Natwest boss’s radio blunder betrays the reality of C-suite groupthink
Natwest chair Sir Howard Davies’s housing comments are the latest episode in generational warfare and betray the risks of the C-suite echo chamber, writes Simon Neville
If the baby boomers versus the millennials was a tv show it would definitely be a soap opera.
The debate and animosity between the two groups has been quietly ticking along ever since the 2008 financial crisis and, like a soap opera, occasionally a storyline becomes part of the national conversation.
Natwest’s chairman (and baby boomer), Sir Howard Davies, played a key role in bringing the debate back to the front of people’s minds when he turned up at the BBC’s Today studio last week to face off with host (and millennial) Amol Rajan.
Sir Howard claimed: “I don’t think it’s that difficult at the moment” to get on the housing ladder, leading to Rajan interjecting quite forcefully. “To buy a house? In this country? Are we living in the same country or are you reporting from overseas?”
He’s right, of course. Anyone who cannot turn to the bank of mum and dad and wants to get their own home (especially in London) has more chance of persuading Elon Musk to rebrand X as Twitter again.
House prices are on average more than nine times annual salaries – or 12 times if you live in London – and rents as a proportion of take-home pay are close to 50 per cent, meaning saving for a deposit becomes almost impossible.
In Sir Howard’s day, houses were typically three or four times annual salaries and rents were proportionally lower, meaning the baby boomers could become homeowners with ease and explains why so many of them are now sitting mortgage free in properties that have exploded in value since.
No amount of cutting out coffees, avocado toast and Netflix will help the millennials, as much as the baby boomers might have you believe.
But what Sir Howard’s comments, which he subsequently apologised for, show is that all too often we surround ourselves with likeminded people who will agree with our viewpoint and not question it.
This problem becomes even more acute when you get to the C-suite, rubbing shoulders with the same small group of executives and non-executives that run the UK’s biggest companies. Groupthink can take over and it is no wonder boardrooms are the last places to change when it comes to diversity – both in terms of people and thought.
Sir Howard must clearly talk about mortgages a great deal in his day-to-day work. It’s Natwest’s bread and butter and, since taken over by the taxpayer, he will know that the bank will face more scrutiny than its competitors. Nothing is more emotive than an Englishman’s home, so I understand.
But what appears less likely is that Sir Howard hasn’t been challenged on the assertion he made on Radio 4, leading to his sense of surprise.
The question is, how will the mindset of senior executives and boardrooms (which are primarily filled with
baby boomers) change when there seems to be such little space for challenging them?
Some executives may never experience the “real world” and live a carpeted life of stepping from their front door, into a chauffeur-driven car, into an office lift. Interactions with the public are so few and far between, they could even be classed as near-life experiences. Until that changes, the view from on high – whether that’s the baby boomers or the boardrooms – will remain much the same.
I like Sir Howard. I’ve met him several times and I always appreciated how open he would be to asking questions and taking time to listen.
Obviously, his engagements with the media are far fewer than with likeminded bankers, but at least he’s making the effort.
Hopefully his experiences at the hands of the BBC won’t dent his appetite for facing scrutiny and having a view in public because we need more senior business leaders like him who might make a gaffe but appear willing enough to show humility and question their own biases.
The real risk from Sir Howard’s remarks is not that the baby boomer versus millennial saga continues but that the unwillingness to admit when we’re wrong becomes more ingrained than ever and nothing ever changes – including the ability to get on the housing ladder.