THE ETHICAL CAPITALIST – JULIAN RICHER

THE ETHICAL CAPITALIST – JULIAN RICHER

From the front inner sleeve:

“Capitalism has lost its way. Every week brings fresh new stories about business exploiting their staff, avoiding their taxes, and ripping off their customers. Every week, public anger at the system grows. Now, one of Britain’s foremost entrepreneurs intervenes to make the case for putting business back firmly in the service of society, and setting out on a new path to a kinder, fairer form of capitalism.”

“Drawing on four decades of hands-on management experience, the founder of Richer Sounds argues that ethically run businesses are invariably more efficient, more motivated and more innovative than those that care only about the bottom line. He uncovers the simple tools that the best leaders use to make their businesses fair, revealing how others can follow suit. And he also delves into the big questions that modern capitalism has to answer if it is to survive and to thrive. When should – and shouldn’t – the state intervene in the workings of commercial enterprises? What does business as a whole owe back to the wider community? Is the relationship between leaders of big corporations and politicians too cosy, and, if so, what is to be done about it?”

That inner sleeve note sets the tone for the book that follows, and the natural question that follows before getting to the book itself is: What has Julian Richer achieved? The rear inner sleeve begins to answer that question.

“Julian Richer established Richer Sounds in 1978. His business now turns over in excess of £200 million a year, and Richer Sounds has won the prestigious Which? Best Retailer award (2010, 2011, and 2015). In 2011 Richer Sounds was granted a royal warrant by HRH The Prince of Wales for the supply of consumer electronic products to the Royal Household. The first shop to be opened near London Bridge, has for over twenty years been listed in Guinness World Records as achieving the highest sales per square foot of any retail outlet in the world. Fifteen per cent of the company’s profits are donated to charitable causes (over 400 of them in 2017). In addition to his commercial activities, Julian Richer is the founder and a trustee of Acts 435, set up to help those in need, and in 2013 he established ASB Help, which works with victims of anti-social behaviour.”

The book is mainly divided into two parts. Part one looks at the “Ethical Business” and proclaims that it is all about the people, while part two looks at the “Ethical Capitalist” and examines the rules of the game. There is also a preface in which Julian Richer writes of his own way of thinking about how businesses are run. The book includes an introduction, and there is also the author’s conclusion.

[The conclusion below is my conclusion after reading the book.]

PREFACE

In the preface, Julian Richer is proud to call himself an entrepreneur, but he is “increasingly angered by disreputable people (mostly men) running their companies in a way that involves taking as much as they can from society and then sneaking their profits out of the country.” Richer believes that it is possible to run a successful company that is also ethical. Indeed, he highlights his own company ‘Richer Sounds’ and its success that was only possible through that business being run in an ethical way. Julian Richer writes that being ‘ethical’ in business means:

  1. Treating staff, customers and suppliers honestly, openly and respectfully.
  2. Taking responsibility for actions and owning up when things go wrong and setting out to put things right.
  3. Seeing themselves as an integral part of society and paying dues and taxes accordingly.

So, Richer asks, what are the whys and wherefores of operating an ethical organisation? And how can we, as a society, ensure that capitalism is ethically controlled?

INTRODUCTION

In the long introduction, Julian Richer speaks of his own experience in setting out in business and letting that early experience shape his thinking and his ways. As a young child he listened to his parents as they recalled how they met and as they described what it was like to work for their then employer. Later, Richer was deeply inspired by his housemaster at Clifton College, and much later by his wife and her deeply held Christian beliefs and values.

What really transformed Julian Richer’s thinking was the book In Search of Excellence and the wisdom contained therein, and he later set out his own principles in his book The Richer Way in which he showed how his principles worked for Richer Sounds and could be applied to any organisation.

Richer then explores the benefits and drawbacks of capitalism in his introduction and he references the principles in the book Capital in the Twenty-first Century that he found thoroughly convincing. Richer goes on to look at economic crashes and their causes, and he states that “ethics is central to the proper functioning of capitalism”. Indeed, he is clearly angered by such practices as zero hours contracts and enforced self-employment.

PART 1 – THE ETHICAL BUSINESS

CHAPTER 1

In Chapter 1, Richer writes that it is all about the people, and he focuses on the employee. Here, he explores the simple truth that employees who are treated badly perform badly. Indeed, going further than that, employees who are deceived and defrauded by their leaders will themselves deceive and defraud their leaders.

[At a personal level, I have witnessed the truth of that over and over again.]

As Richer writes, “Fraud and theft are hallmarks of a poor company culture, but they’re not the only ones.”

[Again, at a personal level, I have seen that, where an employer steals from his employees, the employees will steal from the employer.]

Richer then writes of the stringent process of recruitment that any candidate for a sales post at Richer Sounds goes through. Integrity and good character are central to the qualifications that Richer Sounds looks for – skills can be developed through training. Richer then goes on to examine promotion and how good performance should be rewarded – depending upon what is meant by good performance.

[I was in retail for most of my working life and spent twenty-four years in electrical retail, and Richer’s wisdom in their recruitment process and system for promotion are excellent!]

CHAPTER 2

In chapter two, Julian Richer is looking at what goes around comes around, and he examines some failing businesses and how they were turned around. He explores the mistakes that businesses so often make – focused only on low price, for example – and highlights the key areas that need work and determination to get right, and which make the business ethically successful. Richer examines the necessity of truth in business, and explores how difficult that is to actually implement in fullness. Likewise, he highlights that it is not mistakes that often cause the greatest upsets, but rather it is the fact that those mistakes are badly handled.

CHAPTER 3

In chapter three, Richer looks at the enablers under the heading of “Nowt For Nowt”. The enablers are the support and maintenance staff that often go unseen, unnoticed and unrewarded, but Richer is keen to highlight their importance for every organisation. He recognises that FairTrade products, while ethically worthwhile, are usually more expensive than non-FairTrade products, but Richer still believes that it is possible for “businesses as a whole both to operate profitably and deal fairly with those who supply or otherwise serve them.” For example, this extended to Richer visiting the factories in China that made products for Richer Sounds. As Richer observes, “Reputational damage … can be astonishingly costly.”

PART 2 – THE ETHICAL CAPITALIST

CHAPTER 4

In chapter 4, Richer looks at the rules of the game when it comes to organisations paying fair wages. This is a complicated issue, but Richer is comprehensive in exploring the economic arguments that are ranged against a fair living wage, and he points out that the introduction of a degree of wage regulation did not have the disastrous impact that it was believed it would cause. Richer also examines such controversial practices as zero hours contracts, which can be beneficial for a few people but should never be forced on anyone. He raises many questions as he writes.

If the economic system in the UK is working, why do we have so many people reliant on food banks? And why do we have so much child poverty? And many families who are struggling to make ends meet often have one family member who does have a job but who is very poorly paid. Wage inequality cause social inequality. Richer also examines the issue of those people at the top end of business and the salaries and bonuses that they receive. Transparency?

CHAPTER 5

In chapter five, Richer explores capitalism and the community with regard to paying taxes. Richer explores a number of issues that may be addressed by serious questions.

Was Margaret Thatcher right to say in 1987 that there was no such thing as society? What is community? What is society? Is there such a thing as a free market?

Richer explores the whole concept of the public good, and whether that concept is today held more in theory than in practice. In the UK today, the whole issue of taxes is very much a hot topic but, for too many wealthy people, the main point is finding ways to avoid paying taxes – not seeing that taxes are way of contributing to society. Richer explores the whole subject of taxation in some depth.

CHAPTER 6

Richer explores the limits of capitalism in this chapter, with special reference to the state and private enterprise. Does state involvement generally spell problems with efficiency and value for money? Richer explores this and other related questions through a rather surprising area.

He then goes on to consider the water industry in the UK and explores if privatisation has brought customers a better service. Yet, privatisation has historically become the answer to almost every problem in society. Richer looks at the impact of privatisation across society and in the UK’s infrastructure, and it is not a happy picture.

CONCLUSION

As Julian Richer draws his book to a close, I will say that it has been a fascinating read because we are receiving the wisdom of a successful businessman who actually cares about people and the society in which he lives. Here is man who is wealthy, but who is not selfish with that wealth. Here is a man who is successful, but who treats all of his employees with respect and integrity. Here, then, is man who is entitled to speak and who deserves to be listened to.

Are his thoughts new? No, and much of the wisdom that Richer shares with us has been shared before, though he does gather a lot of it together in one book. Are his thoughts new? No, because the Christian scriptures are themselves full of wisdom of how to treat people and how to behave in business. Notably, what is called the Old Testament is full of similar wisdom that makes clear that the key to success is treating people properly.

It is also fascinating to think that profit need not be the main aim of a business, and that wealth in itself is not the ultimate reward of being successful in business.

Will history judge rich people on the amount of the inheritance that they pass on to their families, or will history judge them on the good that did for society? An interesting question, and one that demonstrates the difference between short-termism and a long-term view.

In one hundred years’ time, will we remember today’s government politicians because they had vast amounts of money stashed away offshore, or we will we remember those who cared about people and the country that they were governing?

A book like this explores many issues, but it also raises yet more questions along the way, as Richer writes of in his conclusion. This is not only a worthwhile read in its own right, but it is also a worthy way to ask important questions for the age in which we live.