UK: THE RISE AND FALL OF THE FRIENDS. - Quality, service, and concern for the individual - these values guided a minor sect to great commercial heights in the early part of the century and still provide an example for industry today.

by Alan Barclay.
Last Updated: 31 Aug 2010

Quality, service, and concern for the individual - these values guided a minor sect to great commercial heights in the early part of the century and still provide an example for industry today.

At the height of the recent furore over extravagant pay awards to directors, one man took a stand. Geoffrey Braithwaite was not among those dissenting shareholders who display placards outside general meetings but who are helpless to change anything. He was once finance director of the paper-cum-software company Kalamazoo, and remained on the board until last year. But in January 1994 he urged shareholders to reject a share option scheme which would greatly have enriched the company's directors. 'I could never pretend I was a superb, indispensible businessman who deserved to become wealthy at shareholders' expense,' he says. It was not profit he objected to, but the directors' intention of awarding themselves big pay rises without reference to external shareholders: 'I wholeheartedly approved of the proposal for an employee share option scheme. I refused to endorse the directors' one.' Having written to shareholders - on his own headed paper, at his own expense - he was outvoted at the subsequent EGM and paid the price by being booted out of the company. In fact, he has since found a niche as finance director of L G Harris, the privately-owned manufacturer of the paint brushes with a red stripe across the handle. Like his new chairman, Leslie Harris, Braithwaite is a member of the Religious Society of Friends - that is to say he is a Quaker.

So, as it happens, was Kalamazoo. At least, the company was founded by Quakers and still retains traces of its origins. It is for example controlled - as to 51% of the shares - by the Kalamazoo Trust, which the founders set up for the benefit of employees. However, voting power among the trustees is weighted in favour of the directors' representative, with the result that the board has even greater power then usual. Braithwaite wanted an independent non-executive appointed, to protect the interests of all shareholders. The board was more concerned to safeguard its freedom to raise capital at the drop of a hat, in order to finance the company's future growth.

This divergence of views casts a hard light on a dilemma which has confronted a long succession of companies with Quaker roots. Should they remain true to their heritage by promoting social harmony via 'enlightened' employment practices like profit-sharing? (In the case of Kalamazoo, according to Braithwaite, the founders had intended that the Trust should hold 100% of the company's equity on behalf of employees.) Or should they face up to the realities of a changed world and adapt - for the sake of prosperity or survival. It's not surprising that, overwhelmingly, they took the latter option.

According to the latest Directory of Friends in Business (published 1992) there are barely 100 enterprises remaining in Britain today which are known to be Quaker-owned. They include a couple of substantial private companies with several hundred employees: Scott Bader, the resin manufacturer, and the brush-maker Harris. But the vast majority are sole traders or partnerships and family firms employing fewer than half-a-dozen people, often in some craft occupation. It's almost difficult to believe now that the Quaker influence on British commerce and industry penetrated as deep - or extended as far - as it once did.

The chocolate manufacturers (Cadbury and Rowntree), biscuit-makers (Huntley & Palmer, Carr, etc) and shoemakers (C & J Clark), whose Quaker connections are - or, in most cases, were - best known, represent the tip of an iceberg. The Quakers also went into banking (Barclays, Lloyds), brewing (Young & Co), chemicals (Albright & Wilson, Crosfields), engineering (Baker Perkins, Ransomes), food manufacture (Reckitt), life insurance (Friends Provident), match manufacture (Bryant & May), newspapers (News Chronicle), paper and packaging (Dickinson Robinson), retailing (Laws Stores), shipbuilding (Swan Hunter), steelmaking (Consett, Stewarts and Lloyds), and textiles (English Sewing Cotton) among others. Incidentally Quaker Oats, the US food manufacturer, has nothing whatever to do with the Quakers: the smiling old man with the white hair and black hat was hijacked as a trademark in the 1870s by a moderately unscrupulous Ohio businessman, no doubt to convey the notion of integrity.

In Britain, even at the peak of their influence during the first three decades of this century, the Friends numbered scarcely more than they do today - in the region of 18,000 people. Reasons for the phenomenal commercial achievement of this minor sect are not hard to find. Although there has been no single, unchanging set of rules or beliefs to which the Quakers have subscribed since they first appeared in the 17th century, nevertheless certain attitudes have persisted. One of these is an abhorrence of violence. Another, related, principle is a concern for this world, rather than the next. They are apt to be vague on the subject of life after death. And having no creed or ritual or altar or priests, they don't make much distinction between the sacred and the secular. 'Faith is something you live,' as a Quaker apologist explains. Every true Friend looks for guidance to the promptings of his own heart - to the 'inner light'. He also commits himself to the service of his fellow mortals - or hers, for Quakers were early practitioners of equality of the sexes.

Naturally, this Puritan ethic assumes straight dealing and hard work. The Quakers gave good value, they were scrupulously honest and industrious as well as self-reliant. It's hardly surprising, therefore, that a proportion of those who established themselves in trade should have prospered. The chocolatiers are typical. Cadbury's history goes back to 1824 when one John Cadbury entered the grocery trade in Birmingham. Another grocer's shop, opened in York almost exactly 100 years earlier by a Quaker woman called Mary Tuke, provided a foundation for the Rowntrees. Both these family firms grew slowly at first: Quakers did not normally get rich quick. It wasn't until around the turn of the century that the Quaker presence at the bigger end of business had expanded to the point where it attracted much comment. But before the first world war Cadbury and Rowntree, along with a number of other Quaker enterprises, had grown substantially, to employ several thousand people each.

No Quaker would think of flaunting his prosperity. Having achieved a measure of wealth almost by accident - as a by-product of diligence and fair-dealing - rather than by design, the successful Quaker businessman saw it as an instrument for improving the condition of his fellows, both physical and spiritual. The munificence of some of the Quaker industrialists was legendary; and none was more bountiful than Joseph Rowntree who presented a swimming pool to the City of York, and later a public park. The big Quaker companies built model factories, with model villages adjoining, and provided schools, medical services, gymnasia and libraries for their workers. Their employment practices were similarly benevolent. In the first quarter of this century Rowntree successively introduced a suggestion scheme (1902), pension scheme (1906), widows' pension (1916), annual holiday with full pay (1918), central works council (1919) and profit sharing (1923).

Of course the Friends had no monopoly of Christian virtue - nor of paternalism. Some other employers could be equally open-handed without the promptings of the Quaker tradition: Unilever's British founder Lord Leverhulme, whose most visible memorial is the model village of Port Sunlight, was a Methodist. (Had he been a Quaker he would not have accepted the title.) Nor were all Quaker employers as progressive as the Cadburys and Rowntrees. In general, they were in advance of their time, but there were practical limits to their idealism.

The issue of power-sharing, which came to a head during the first world war, was one that greatly preoccupied them, as the business historian David Jeremy relates in Capitalists and Christians. The first-ever national conference of Quaker employers took place in 1918, as the war was drawing to a close. What, above all, focused the minds of the Quaker businessmen was the Whitley Report which had appeared the previous year. This recommended that, in order to minimise industrial conflict, 'Whitley Councils' should be formed in each industry, consisting of representatives of employers and workers who would be free to debate every aspect of industrial life - wages, job security, training, even including management and employee participation. Up to a point, the Quakers welcomed the proposals. A speaker from Morland & Impey - later renamed Kalamazoo - was especially enthusiastic. But while the conference accepted that owners and workers should co-operate - on equal terms - over questions of industrial control, it was against granting workers any say in financial or commercial decisions.

There, more or less, the Quaker position remained. Twenty years on, William Wallace, a director of Rowntree (and later its chairman) declared that: 'Share in management should depend upon capacity and capacity alone. It follows that a sense of brotherhood does not involve management of business by mass meetings or show of hands. It is the duty of the employer to see that his business is conducted with maximum efficiency.' That was shortly before the second world war. The optimum level and appropriate mechanism for worker participation in management are far from settled nearly 60 years later. But it's clear that, as the 20th century rolled on, openings for paternalism were gradually being whittled away.

Most businesses had to come to terms with trade unionism, of varying degree of militancy. Typically the Quaker families, like other employers, resisted at first and then succumbed. Even down in rural Somerset, the Clarks of Street had reluctantly recognised the footwear union before the first world war. (Later on, the firm encouraged workers to join.) The growth in union membership was helped by the growing size of firms - which simultaneously sapped the once strong personal relationship between employer and worker. A monograph on the life of Joseph Rowntree records how, one day shortly before he retired in 1923, 'he hurried back along the main corridor to greet an old worker whom he had inadvertently passed'. The company then employed nearly 7,000 people, and such simple displays of humanity were becoming less possible.

Increasing scale placed new strains on management. Naturally the Quakers (no less than other dynastic families) strove to maintain the family succession. George Cadbury Jnr, in 1928, acknowledged that the company's top management would be selected, 'in the first instance, from among those most interested financially, that is from among the sons of the biggest shareholders and directors'. In the absence of suitable candidates, however, Cadbury was fully prepared to recruit, and promote, university-trained men who had no connection with the company. Over at Rowntree, William Wallace was a case in point. An LSE graduate and a solicitor, Wallace was appointed assistant to Joseph Rowntree's son and successor Seebohm Rowntree, and rose, via company secretary, to become chairman in 1952. He was not even a Quaker when he joined the company, although a sound Nonconformist upbringing would have predisposed him in favour of its values; and it's clear that he was accepted into the Society of Friends long before the war. There was nothing remarkable about this conversion: the Quakers have never been an exclusive society. These days fewer than a quarter of their number are born to Quaker parents.

By the same token, the Quaker bond was loosened, in some companies, as scions of the ruling families drifted out of membership. Alternatively, changes in company structure may have served to dilute the Quaker influence. Barclays Bank dates from 1896, when 20 local banks - all of them Quaker-run - merged to form Barclay & Co, taking the name from their London constituent. Only 25 years ago descendants of the founding families, with names like Barclay, Bevan, Gurney, Seebohm and Tuke, still made up approximately half the board; and had up to that point supplied every chairman but one. But few people, even then, would have identified Barclays as a quintessentially Quaker enterprise. Gradually - and then not so gradually - the Quaker influence waned as the companies went public, and ownership passed progressively out of the families and to the institutions (Barclays floated in 1896, Rowntree in 1937); or they merged (Cadbury with Schweppes, Reckitt with Colman, Rowntree with Mackintosh); or they were taken over (Huntley & Palmer by Nabisco, Rowntree Mackintosh by Nestle); or nationalised (the shipbuilders and steelmakers); or they failed (News Chronicle). One business that has so far avoided all these outcomes is C & J Clark, although it narrowly escaped being taken over by an aggressive Berisford International. But Clark today is hardly the model of an early 20th century Quaker company.

Despite all these upheavals, it cannot be said that the story of the Quakers is over. Many of the companies they founded are very much alive, even though buried within larger groups and no longer under family control. 'The firms themselves have not declined, they're still great firms,' says historian David Jeremy. In a few instances, like Cadbury Schweppes, the family is much in evidence. Chairman Dominic Cadbury is not himself a Quaker, but the business continues to embrace many of the old values which often surface in small ways (such as a scheme for taking care of children between end of school and their parents' return from work). Cadbury Schweppes is also one of those companies that can be relied upon to join in every socially worthwhile venture like the Percent Club.

Dominic Cadbury's predecessor (and elder brother) is now best known as chairman of the Cadbury Committee, whose prime recommendations - on accountability and the treatment of individuals - are in the direct Quaker line of descent. 'I am very much influenced by Quaker ideals,' admits Sir Adrian Cadbury. The Committee didn't set out to espouse them, he insists, but its proposals 'contain many things which the Quakers would approve of'. Indeed, their example has countless lessons for today's businesses - and tomorrow's. The field of industrial relations is only the most obvious. The Quaker firms were among the first to appoint personnel specialists. In the 1930s, when Elton Mayo began to show that there were other tools for managing people besides the stick (of discipline) and carrot (of incentives), the Quakers were ready for his findings. Being fundamentally concerned about people, they knew instinctively about harnessing the energies of employees. Many businesses are just finding out.

'Quality' and 'service' have been battlecries of the '80s and '90s. The Quakers were accustomed to giving quality and service because they were hardworking and honest. They lived modestly and put money back into their firms. They thought about the future as well as the present. Rowntree was the first British manufacturer of pastilles. Cadbury developed an improved method of extracting cocoa butter out of beans. At Coalbrookdale in the previous century, Abraham Darby, also a Quaker, invented a new process for smelting iron, and so became one of the founders of the Industrial Revolution. His business lasted well into this century. Diligent application of the basics may not be enough to confer immortality on a company. But there's never likely to be a better formula.

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