In her role as Group HR Director for CYBG, we welcome Kate Guthrie who talks to us as the organisation prepares to transform four diverse banking brands into a digital first bank. She shares her thoughts on the benefits of integrating technology into HR functions and the challenges of creating a cohesive culture while maintaining the integrity of brand values.
Can you tell us a bit about your people strategy role at CYBG, particularly in the context of its transformation to a digital first bank?
As the Group Human Resources Director my key function is to develop a people strategy that underpins the overall business strategy. Ultimately this enables us to do the right things with, and for, our people to achieve the strategic goals of the company – a fundamental one of those is becoming a purpose-driven digitally-led bank.
To deliver that, I have to assess what skills and capabilities we need from our people and the shape we need to be in to attract and train that talent. CYBG was a fairly traditional bank before we acquired Virgin Money, so my team continues to work hand in glove with the business to shape the organisation of the future as we transition from where we are today to where we need to be. With the vision to become a modern digitally-led business, the people and management framework needs to be considered with purpose and values at its core. My team and I are leading the shaping of that.
CYBG incorporates four different banking brands and is to rebrand to Virgin Money by the end of 2021. Can you highlight some of the key elements you and your team have had to consider as you transition to a new brand and vision for the merged business?
The heritage of Clydesdale and Yorkshire Banks goes back over 180 years. Both were very much northern banks – Clydesdale based in Glasgow and Yorkshire in Leeds. These remain the heartlands of our business.
Prior to the Virgin Money acquisition, CYBG had been on its own journey. We demerged from National Australia Group in January 2016 and then went on to IPO and list as a new independent bank in the UK. For the past three years we have been on a transformation journey and during that time we have had significant share price growth and a clear shift away from a traditional bank. This then created the opportunity for the acquisition of Virgin Money which was an excellent demonstration of how the CYBG team had the ability to perform and deliver significant transformation, enabling us to make a serious acquisition.
By 2021 our entire business will be branded Virgin Money. It is one of the most iconic brands in the world and a premium brand in the UK. This gives us a national footprint that accelerates our geographic penetration and visibility, however as a Virgin business it does require a different approach. We have a relationship with the Virgin management group and that is exciting for us to share knowledge, skills and capabilities with all companies in the group. A fundamental part of being a Virgin business is to think very clearly about purpose and that work has been led by my team.
We started out with the ambition of establishing our ‘1,000 voices campaign’ intended to gain the insight of 1,000 colleagues across our combined business to shape the new purpose. Such was the enthusiasm behind this that 2,500 of our colleagues took part and by having an inclusive process early on we have a very strong commitment to it at the early stages. The result was the establishment of our purpose: ‘Making you happier about money’.
For the ‘1,000 voices campaign’, we went out to every part of the organisation, whether it was stores/branches, customer functions or head office and carried out focus groups around the purpose and the values. We also ran an online jam which was the first time we had used jamming technology. At any given time there could be more than 1,000 people participating in this jam across any part of the organisation. It was a big success.
“If you are going to express a purpose you need to make sure that as an organisation everyone is really well aligned behind it.”
To develop the purpose and ensure its longevity and resonance we did two things simultaneously: we were developing the purpose internally and at the same time working closely with colleagues in brand and marketing who were testing the purpose with customers. The customer view is taken into account, but the purpose was intended mostly for internal use, therefore our primary audience was our colleagues.
One of my core underpinning beliefs is that if you are going to express a purpose you need to make sure that as an organisation everyone is really well aligned behind it. So, having identified and launched the values and purpose in the first three months, we had to implement new systems which reflected our purpose. An example of this was our new performance management framework which abandons the bell curve and alpha numeric rating and is underpinned by our values, where the underlying philosophy is that we want to help every colleague be at their best. We have moved to a quarterly check in rather than an annual appraisal. This had been implemented with a very agile piece of plug and play technology accessible by every colleague and easily checked by line managers. This was up and running in Virgin Money in six weeks and in the first year we received 120,000 interactions from 6,500 staff. It really allows us to do things at pace.
When we put our performance structure in place, we introduced a team-based bonus for 95 per cent of our people. It has created transparency from the beginning and much greater feeling of fairness and equality. It is underpinned by the notion that if the company does well, we all do well together. It was a bold move in the UK banking industry, but in the first year we reduced the loss of high performers more than in any previous years. It is creating an interesting response where people are thinking: who is this company, what does it stand for, do I like it, and do I want to be part of it?
As you have said two of the merged brands (Clydesdale and Yorkshire Banks) have very established histories. How important is it that you maintain and build in the values of those businesses as you establish a new banking organisation for the future?
We have worked really hard to take the best elements of both cultures and tried to build on them. At CYBG our values had only been in existence for 18 months when we made the Virgin Money acquisition, but there was already significant buy-in. So, we pulled them together with the Virgin Money values and looked for a ‘best of both’ expression to support the values of the new organisation. This has been led by my team working closely with brand and marketing to ensure everything internally is lined up with what we present externally.
We have to be very careful with a best-of-both model as people tend to interpret that as 50/50, which it is not. We have aimed with the incorporation of the best bits to be better than both. However, I think what is really important is that we have collaborated and been inclusive. All of this has been achieved through new technologies and taking a different approach. It has been very successful for us. We want to take the best of both organisations and continue to build on that for the future
Our values are: delightfully surprising; heartfelt service; insatiable curiosity; straight up; smart disruption; red hot relevance. These reflect the colourful and less formal nature of our bank. It is naturally collaborative and irreverent, which is not like a ‘normal’ bank in my experience.
A key element of your people strategy approach has been focused on collaboration and inclusivity. Would this have been possible without new innovation in technology?
It would have been possible, but it would’ve taken considerably longer and been costly to organise and deliver. The technology allows people to do things at pace, using tools that we all now have as part of our everyday lives. It encourages people who have never met or spoken before to have conversations. In some cases, these were very frank exchanges of views, but in an entirely appropriate way. The tools we used allowed the whole process to gain momentum and develop a life of its own.
Within our business we believe in the power of internal communications as a lever for change. We are very good at that and work collaboratively to make sure that we are completely joined up on colleague insight.
Our performance system allows for easy analysis and we use that to encourage behaviours and the implementation of values. We know who is giving feedback and who isn’t. It really does mean that we have a great source of data to adjust the tiller on the people strategy if we need to.
As a digital first bank, innovation is clearly paramount to the culture. Does this require a different way of thinking from leadership, staff and partners?
Yes, it does. It requires open mindedness and a philosophy of experimental test and learn. This means some risk taking and a willingness to find a way to make things happen. For example, the online jam we introduced for our 1000 voices campaign was hard to implement across our group legacy IT systems. It took a lot of determination plus a lot of executive sponsorship. There were tensions of course but we were committed to making it work, which it definitely did.
Can you share an example of how digital innovation has made a difference to the people strategy at CYBG?
I absolutely have to highlight the performance system that we have implemented which is built on our values and based on modern neurosciences to help get the best out of people. It is supported by brilliant, easy to use, cloud-based agile technology which enables us to achieve the aspirations of the approach which underpins the whole people strategy framework.
“We believe in the power of internal communications as a lever for change.”
To put this in place did require a bit of experimenting. However, I have a main board and leadership team who genuinely believe that people make a difference and they backed this new system brilliantly. It brings us a whole new level of data and now I never go into my leadership meeting or board without the data and science to back up our approach and provide evidence of what we need. It allows us to see where we need to encourage different approaches and mindsets and consider needs for communications, learning and development and training.
Are there new skills, attitudes and experience that you are looking for from leadership in this environment?
Without question. We are not one of the small challengers anymore. We are now the sixth biggest bank in the UK and are systemically important economically. We are, however, of a size that we can move quickly, and that is important.
One of the great pieces of technology we have is our IB customer platform. We have been able to build a services layer over the top of our legacy systems to bring a modern look and feel and allow us to plug in other applications. We have invested in people with the skills to bring this type of technology to life. Increasingly we will need more of this. AI and automation will change the face of banking in the next ten years significantly. Those companies that can engage with it will be the winners. Those who can’t will be left behind.
“AI and automation will change the face of banking in the next ten years significantly.”
The banking sector is one of those leading the way using advanced technologies such as automation, AI and machine learning. There is much excitement, but also some trepidation about the impact on human interactions and jobs. How do you address this with staff and customers?
Whatever the excitement or fears about it, the world won’t change tomorrow – there will be a lead time and then suddenly we will realise it has happened or is happening to us.
We are already deploying robotics in certain internal and customer areas. For example, in our legal function we are using AI to scan documents, which has been proven to be very reliable and speedy.
According to the current research, in the long range, the roles that are likely to be affected will be those which involve repeatable processes that could be replaced by an algorithm or a robot. The skills at very senior levels where you need to be able to prioritise and make judgements and those roles that require high levels of human touch and customer interaction are the roles that are likely to be less affected. However, no doubt things will continue to evolve as technology develops.
Change is coming and therefore we try to equip colleagues to be open-minded to it and accept that the pace is increasing. We can and do train for skill, but the critically important thing is to train at an attitudinal level as much as possible. If you want to change behaviour, you need to change attitude and that is much harder than skills training.
How much opportunity do you believe digital innovation has to thrive in the Scottish and UK banking sector?
In the banking sector innovation is coming, in Scotland, the UK and globally. It will thrive absolutely because it will drive efficiency, cost reduction and better customer and colleague experience. Although people know us as a bank, we are actually one of Scotland’s biggest tech firms and work with a range of technology and fintech firms growing out of the tech clusters that have developed in Edinburgh and Glasgow over recent years. That’s now being replicated by others in banking – Barclays is an interesting example, announcing last year that it is going to put 2,500 jobs in Glasgow particularly focused on technology and digital – which demonstrates some of the inward investment going on in Scotland and the confidence in the tech clusters developing here. Scotland has done a lot so far. Could we do more? Yes, but most countries always could.
Are there barriers or enablers that you would particularly highlight in this context?
I think the barriers traditionally will be investment and how to make the best case for it. Sometimes it can be clear and other times hard to quantify in terms of financial benefit or improved productivity. It is important to be thoughtful and creative when trying to find the best case for investment. This can be a challenge in banking where people are looking at straight line financial return. We need to look at it differently – mindset, attitude and a willingness to embrace new technology, systems and approaches is vital.
In order for innovation to thrive there needs to be support from the leadership. In this business, my fellow leaders have given very strong support to the people strategy and have been ambitious, courageous and willing to take a risk on many of the innovations we have brought in, not just the technical ones. There are not many companies who would have let me introduce a team-based bonus, particularly in a bank, but it has proven so far to have been a welcome approach by colleagues, and the regulator, and we are pleased that we took the risk to reward more of our people more broadly.
You also have established non-executive experience in the not for profit sector. How do you select which roles to take forward?
My first not for profit non-executive role was with Lloyds Banking Group and we established a new Bank of Scotland Foundation. I was asked to take the position of the inaugural chair, which was an incredible privilege. We were dedicated to small and medium grant giving and this impacted on communities across Scotland.
I was really proud to have been part of that I have also been involved with Action for Children UK for a long time: until recently I was the Deputy Chair for three years, and I have also been an independent non-executive director. I did this alongside my executive role so I have had to make sure that I manage my time extremely well. I care deeply about what Action for Children does, providing front line services to the most disadvantaged children and young people in our society and changing the lives of hundreds of thousands of them.
If you are going to do a not-for-profit, or any non-executive, role you need to truly care about what the organisation does so that you bring your time and energy with you. You need to look at the board, the CEO and the Chair and consider how it is going to work and whether it will be a highly functional relationship for all of you where, as a non-executive, you can offer value. I have found that the kit bag of skills and experience I have gained from a multi-sector career has been enormously useful.
I have also recently agreed to join the Virgin Money Foundation, which is independent of the company but funded by us and I am looking forward to working with colleagues to drive that forward.
Kate Guthrie Biography
Kate Guthrie joined CYBG in 2016 prior to the demerger of the business from National Australia Group and the IPO and listing on the UK Stock Exchange. She leads the development and implementation of the company’s innovative People Strategy including the Group’s Purpose and Values. CYBG acquired Virgin Money in October 2018 and Kate and her team are now leading on the organisation design and people related challenges associated with the integration of the two companies. With over 30 years’ domestic and international multi-sector experience, Kate has worked for many companies recognised for their HR functions including Marks and Spencer, Diageo, and Novartis. Immediately prior to joining CYBG/Virgin Money, she worked for Lloyds Banking Group for eleven years. Kate is a Trustee of Action for Children and the Virgin Money Foundation. She was Chair of the Bank of Scotland Foundation.
