound Advice
year out — between £2 million and
£4 million. With us, though, it is a
fraction of 1 per cent — less than 0.1 per
cent — which saves us millions of pounds
a year and we are only a small business.
And our accountants will happily
confirm that this saving covers the cost
of our 12 company holiday homes
several times over (and that ignores,
incidentally, the rise in capital values of
the properties over time).
4) I would add, finally, that happy staff
give better service. The members of the
Which? consumers’ association have
kindly voted us the best retailer of any
kind once again this year.
Me showing off about it here means
that we won’t win it again, as I am
obviously tempting fate. But if it
convinces businesses out there to look
after their people better, then that is a
price worth paying.
Julian Richer is founder and managing
director of Richer SoundsGERARDO JACONELLIHe was referring to when
Ken Clarke was chancellor
and the late Eddie George the
governor between 1992 and- In his book The
Chancellors, published last
month, Davies explained how
he used to chair the internal
Bank of England meeting
which prepared advice for
these occasions. He
described that often if the
advice had been to raise
rates, “Ken Clarke would
open the meeting cheerily:
‘Well there’s obviously no
chance of a rise this month.’ ”
After Brown gave the Bank
independence over rates
when Labour swept to power
in 1997, the chancellor asked
Davies to set up the new
regulator, the Financial
Services Authority, which
was disbanded after the 2008
banking crisis.
Davies has chaired
NatWest, still 48 per cent
government owned, for seven
years and his time is likely to
be drawing to a close.
Sir Howard Davies has little
sympathy for central banks
complaining they can do little
to tame inflation. Neither has
he any truck with those who
claim that the Bank of
England’s independence over
interest rates is to blame for
prices rising at their fastest
pace for 40 years.
The chairman of NatWest,
who was deputy governor of
the Bank when Gordon
Brown granted it
independence to set the cost
of borrowing 25 years ago,
argued that central banks
could have done more to
contain the inflationary
pressures which emerged as
Covid-19 lockdowns eased.
Davies, 71, said that the
Bank of England, led by
governor Andrew Bailey,
could have raised rates
earlier and eased back on
quantitative easing (QE),
through which the Bank has
bought £895 billion of bonds,
mostly issued by thegovernment.
That’s in stark contrast to
Bailey’s view. He has told MPs
there was little he could do to
stop inflation because of the
external pressures forcing up
price rises to 10 per cent later
this year — five times its 2 per
cent target.
The Bank raised rates in
December off their Covid-19
emergency low of 0.1 per cent
and they are now 1 per cent.
Some economists want rates
of 3 per cent to fight inflation.
The European Central Bank
(ECB) is expected to signal
tomorrow that it is preparing
to raise rates for the first time
in a decade.
“For central banks to say,
‘we’re powerless’, is not
really a good message,”
Davies said.
Inflation hit 9 per cent in
April, with almost three-
quarters of that fuelled by the
50 per cent rise in energy
prices that month.
Davies accepted that most
of the inflationary pressure
“is from forces that areJill Treanor
outside the Bank of England’s
control”, but he said: “There
is an element of what’s going
on which does relate to very
rapid increases in the money
supply, which were driven by
very low interest rates and by
massive QE.”
Davies said the Bank — and
the Federal Reserve in the US
and the ECB — would have
been in a better position if
they could have said, “We
can’t deal with this oil price
and food price-driven
inflation... [but] we’re
focusing on what we can do,
which is to ensure that
financial conditions are not
out of control.”
Even so, Davies was also
sceptical about the political
attacks on the Bank, and the
idea that political oversight of
rates would have resulted in a
faster move. “Would you have
had a more rapid withdrawal
of QE and an earlier rise in
interest rates had it been
done by the Treasury?” he
asked. “Come on,” he said.
“I’ve been there.”In many ways, it’s a typical
mentor-mentee relationship.
A 43-year-old insurance
executive paired up with a
20-year-old economics
student who wants to work in
finance. But there’s a twist:
the 20-year-old is the mentor.
Over three sessions late
last year, Lincoln University
student Efetobore Efemini
and Paul Lucas, chief actuary
at US insurer ArgoGlobal,
discussed everything from
subconscious racist slights —
known as “microaggressions”
— to bridging generational
divides in the workplace.
The pair were participating
in reverse mentoring
organised by The Brokerage,
a social mobility charity that
aims to help young people
from disadvantaged
backgrounds get on the
corporate ladder — as well as
to improve workplace
culture. About 94 per cent of
the youngsters it works with
are people of colour.
The scheme aims to be
mutually beneficial: the
young people meet senior
industry figures, while their
mentees, executives at big
City firms, can talk frankly to
young people from outside
their corporate bubble.
It is one of many initiatives
that have emerged in the City
as it tries to shed its image as
the domain of the male, pale
and stale. After the murder of
George Floyd in 2020 and the
Black Lives Matter protests
that followed, firms rushed
out statements in support of
racial equality and vowed to
improve ethnic diversity
within their own workforces.
However, research by The
Sunday Times suggests that
big City firms have made slow
progress. Employees from
ethnic minority backgrounds
remain hugely under-City firms still disappoint two
years after George Floyd killing
Research shows
slow progress
boosting diversityat big employers
Lucas is pleased he got his
insurer involved with the
mentoring scheme from The
Brokerage. For him and his
staff, the sessions have been
eye-opening: “I think for a
couple of them, it was
probably the first time they’d
spoken to somebody who
came from a less advantaged
background.”
Efemini found the unusual
dynamic of the scheme
meant he could be more open
with Lucas about his
experiences of trying to break
into the corporate world
including feeling out of place
among people from more
privileged backgrounds.
He said: “Those types of
conversations might usually
be a little bit more difficult for
employees, but Paul and me
were able to grow a really
good understanding of each
other and I really enjoyed my
time with him.”
Measuring progress in the
representation of ethnic
minorities in the City remains
difficult as data is sparse and
inconsistent. Without any
centralised data collection,
statistical analysis relies on
firms gathering consistent,
comparable data.
The Sunday Times asked
36 of the City’s biggest
financial and professional
services firms for data on the
ethnic diversity of their UK
workforces. The surveyrepresented, especially in
senior roles, and are paid far
less than white colleagues.
Banking giant UBS has a pay
gap of 24 per cent between
ethnic minorities and white
counterparts, while only
0.8 per cent of senior workers
at Lloyds are black.
Ethnic minority employees
at accounting giants KPMG,
Deloitte and EY earn at least
15 per cent less than white
counterparts on average.
PwC and Barclays are the
only organisations where
workers from an ethnic
minority earn more on
average than their white
counterparts. At the elite law
firm White & Case, 86 per
cent of staff at the entire
partnership are white, while
the combined ethnicity pay
gap is 50 per cent.
The data also shows that
many firms have made little
progress on pay since last
year, when The Sunday Times
last conducted the research.
“Magic Circle” firm Allen &
Overy reported a mean
ethnicity pay gap of 22.4 per
cent in 2021, identical to that
in 2020. And while UBS bank
has halved its mean hourly
wage gap over the year, from
24 to 12 per cent, the gap was
46 per cent when bonuses
were included, against 50 per
cent before. Deloitte’s
ethnicity pay gap is 37.9 per
cent, just 2.2 per cent lower.Anna Menin
and Laith Al-Khalafsought figures on how ethnic
minorities are represented in
firms, on the demographic
make-up of senior leadership
roles and on pay disparities
between racial groups.
Just nine firms supplied all
that was requested, providing
data broken down into
specific ethnicities rather
than just gathering data on
whether employees are
BAME or not. Some 21 firms
did not provide any data and
six, incomplete information.
The data that does exist
suggests that in every sector of
the City, employees from
minority backgrounds are
under-represented in senior
roles, resulting in big pay
gaps. While many firms’
annual reports show progress,
others fail to keep data, so
there is no way of knowing.
While campaigners are
calling for urgent action,
companies argue it will take
time to fill more senior roles
with more diverse candidates.
PwC’s chief people officer, Ian
Elliott, said it was making
progress, but admitted: “We
can’t change senior level
diversity overnight.”
Most of the companies that
supplied full information
were law firms. The Solicitors
Regulation Authority requires
them to report data on the
diversity of their workforces.
Noreen Biddle Shah, head
of marketing at investment
bank Numis, is founder of
Reboot, a campaign group
pushing for more diversity in
professional workplaces.
She said she faced bigotry
at Aviva’s annual meeting last
month, when chief executive
Amanda Blanc faced sexist
investors saying she was “not
the man for the job”. After
asking about the insurer’s
ethnicity pay gap, Biddle
Shah said two shareholders
asked: “What will happen
when ethnics start getting
paid more or get all the senior
roles and white people aren’t
getting the jobs?”
“It left all of us in shock,”
she said. “You think as an
industry we have moved on.
Then things like this happen
and you think, ‘Actually, we
have a long way to go still.’ ”Bank ‘should have acted earlier on inflation’
Role reversal:
young mentor
Efetobore
Efeminijoined in 2008 and, initially, the plan
seemed to be working out. She hired a
phalanx of her former colleagues from
Google and her days in Washington.
Members of her growing coterie came to
be known internally as FOSS — Friends of
Sheryl Sandberg.
As Facebook prepared to float in 2012,
she seemed prime to ride off into the sun-
set. The listing, though, was a disaster.
Zuckerberg alienated Wall Street by
showing up to investor meetings in his
hoodie. And the story he was spinning
was not compelling.
The smartphone revolution was
taking hold, but Facebook was a desktop
experience. It was in danger of being left
behind by a huge shift in people’s behav-
iour. The share price crashed. It took
more than a year just to get back to the
offer price as Zuckerberg and Sandberg
reoriented the company entirely around
the mobile phone experience.
That turnaround complete, in 2015
Sandberg’s husband, Dave Goldberg,
died suddenly while on a treadmill on a
Mexican holiday. She was crushed. The
following year, Trump was elected, tip-
ping the company into a seemingly end-
less stream of controversies as the world,
and regulators, awakened to the power
of the platform to influence people. In
2018, the United Nations slammed the
company for fomenting genocide in
Myanmar. Six months later, Sandberg
was grilled by Congress alongside Twit-
ter’s Jack Dorsey in a hearing on Ameri-
can election integrity.
Countless hearings followed. Sand-
berg put her damage-control mission
into high gear. She travelled to Washing-
ton DC to meet with congressmen. She
would scurry through the halls of the
Capitol, trailed by a retinue of staff. She
sent handwritten thank you notes to law-
makers who were threatening to throw
the book at the company. Facebook’s lob-
bying budget soared. Last year it spent
nearly $21 million on its Washington
influence operation, making it the single-
biggest corporate spender in America.A
mid the sea of controversies, Sand-
berg’s carefully honed image dark-
ened. In 2018, the New York Times
reported that her team signed off
on a dirty tricks campaign that
involved feeding journalists negative sto-
ries on critics of Facebook, including
George Soros, the billionaire trader who
had branded the company a “menace”.
This year, Facebook was exposed for a
similar campaign against TikTok, which
sought to paint the Chinese-owned app
as “the real threat” to America.
Sandberg’s image as a feminist cham-
pion received a blow last year when whis-
tleblower Frances Haugen published
thousands of internal documents laying
bare how, time and again, the company
appeared to prioritise growth and profits
over safety and the mental health of
users, particularly young women.
Lean In encouraged women not to
hold themselves back professionally, to
be more assertive in the workplace. For
some, though, it was too reductive, not
taking into account the forces of sexism
while giving men a pass. Michelle Obama
famously quipped: “Sometimes that shit
doesn’t work.” Rosa Brooks, a George-
town law professor who wrote a viral
post about Lean In back in 2014, said that
Sandberg’s role at Meta has further
undermined her message. “Lean in to
what end?” Brooks said. “Who wants to
be the most powerful woman in the orga-
nisation that helped push American
democracy to the brink of collapse?”
Aged 52 and worth $1.6 billion, Sand-
berg said she had no grand plan, other
than to spend more time on philan-
thropy, her charity, and parenting her
soon-to-be enlarged family of five. She is
set to marry Tom Bernthal, a marketing
executive, who brings three children to
the marriage.
The rumour mill, however, has
already gone into overdrive. Elon Musk is
in the market for a new chief executive of
Twitter if and when he closes his $43 bil-
lion takeover of the social media com-
pany. Dianne Feinstein, California’s long-
serving senator, has faced calls, at age 88,
to resign amid allegations that she is no
longer mentally fit to handle the rigours
of the job.
Might Sandberg throw her hat in the
ring should Feinstein, who calls Sand-
berg her “good friend”, vacate? Perhaps.
Even stranger, though, would be if the
famously driven executive does nothing,
and ends her career having never
reached the summit herself.
Surely she has more leaning in to do.he would not replace Sandberg. Instead,
he would finish the job he started in 2018,
dividing Sandberg’s duties among a hand-
ful of executives, all of whom would
report to him. He wrote: “I think Meta has
reached the point where it makes sense
for our product and business groups to be
more closely integrated, rather than hav-
ing all the business and operations func-
tions organised separately from our prod-
ucts.” Olivan will assume the chief
operating officer title, but it will be “more
traditional” than the role Sandberg had.
She leaves at a fraught time. For the
first time in its history, Meta lost users last
year as shiny rivals such as TikTok lured
away young people. Apple’s new anti-
tracking software has sapped its ability to
serve ads, translating to an estimated
$10 billion sales hit. Since September, the
company’s stock has plunged nearly
50 per cent to $194.00, vaporising an
astounding $500 billion in market value.
Zuckerberg’s response: to plough tens of
billions of dollars into the metaverse, an
immersive version of the internet that it is
not clear anyone wants.
Wedbush’s Ives said: “The fact that she
is leaving just as the company is beginning
to transition to Meta was a shock to inves-
tors. Wall Street slept well at night know-
ing that Sheryl was the co-pilot. Zucker-
berg being in that chair alone is more
concerning.”
This was not the way it was supposed to
go. Sandberg had a plan. She would join
Facebook as “the adult in the room”, stay
on for five years, perhaps see it through a
stock market float. And then? It was
expected that she would transition back
into public life, maybe as a senator or a
high-level post in the federal government.
Her interest in civil service started early.
At Harvard, Larry Summers, the econo-
mist and head of the university, became
her thesis adviser and mentor. When Bill
Clinton appointed him deputy Treasury
secretary in 1995, he nabbed the recently
graduated Sandberg as his chief of staff, a
job she did for five years.
Google chief Eric Schmidt started call-
ing in 2001, enjoining Sandberg to “get on
the rocket ship”. She joined Google when
it was just three years old, and helped
turn the search engine created by two
brilliant young technologists into an
advertising leviathan. Her team grew
from four to 4,000.
By 2007, and having made her first for-
tune thanks to Google stock, she was
ready to leave. Zuckerberg courted her
over many months. They met for dinners
and coffees, and talked long into the night
about the young chief executive’s vision
of turning every human with an internet
connection into a Facebook user. SheWho wants to
be the most
powerful
woman in the
organisation
that helped
push
American
democracy to
the brink of
collapse?
$500bn
Meta’s drop in market value
since September$117bn
Meta’s sales for last year$10bn
The hit to sales by Apple’s
anti-tracking softwareTHE WEALTHY WOMEN WITH IT ALL TO GIVE
In her shock exit
from Facebook’s
parent company,
Meta, last week,
Sheryl Sandberg
said she planned to
spend her new-
found free time
“focusing more on
my foundation and
philanthropic work”.
What that means
is far from clear,
although she is
poised to join some
illustrious women
who have drawn
their billions from the
tech world and
turned the world of
charitable giving on
its head.
MacKenzie Scott,
ex-wife of Amazon
founder Jeff Bezos,
has become a force.
Since finalising her
separation in 2019,
she has given away
more than $12 billion
(£9.5 billion) tohundreds of
organisations.
Despite her largesse,
her net worth
($37 billion) remains
virtually changed
because of Amazon’s
rising stock price.
The 52-year-old is
known to hand out
millions without
warning to NGOs,
many of which work
on helping “under-
represented” groups
in society.
Laurene Powell
Jobs, widow of Steve
Jobs, is also active in
philanthropy. The 58-
year-old, with a
$16 billion net worth,
pledged in
September to give
$3.5 billion to
climate causes over
the next decade via
her Waverley Street
Foundation.
PowellJobs has handed out
hundreds of millions
of dollars, but keeps
her activities
discreet by routing
donations though
other funds that
allow for anonymity.
Sandberg’s
foundation, called
the Sheryl Sandberg
& Dave Goldberg
Family Foundation,
has twin goals. They
are to advance
women and women’s
rights via Lean In, the
organisation named
after her first book,
and to “build
resilience” via
Option B, which
helps people bounce
back from adversity.
It is named after her
second book, which
she wrote after her
husband Goldberg
died unexpectedly.
Sandberg, 52, and
with a net worth of
$1.6 billion, said last
week that this is a
“critical moment for
women”.
This was probably
a nod to the recent
leak of a draft
Supreme Court
decision set to
overturn Roe v
Wade, the landmark
case that legalised
abortion.Billions to
go: Laurene
Powell
Jobs and
MacKenzie
Scott,
right