The MT Interview: Martin Taylor of Barclays

UK: THE DAVIDSON INTERVIEW - MARTIN TAYLOR. - Hailed as the brightest manager of his generation, fast-talking Martin Taylor has added to his legion of admirers with his revitalisation of Barclays. Andrew Davidson probes for the steel beneath the charm an

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Last Updated: 31 Aug 2010

Hailed as the brightest manager of his generation, fast-talking Martin Taylor has added to his legion of admirers with his revitalisation of Barclays. Andrew Davidson probes for the steel beneath the charm and asks: is he a manager, banker or both?

 

What does the boss of Barclays do? 'Oh it's mainly meetings, far too many meetings,' sighs Martin Taylor, head in hands, crouched over the table in his modest fifth-floor office in the City. It is a curious position. He is, it appears, making an effort to speak directly into my tape recorder which sits by his tea-cup, about a foot beneath his nose.

Now this is not without some planning. Taylor, as everyone who has met him remembers, speaks so fast, and with so little change in cadence, that an hour-long interview not only gives you about three hours worth of material, but also frequently leaves you cognitively panting in his wake. Bring a tape recorder, the Barclays public relations chief had warned, you'll need it. I am glad I did, though I have to admit sometimes even the machine found difficulty in keeping up.

Perhaps there should be a sign up on the table: Caution! Bright Man In A Hurry. For Taylor, just two years into his job as chief executive of Barclays, Britain's second-biggest clearing bank, has won many admirers with the speedy efficacy of his executive style. When he arrived, at the tender age of 41, with no previous banking experience and only stints in textiles and journalism behind him, Barclays had just posted its worst results for around 300 years, a loss of £244 million caused by bad loans and a recession squeeze.

Yet three years later, two of them under his leadership, profits were back to £2.08 billion, and earnings per share had polevaulted from 19.2p to 83.6p. More importantly, according to insiders, Barclays had already become a far better place to work, with better communication and management systems and a more enlightened feel to it. Taylor, you see, is not just hailed as one of the sharpest young managers in Britain, he is also, in his own way, one of the most personable. Those shareholders and fellow executives that aren't bowled over by his speedy acuity are usually mopped up by his earnest charm.

However, if all that sounds too good to be true, he is swift to admit he is no miracle-worker and not about to claim sole responsibility for the bounce-back in Barclays' figures. Although hired to clear up the mess after the bank's annus horribilis in 1992, he says that most of it had been sorted out before he arrived, hence the rapid climb in profits.

All he has done is to help put in place systems to make sure that kind of loan debacle doesn't happen again, and to sort out some new ways of sensibly assessing and managing risk - which is, of course, a key part of what banking is all about. He makes it sound commendably simple, yet with an organisation encompassing over 90,000 employees, assets of £169 billion, shareholders' funds of £7 billion, £88 billion in customer accounts and £82 billion out in loans to customers, it isn't.

He is a tall man, skinny, with a long fleshy face, piercing blue eyes and thin blond hair scraped roughly over his head and curling slightly at the edges. There is about him a donnish air of fierce concentration, mixed with the slightly fey but serious manner common to many of the brighter Old Etonians. Taylor, it should be pointed out, was not a silver-spoon Etonian, but a scholarship boy from Burnley, the son of an accountant, who got to Britain's most famous public school on his brains. Banking is full of Old Etonians but, says Taylor tartly, he is not that kind of networker.

He is, though, as one of his former colleagues put it to me, 'very well-connected' from his early days in journalism, which may explain the startling career leaps he has achieved. After reading oriental languages at Balliol, Oxford - he is still, by all accounts, a fine linguist - Taylor started his career at Reuters before moving on to write the Lex column on the Financial Times. There he turned down innumerable offers to go into the City, before succumbing to the blandishments of Christopher Hogg at Courtaulds.

Ten years later, after he had helped to demerge Courtaulds, he surprised many when he popped up as the headhunters' choice for Barclays. To say it was a brave move on the bank's part is something of an understatement.

Bosses of Barclays are normally groomed, not poached, but this time pressure from major shareholders and some smart thinking from the non-executive directors won the day, even though a few outsiders predicted that Taylor would be way out of his depth.

Did he think for a long time before taking the job? No, says Taylor briskly.

'If you're curious about management and anxious to develop it, you would have to be a mug not to take it, unless you believed you wouldn't be able to do it.'

Which he didn't, he says. Even so, it's quite a leap, from the cloth mills of Derbyshire to the marbled hush of Lombard Street. It is not just the difference in scale, it is also the culture. Many believed that, arriving from outside banking, Taylor would have enormous difficulty cracking the autonomous nature of Barclays' different divisions.

Just coming to terms with some of the profession's arcane rites and practices - especially after 10 years in manufacturing - would be daunting enough for most.

Yet Taylor says he had quite a lot of relevant experience: he had written about banks, he had dealt with them at Courtaulds, and he had worked closely with Marks & Spencer, so he felt he knew a bit about the management of large retail networks. More to the point, perhaps, he had a manner and demeanour that the staff from Barclays felt instantly comfortable with.

'For a man of his style and intellect it is the right business to be in,' says Sipko Huismans, chief executive of Courtaulds plc and a former colleague of Taylor. His point is that, for those who knew Taylor, the move was not as odd as it looked. Barclays needed managing, not banking expertise, and Taylor fitted the bill.

Taylor does concede that he also knew what a lot of outsiders didn't: that Barclays wasn't in need of being turned around at all. It had already been turned around. The current strategy, of reining in its worldwide ambitions and building the business more soberly on four main fronts - personal, business and investment banking and asset management (the latter two through its BZW subsidiary) - was already in place. His job was to provide leadership and rebuild the key relationships with shareholders, customers and staff. He also had to ensure the bank never made such a hash of its lending again.

Has he succeeded? 'I don't know. This is a business with famously long lead times. I think the organisation works more smoothly than it did, and people are more open and transparent in their discussions of what is going on. They are more spontaneous, if you like, and the organisation is a more agreeable place to work and a more effective one.'

Others are less hesitant. 'What he has done is sharpen everything up and improve the management,' says Andrew Buxton, Taylor's chairman. There is no doubt that Taylor has made an impact. Buxton cites better teamwork on the executive committee, which Taylor has expanded, and a willingness to give managers more responsibility, though within clear restraints.

The key, he says, is that Taylor approaches issues from the point of view of management rather than banking - one of the advantages of bringing in someone from outside the profession.

'In the past we used to spend a lot of time arguing about the facts,' says Taylor, 'Now we try to find out exactly what the facts really are, and to be rational about them. And that has helped. Where there are differences of view, which can be quite strong, they tend to be more openly tabled and discussed more sensibly.

'If you are collecting better information and dealing with it rationally, and, this is the hardest bit of all, communicating what you are doing, which I have found difficult in a business this big, you will take better decisions and you will manage the business better.'

Consequently, he says, while the bank is lending a little less, it is lending more intelligently and pricing better. Support tools like computerised credit-assessment systems have been brought in; a system of running provisions helps recognise the level of risk inherent in particular loans. These sorts of initiatives, he hopes, mean that Barclays is less exposed to the kind of errors that brought about the crisis of the last recession, when several loans, mainly to real estate companies in the UK and abroad, went very wrong.

The wrong kind of customers? 'I don't think a bank should blame its customers,' he says quickly. 'I think there were bad decisions, but if you take a lot of decisions there are bound to be a few bad ones. Every loan we made we thought was good at the time, you have to remember that.'

And remember also that the climate was seductive and that all the banks got into trouble. The problem was that Barclays got into worse trouble than the rest because, he says, it joined the chase late in a bid for growth. Then it found itself lending mostly to property companies, because they were the main borrowers at that part of the cycle, and to companies that were less 'well-rooted', because they were the ones that other banks hadn't got to first.

It was a shambles, and one of the reasons why shareholders demanded an outsider be brought in. Intriguingly, Buxton, the chairman and chief executive at the time, stayed on as chairman, providing continuity (and an example of the way banks like to do things). Now things are steaming ahead, with BZW growing apace despite the tough trading conditions, and UK banking services putting in a strong performance.

So, his systems in place, profits up, shareholders happy, his senior managers empowered and enthused, Taylor has lots to smile about. Some clouds still remain on the horizon, however. The bank's relationship with its own staff, for instance, remains uneasy. Over 18,000 jobs have gone at the bank since 1990. While Barclays' return to the black has boosted morale, many inside the company are still very resentful that big profits still do not mean job security.

The union response to Taylor's £710,000 salary-bonus-and-benefits package, revealed in last year's annual report, was indicative of the ill-feeling that permeates this particular relationship. 'While Barclays directors were lining their pockets, thousands of jobs were being axed. This kind of hypocrisy will shock an already heavily demoralised workforce still reeling from cost-cutting and technologically-driven change on an unprecedented scale,' said one Barclays union representative. That anger will resurface if the annual report which is due out shortly shows Taylor's salary has taken a further boost. Not much room for compromise there, perhaps.

Taylor sighs. 'I don't think it is different from other businesses. I think the biggest decline has taken place for the foreseeable future.' But with close to £1 billion a year now being spent on technology, he has instructed his managers to keep up 'regular downward pressure' on staff levels, if only because it is less worrisome for the people concerned than the 'occasional blitz'.

So is banking still a good career? Taylor looks rather uneasy. 'It depends if you are the right sort of person,' he says stiffly. 'It has gone from a place where staff thought they had absolute security to a place where they exaggerate the insecurity.' He says he is still surprised at people's lack of understanding of the business. He gets letters saying 'how dare you make your staff redundant' or 'how dare you close this branch', and the same people ask him how he dares charge for anything. 'I wonder how people thought we balanced the books?' he asks plaintively.

Yet the fact remains that it is not just staff that feel shoddily treated by banks. Many personal and corporate customers were infuriated by what they saw as Barclays' heavy-handedness after it went into crisis-mode in the early '90s, and it's interesting that Taylor has already developed that testy impatience which bankers habitually reserve for those who expect something for nothing - like those of us with current accounts, for instance.

'I think the free, in-credit current account is a great misfortune for the banking industry and its customers,' he says, pointing out that free, in-credit accounts were introduced in 1980 when the base rate was 17% and the value of 'idle balances' (ie, the cash sitting in current accounts on which banks pay little interest) was considerable. 'Now the base rate is 6.25% and the value of idle balances doesn't cover the cost of the accounts by any means. Yet people don't want to pay and in the end you get what you pay for.'

A cynic might say that sounds like an excuse for indifferent service.

Taylor, of course, doesn't mean it like that, and points out that banks have invested hugely in keeping the whole thing going (because they are all too frightened to be the first to pull out?) but his irritation at the state of affairs is revealing. He seems to be blaming the customer when perhaps he should acknowledge that banks got themselves into this mess: they introduced free, in-credit accounts when the interest rates were high. Now they are too expensive to run and yet customers are very happy with a free product. Whose misfortune is that?

e sighs. 'The reason it is a shame is that we can't get price signals from our customers. We don't know, bundling everything together, what they value and what they don't.' Barclays has already introduced a 'premier' banking service - you pay a fee and you get more attention - which he says is doing awfully well. For the future, the basic current account will stay free, he concedes, but customers will have to pay for most new products.

At this point, it did seem as if I was in danger of stretching the famed Taylor charm to snapping point. Later, when we moved on to talk about his career, he became similarly clipped when I complimented him on the timing of his job moves and asked how long he would stay at Barclays.

One of his old colleagues had suggested to me that, beneath Taylor's old-school exterior, there lurked a career-planning nous every bit as shrewd as his management intellect. Although no one was suggesting he was about to flit from Barclays, at some stage he would obviously want to test himself outside banking again, wouldn't he?

He didn't like the suggestion. 'You know I am fundamentally quite a serious person. The idea that I job-hop ...' He looks momentarily exasperated then starts again: 'I've never left anywhere that wasn't ready to be left in my view. I ran Courtaulds Textiles for seven years. I think the interest here is incredibly wide, we operate in every part of the world, every part of the banking spectrum ...'

But it's still banking. However much banks have widened their scope in recent years, for a man who has worked in manufacturing industry and journalism, and who is clearly fascinated by management, it must eventually be a bit limiting, surely? Not a bit, says Taylor. He can't really think of ever giving Barclays up for another job in business because running Barclays is the most interesting job there is.

Really? More interesting than running the Bank of England where, if he is going to stay in banking, many expect he will end up one day as governor in, say, about the year 2003?

He looks rather flustered. 'Gosh I can't see the point, it's a much less interesting business.' Suddenly he sounds rather breathless. 'If I had to go I think I would do something in an entirely different world.'

riends say he will probably become an academic, or go back to writing.

For one of the curious things about Taylor is that, unlike many business leaders, his genius for management is intellectual, rather than instinctual, which is why some believe his only weakness may be a lack of entrepreneurial feel although everything at Barclays suggests there is little evidence for that.

Equally, he admits he is unusual in that, unlike most business leaders, he is not really very gregarious. He says that the part of the job he feels least comfortable with is the vast number of people he has to deal with at Barclays - the endless meetings to ensure 'transparency', the visits to far-flung outposts of the empire, the shareholders, analysts and staff that want to see him - which leaves him with little time to do what he most enjoyed in his previous jobs, 'brainstorming' with fellow executives.

Yet no-one has ever questioned his ability as a communicator or a 'people manager'. Andy Harrison, executive director of Courtaulds and an old friend of Taylor, says he was superb at the textile company, always prepared to listen, sending staff hand-written notes and geeing them up, never intimidating them with his brainy demeanour.

Is it a contradiction? No, but there is an austere side to Taylor which you might think would make him rather a severe judge of others. For instance, when I ask him what he does with all the money that he is earning, and whether he has a holiday home to add to his house in London's Blackheath, he looks at me as if I am mad.

'A second home?' He considers it for a moment. 'No I can't see the point.

No. Ridiculous.' Most of his salary goes back to Barclays to be invested.

Likewise, when I ask him what he does to relax, other than spend time with his wife and two daughters, he says he likes getting away from people, going to 'lonely places'.

Another old friend says that this is actually a bit of a put-on, part of an ascetic style common to his generation of Financial Times high-fliers, who see any form of ostentatious wealth or flashy behaviour as demeaning to the intellect. 'Martin is great,' says the same friend, 'but he is not the kind of guy you would want to go down the pub with.'

Which perhaps makes him perfectly suited, as all his friends suggest, to the job in hand. 'Oh I am a manager, not a banker,' says Taylor when I finally ask him what he sees himself as, 'but my protests probably ring more and more hollow.' Down Lombard Street they don't care which he is, just as long as he keeps coming up with the goods.

 

Biographical Notes

1952

Born 8 June, Burnley

Educated Eton and Balliol, Oxford

1974

Financial journalist, Reuters

1978

Writer, Lex column, The Financial Times 1982

Joins Courtaulds

1984

Appointed to Courtaulds clothing board

1987

Director of Courtaulds plc and managing director of Courtaulds Textiles

1988

Chairman, Courtaulds Textiles

1990

Chief executive, Courtaulds Textiles plc after demerger from Courtaulds

1994

Chief executive, Barclays plc

 

'We were looking for a good manager, not a good banker. There are not enough good managers in any industry.' Andrew Buxton, chairman of Barclays plc

'Martin has all the tools in the tool kit. His intellectual brilliance is just the shiniest one of them all.' John Makinson, finance director of Pearson and former Financial Times colleague

'He is probably the sharpest manager of any I have worked with, a superb communicator with a wonderful manner and a great sense of humour. Nobody was surprised that he went on to a bigger company. He was very well-known and respected, and very well-connected from his days in journalism.' Andy Harrison, executive director, Courtaulds Textiles plc

'At the time he came in to Courtaulds I was a senior line manager and the sort of person who could easily have fallen out with him. But it was exactly the opposite. He made a great impression on me as someone who would listen to what you said, and he was always willing to look at unconventional ways of dealing with issues.' Sipko Huismans, chief executive, Courtaulds plc

'Martin is a driven man, seemingly doing things effortlessly, but working tremendously hard.'

Sir Christopher Hogg, who hired Taylor for Courtaulds.

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