Arriving in Newcastle

I remember my experience of arriving in Newcastle to take over the rule as the local director of operations. The workers were warm friendly I'm curious well the management struck me as archaic.

I'd been sent in to try and fix the issues with the quality of output and I quickly realised the quality of the output was down to the input.

The stock for operating on very slow 10-year-old computers. They had not been incentivised to invest in the roles themselves, to study their work, to sit exams so many were doing roles that the management perceived were required. Very few were doing jobs that they felt they should do. Those who were rarely got any management supoort. This lack of comprehension came through in the ownership of any task and produced output that was often worthless.

Within 6 weeks the £2m staff were given new computers costing £80,000 and their productive output increased by 50%. The destructive output declined but not as significantly.

An exam policy was introduced to give £500 salary rise for each of the first two diploma exams and a £1000 for the third and the granting of a diploma.

The cost of the exams was bourne by the firm but the hours, by the individual worker.

Over the first year, 200 exam passes were obtained, an increase of 190 on the previous years.

Productive output increased and destructive output declined significantly by 35%.

The net contribution was that the offices who used to jam the switchboards on management time with the complaints were now much more likely to be recipients of a happy phone call saying their client was now fully established.

The final resolution to the problems came with the identification of a fraud. Resolving this would finally clear the backlog.

I enjoyed my time in Newcastle much as I enjoyed my time in Aberdeen. I was probably there roughly the same amount of time.

I've always believed the simplicity of administration tasks is to move boxes from one destination to another. Sometimes you have to open boxes and merge the contents with another box, before sending it on. If there was a trick that I used successfully more than once it was to try and get the client to manage the contents so that we received a box and just passed it on.

In stock trade we took this a step further to ensure that the processing was almost completed by the client. Delivering sold stock was a simple case of marrying a certificate with a transfer and in the days of talisman a docket.

If we could get the client to deliver us a box with the certificate and transfer already married up then we'd removed one merging of the boxes.

We did this very simply by introducing a reply paid envelope which the customer would use to put the transfer and certificate in.

These were the most valuable documents that arrived in our office on a daily basis and because they were in reply paid envelope they got priority and were back out the office by 12.

One person could process 100 items when they came in together. When they came in separately one person could process 50 items. The small efficiency had enormous ramifications for accuracy was improved as human error was removed.

The level of competency within stocktrade was so high that the migration to the electronic settlement of crest was seamless.

Under Crest settlement, firms like stocktrade would be responsible for converting the paper into electronic shares. They and their clients would beat the brunt of the costs of this dematerialisation.

I remember explaining this to Angela Knight who was treasury secretary at the time after her speech at the Mansion House. I'd been perplexed by her ridiculous speech saying how good it would be for the private investor, so I let her know, it was fantastic for liquidity in the markets, a huge step for London in global markets, how shortening the cycle improved  security, how institutional transaction cost would plummet, stock borrowing enhanced, but it would cost individuals more.

I went further and suggested that she sack her script writers, it's just the way I am. She asked me my name so I told her and said get in touch anytime, but she didn't.

Alistair Darling took over the following year so I invited him into see us in Edinburgh, we did after all have offices in his constituency.

I wanted to find ways to give our staff the firm. An old Marxist law is about owning the factors of production and while we were a service, little manufacturing existed in the UK by the 90's,  I still felt it incumbent to try and move significant chunks of the firm into the hands of the people doing the work.

This was not well received, we don't believe in that anymore, was the rather glib response. I said I wanted to do more for out people than just exploit them and chuck them a gold watch at retirement or a redundancy cheque the next time the market took a dive, buy I could tell it was time for a guided tour. 

I was quite devastated, momentarily, but then I realised policy was about power. Don't have policies for people's well being policies are designed for people's perceptions.

Power comes with policies that people vote for and populist policies must be simple and usually involve a focus group out take from a marginal constituency.

Providing solutions is what people do politicians on the other hand just try to cling to power. I think the disregard for labour in Scotland and the rising support for the SNP and independence is clearly just down to people feeling they've been ignored.

They know independence is not a destination but it may allow better representation and the creation of a better society. Being part of Europe has been a big thing for many Scots. When Stocktrade was up for sale we had a German firm bid for us and an American. My preference was for the Germans as they seemed a natural fit. They believed in investment in the long game, developing deeper roots in our marketplace, whereas the American attitude was about exploiting the obvious and getting access to Europe. The latter offered the quickest gain in the shortest time.

I always thought what we were building would allow people to have careers for life if they wished it. The idea of cashing your chips and not having to do the work seemed alien, but I suppose if I had put it to the vote, do you want 10 years money now or do you want to work 10 years to get it, I may have got a different answer.

It was never my decision to give the firm away but I would've loved to have done the vote!

It ticks all my boxes for allowing people to self determine. I felt in all the offices I worked in processes and procedures were given, and I felt they should be inate. You need to be shown, to be trained, but then you need to think.

In 1987 I went down to London  to help with the "backlog" blamed by CRR, a new risk calculation introduced called counterparty risk requirement. It calculated your exposure and how much you had to set aside. I started working and discovered a ledger with £607 million on it! There were 40 temps working on this "backlog" but it wasn't really a backlog it was a complete breakdown and the firm had needed £607m from Nat west bank to tide them over.

4 weeks after I arrived they stopped doing any more bargains in the market thus ensuring the backlog could not grow any higher. I joked about someone in the NatWest working out it would've been £1bn by Christmas and that's why we had merged with them.

The recovery of this situation still makes me chuckle to this day. I requested we get rid of the 40 temps and myself, Andy and Paul would get it back. The firm had only been trading for 16 months and had managed to pay £298m for sold stock, but failed to deliver that sold stock to the market. Similarly there was £311m worth of bought stock that we had paid the market for but not received the money from the client. I said please concentrate on the current trades and was assured they were 100% up to date.

Call me old fashioned but if I loaned £20 to someone ahead of payday is expect it one day late max!

The complete lack of identification with the issues is what utterly stunned me.

I became a ranting banshee about how much we are still outstanding or what we'd brought in when out in the pub at lunchtime as I felt it so real. Finding and delivery into the talisman system a piece of stock worth £16m that had been in someone's drawer was sheer joy.

My observation that there were only 4000 items to find meant there were lots of needles in this haystack of an office. 

The reason for the mess was quite simply a lack of comprehension regarding the jobs. When the panic set in, local management 'threw bodies at it', much as projects hire consultants to sit and wait for work. We had 40 temps all sitting with sections of the alphabet and usually one had one box and another had another box, neither of whom knew the other had the box. By concentrating the resources to a few people with good memories for where they had seen that name before and who could take a certificate and file it in stock order, we got £100m in during our first week.

The last bargain we settled was dealt during that first week and I remember rabidly ranting that I'd been assured the current business was fine, and that clearly it wasn't and I was wiping my feet as I went out the door.

I was after all sent down as "an acquired taste", a sobriquet I changed to "after taste!".