Over the last 2 years what specific activities has Virgin Money undertaken in response to the recession?
From a product perspective…if you make pens etc you sell less of them because people’s response in a recession is to just stop spending on things they don’t need.  Financial services are somewhat different of course because the first thing people think about is “I need to keep paying my mortgage”.  People with our existing products have a longer term relationship with us and will often need to modify products they have with us – but a recession doesn’t stop people from needing financial services.  Interestingly, in a recession the savings ratio increases.  People stop spending and if they retain a job still have money, so they can actually have more money and they need to do something with it.  Over the past two years in this recessionary environment with all the impacts that has had on the world of banking and financial services, we’ve been able to grow our business significantly.

So do you think the recession has given Virgin Money an opportunity?
Yes.  The public perception of Banks and banking has changed fundamentally in the past couple of years.  Consumers are actively telling us they want new players in the banking market and for increased competition – and we’re responding to that.

Can I ask you about Northern Rock - was it on your horizon to do something like the Northern Rock bid before the Northern Rock debacle or were you simply seizing an opportunity?
The thought to take Virgin Money from what it is – a credit card, investments and protection business – and to create a bank from it has certainly been in Jayne Anne’s [Virgin Money CEO] thoughts for a while.  Northern Rock was certainly an opportunity that came along.  No-one could have predicted it – and we thought actually we could do something about it.  Equally it was born out of Jayne Anne and Richard [Branson] saying, “you know what, it would be awful if that business did fail and we don’t want that to happen.  Let’s see if we can do something about it”

If you were going to take on a branch network that would have significant implications for the way you are structured, wouldn’t it?
Yes clearly we would have to think about our structure.

How big are you?
In people terms, in the UK, we are about 250 but this belies the size of the business.  Upwards of 3000 people rely on us for a job but they work for our partners.  In the core if we want to change shape it is easy to do.

What would be the most challenging thing for you about incorporating another organisation into yours?
We are a direct distribution player at the moment so clearly taking on a branch distribution and thinking about how we control that would be a challenge to think about but we have people who do have experience of that. 

Are you a very separate entity to the Virgin Group?
Yes – like every Virgin business.  It’s how Virgin gets people to own and run their own business. For most people here, responsibility is a big thing.  Yes  I’m working for Virgin Money but there’s a real sense for everyone that it’s my business. 

So as a result of your activities during the recession, does your organisation feel different in any way?
As an organisation we are very much trying to be on the front foot, and whilst that was already in mind, it probably pushed us even more onto the front foot because we can sense that there is something we can do here, a big opportunity for us.

So there must be a feeling of energy and excitement?
Yes, exactly that; which is a bit odd because most people in financial services have heads stooped but we’re the other way

As HR Director, what has been your biggest contribution over the last couple of years?
Mainly, it’s been the shaping of the business moving towards Jayne Anne’s culture that she wanted to set up i.e. if you are going to head off to be a bank, you have got to put in place the robustness of a bank in a Virgin customer-focused way.  So we gave support to the management team to make cultural change as well as structural. 

Can you give me some examples of how you have changed the ethos and culture of the organisation?
Culture is really difficult to describe – I think of it as a sum of your habits which drives or becomes your culture.  If your habits are to have senior staff canteens you will drive a specific culture, stuffy etc.  Specific examples – we changed our HR policies to support the culture, which included tightening some of them up.  We changed our appraisal process and introduced normal distributions for performance management, far harder than we had done previously and made that stick.  We needed a robust HR department that could genuinely support that and make it happen in the business with managers.  Decisions of an HR nature can be made at a high level and dissipated further down –we have to be robust and get the balance right and make it work for all.

On a scale of 1-10, how efficient and responsive would you consider VM to be? (10 is very)
From a structural perspective we’re an 8 because we don’t have huge back office customer systems.  If we want to deliver a new product we focus on it and get on with it. 

When designing any significant changes to the way that you operate (e.g. changes to your operating model, your product mix , your organisation structure etc) how far ahead do you plan? Up to 2 years, 3-5 years, 5-10 years or 10 years plus?
3 -5 years based on our existing business.

Do you have any specific resources to help you to envisage what the UK or global economy will look like in 5 years time and what your consumers will need?
I don’t in terms of planning people resources – I probably only look 1 or 2 years out partly because things will change shape.  I do marvel at HRDs of huge organisations who can say demand for my products is going to be this therefore I need to be employing this many people in 3 years time.  Do we have enough people or do we need to open an office somewhere else?  I can see that in big organisations you need to an extent that degree of pIanning and I can see that’s valuable to do so but I don’t think it should govern what you do.  From an overall business strategy perspective, the team look farther out , of course

I wanted to share 2 examples with you of companies we have worked with who have used this future view to change their thinking: Syngenta who are in the crop protection business so have used knowledge particularly about climate change and the impact on both flooding and water shortages to plan the relocation of premises and to develop crops which need minimal water.  The other example is Boots who have used knowledge of future healthcare and society changes to change their product offer so that it’s split between health and beauty rather than more beauty and gifts and some health.  Is there a parallel way do you think that such future back planning could be used in financial services?
I think it’s interesting.  For example, pensions are a classic case– people aren’t saving enough, the government can’t afford old age pensions, the retirement age is being pushed back, it’s going to be a very different place but it’s really difficult to respond from a financial services product perspective because there is no silver bullet.  People my age need to save like there’s no tomorrow or plan a second career because actually that could be the answer to the pension problem or buy a bigger house now and draw money off later.  There are various ways to solve the problem so we could ask, what are the products that would support those different approaches?  Businesses are thinking about that but businesses of our size should take the lead here.

There are broadly 6 different factors influencing the changes coming in the next decade – which of these do you think are the most important for you in terms of planning ahead?

·         Resource Constraints – fewer resources and more expensive

·         Climate Change – floods and water scarcity

·         Demographic Change – Europe becomes an old age people’s home

·         Societal shifts – a third of us will live alone

·         Technological Innovation – super computers, nanobots etc

·         Economic Discontinuities – the East continues its growth in the West

It’s between demographic changes and societal shifts.    The greater change will absolutely be demographic  – because it drives old age pensions – youngsters coming into the work place now - pensions could disappear from anything they will do anything about because they can’t solve it –they will save so much to get so little back in comparison.  Demographic shifts, trends about living alone, getting divorced will equally change people’s view.  Today people get married, have children and get protection and buy insurance – clearly if protecting a family is less of an issue those things shift to more of a savings orientated nature

So it will have an impact on the service you provide?
Yes and on the products we offer

What, if anything, are you doing to prepare your organisation for these changes and is there a role for HR or is it product led?
Initially yes, it is product led but from a pure HR perspective it is changing.  It is changing the relationship of an employee with the firm as we look ahead.  In lots of different ways…if you look at the security organisations offer their employees, it has diminished.  That’s why nobody wants to move anymore.  If you look at the weekends, everyone is on the move; they’ve been working away all week.    Why should people uproot their family to move and then everything changes and they have to move the family again?  People used to move when there was security there but there is less security offered in employment now.  If you start having more single people, the benefits package has to change to reflect the single lifestyle – death in service?  Not so worried about that – rather have more money in my pension.  So you will see a drive towards people being slightly more commercial about the working relationship with employers because there’s no longer a job for life. 

Yes, people are talking about a portfolio of jobs so rather than just having 1 job you will offer your services to a number of employers…
Absolutely, I see that now – far more people are on the interim market –they are quite comfortable saying, “I will work for you for 6 months and worry about it then”.  In fact, some people who have been offered a contract of employment valid until 60 ask for 2 years and they negotiate a better rate because they’re quite happy worrying about it in 2 years time.  To them that’s more secure than having a contract till they are 60.  We’re going to have to break free from the traditional employment piece…working from home, blackberries, changes loads of things about the nature of the employee relationship

Is there anything else you would see as being challenge or a change for HR in next few years?
Well, we need to be far more flexible with the employee relationship as we’ve just discussed but equally we need to be robust.  There’s a definite shift to a more commercial HR, as that employee relationship hardens up.  We have a far more adult to adult relationship with our employees.  Going forward that’s going to be the HR focus – being more flexible and not hanging on to how traditionally this is how employees worked…because you’re expecting it from them.

We’re almost done now – Is there a question you would like to pose to a fellow HRD?
I’d love to ask an HRD who has thousands of people – what do you actually look at and do to control your people – is it through policy or do you get involved with individuals?  A very large financial services institution like Norwich Union – what are they focused on, what do they do that’s different to me.

If you could be granted 1 wish to improve the way work gets done in your organisation, what would it be?
That’s tricky…Let’s come back to that…Meetings – in modern business as a whole, not our business.  I marvel at how modern business has to be run by meetings.  It’s good to share but equally, can we just not do something rather than have a meeting about it?

What has been the most influential business book you have read and why?
The Pyramid Principle –Taught me to say, “What’s the question I’m trying to answer?” It gave me a structured approach to answer it and put it on paper which has been invaluable for me

Are you reading a novel and at the moment and would you recommend it?
The White Spider, a climbing book, by Henrich Harrier.

Are you a climber?
I’m not a climber, I dabble and do something stupid every now and then!  I just climbed the Matterhorn