Reflections on the year
The Coronavirus pandemic has wrought havoc across businesses, governments and the lives of billions of people. As a major supplier of public services, we have been deeply affected from the start, and from the start we made our priorities clear:
“Our priority in this crisis is to support the delivery of essential public services and, within that context, do all we can to protect our employees from harm and our shareholders from loss.” Trading Update 2nd April 2020.
The scars of the pandemic will remain with us all for years to come: millions dead before their time; governments left with current account deficits and burdens of debt which would have previously been considered the height of folly; whole industries bankrupted; others growing fast. Changes in the way people work and consume goods and services, which have been gradually creeping up on us, suddenly accelerated and became part of a ‘new normal’.
The way important changes happen ‘gradually, and then suddenly’ was famously observed in Ernest Hemingway's 1926 novel, The Sun Also Rises:
“How did you go bankrupt?” Bill asked.
“Two ways,” Mike said. “Gradually, and then suddenly.”
This resonates with our thinking about Corporate Responsibility. Just as a government’s first responsibility is to protect its citizens, so a company’s first responsibility is to protect its shareholders and other stakeholders. And just as there are many ways governments can fail in their responsibility to protect their citizens, there are many ways Companies can fail in their responsibilities to shareholders and other stakeholders.
Corporate Responsibility, commonly subdivided into three core components of Environmental, Social and Governance (ESG), encompasses a number of issues which investors now recognise can damage the value of a company, or even bankrupt it, every bit as much as failures of financial control or competitiveness. And they need constant attention, because, like bankruptcy, they can wreak their destructive havoc ‘gradually, and then suddenly’.
We believe that Corporate Responsibility should not be seen as something whose only purpose is to protect from harm. Done well, it builds strength and resilience in a corporation. We believe that the effectiveness of our response to the Covid-19 crisis is in part due to our painstaking work, led by the Board, around risk management, culture and Corporate Responsibility. The value of this work, built up gradually over recent years, suddenly became evident in 2020.
Our Values of Trust, Care, Innovation and Pride gave us an effective cultural framework that enabled us to adapt to rapidly changing customer requirements and deliver services at speed, to high levels of quality and assurance.
- Trust was important because it allowed our customers to give us contracts at short notice, knowing that they could trust us to deliver, and importantly, to adapt our services if circumstances changed. A culture of mutual trust and respect amongst Serco management also enabled us to mobilise rapidly and effectively in the face of large and rapidly changing requirements.
- Pride and Care were important because they meant that colleagues cared enough, and had enough pride in their work, to understand the importance of delivering on our promises even when under intense pressure.
- Innovation was important because we had to invent completely new ways of service delivery and scale up internal processes to levels at which we had never used them before. By way of example, around the world between 1st January 2020 and 31st December 2020, we hired around 20,000 people directly or indirectly. And we have adapted our systems to allow thousands of people to work from home, rather than sitting at desks in large offices. All this was done at breakneck speed, but without breaking necks.
Our ‘Loose-Tight’ management philosophy performed exceptionally well during the crisis:
- Devolving power and responsibility to sit as close as possible to the people delivering to our customers has given us great agility. This applies as much to businesses which have shrunk during the crisis as to those that have seen significant growth.
- A well-established framework of controls and processes, along with a culture of compliance and transparency, have enabled us to maintain assurance and risk management without which such rapid change would have been extremely risky.
All of these things are fruits of a focus on Corporate Responsibility, built into the culture, processes and systems of the business over several years.
We moved into 2020 with clear objectives across our Corporate Responsibility agenda, focused on consolidating progress and building greater momentum in addressing our ESG priorities. Even as the impact of Covid-19 impelled us to ramp up and accelerate existing plans in some areas – such as our ambitions for enhancing colleague experience, wellbeing and connectivity – we have held to our priorities in all areas, recognising that our material issues remain material issues, even in the face of a global health crisis.
This includes our new Group Strategy for Environment – focusing on climate-related risks and opportunities – and ongoing drive to mature our governance around an increasingly integrated and clearly defined ESG agenda that is closely aligned to our purpose – focused on protecting shareholder interests by managing our business in a way consistent with the broader interests of society.
Here, in our eighteenth Corporate Responsibility Report (the first one was published in 2003), we summarise our impact, progress and performance in delivering our commitments across our ESG priorities. Brought together in one model, our Corporate Responsibility Framework, we drive them forward as continuously maturing and integrating systems of policy, people and process – governed by our Values and bound by our purpose, with appropriate Board and Executive oversight and dedicated leadership at all levels.
We are proud of the strength and depth of our approach to Corporate Responsibility; we believe that our focus on it, particularly over recent years, has served the Company and its stakeholders well. However, we also understand that, to coin a phrase, ‘the price of liberty is eternal vigilance’. It is when companies think they are doing well that they can sow the seeds of their own destruction; they can become complacent, too believing in their own righteousness, and insufficiently humble in the face of the fact that in any company as large and diverse as ours, someone, somewhere, is doing something stupid or wrong every day of the year. It is eternal vigilance, an understanding that the gravitational pull of temptation is constant, a belief in transparency, a willingness to admit to fault and accept our own fallibility, and a desire to do the right thing, even when it hurts, which are the ways to preserve long-term value for our shareholders.
Serco Group plc