BSA: Does the ownership of an organisation affect the culture?

Andrew Gall, Chief Economist | Building Societies Association

What does it mean to be mutual? Formally, there is the ownership structure, with customers as member-owners of the business. However, mutuality goes much deeper, affecting how and why an organisation functions, says Andrew Gall, Chief Economist, BSA.



The BSA investigated how employees relate to working for a member-owned business, and how deeply a mutual ethos is embedded in the workforces, by looking at the extent to which building society staff understand and relate to mutual values.

The importance of ownership

The results, published last year and entitled Ownership Matters, indicate the effects of mutuality run deep: 85% of employees from across building society businesses agreed that they would be confident explaining mutuality to a customer.

Alongside the BSA’s survey of over 2,400 building society employees, YouGov asked 1,100 people working in plcs, private companies and in the public and charitable sectors who they think receives the value created by their organisation. The comparative results made for interesting reading.

In each type of organisation, the respective owners are seen to receive the largest share of the value created: so building society staff think that customers get 37% of the value created, while employees at plcs think their customers get just 13%.

In contrast, employees believe shareholders and external investors receive 4% of the value created by building societies - plc employees believe that shareholders receive 36% of the value created.

So ownership really does matter, because it determines who gets the value generated by the business, and as such, will affect how the organisation goes about doing business

Shared values

The ownership structure affects the governance arrangements and incentives within an organisation, and the direction set by the firm’s leaders.

In this way, mutuality is also reflected in the values that building societies state are important to the ethos of their businesses –being trustworthy, ethical, friendly to customers and having supportive, respectful, responsible workplaces.

The survey results show that while 93% of building society employees agree that their employer is trustworthy and 85% agree that the working environment is respectful, for plc employees the proportions are 55% and 58% respectively.

Structure shapes behaviours

Since the financial crisis, there has been more focus on culture at financial services providers. Many banks have publicly stated that they are putting the needs of the customer more centrally within their strategies, and are seeking to adjust their cultures and employee behaviours accordingly.

Building societies’ mutual ownership structure should give them an inherent advantage in this respect. Their long-standing purpose, through the filter of member-ownership, affects their culture by encouraging important stakeholders - such as employees - to take on the values that the firm wants to sustain.

An organisational purpose of meeting the needs of member-owners can produce a strong culture that earns consumers’ trust.

The culture special Spring edition of BSA Society Matters magazine is available to download at www.bsa.org.uk/SocietyMatters and includes articles from the Banking Standards Board, Pecan Partnership, Glasgow Credit Union and Harpenden Building Society.

The full BSA Ownership Matters report is available to download at: www.bsa.org.uk/OwnershipMatters