Why aren’t building societies getting a greater vote of confidence?

Why aren’t building societies getting a greater vote of confidence?

It’s that time of the year again when members, aka ‘the customers’, of our building societies get their chance to vote.  Many already have and the signs of support, or lack of it, will not make happy reading for society CEOs and executive boards. There’s again evidence of a continuing decline in the number of members who’re choosing to take the time to examine their society’s performance and then vote.  According to figures published or supplied by five of the largest building societies* the average voter turnout in 2017 has fallen to 11.73%.  In two of the societies turnout was close to just 10%.

That’s disappointing low given that all these societies remain strong, continue to provide the financial services which their members chose them for in the first place and would appear to deserve a better show of their members’ support. Imagine the outcry if that sort of low voter turnout were to occur in a general election or even a local council election. Questions would be asked about whether such low voting levels gave a strong enough mandate to those elected, yet very little is being said about this declining engagement to vote in the building society sector.

The Building Societies Association, which has records of each year’s voting and can make them available to all CEOs, could flag this up clearly and discuss it more openly in public.  A low-key report on engagement produced every three or four years just isn’t enough to either encourage or shame society boards to discuss the issue more seriously.  As a start, how about the BSA publishing the voter turnout figures for this year and last year and then continuing to do so each year in order to display the emerging pattern? Some societies, like Coventry and Skipton, already follow good practice and publish their annual voter turnout figures via their online results pages, but most societies still don’t do this.

We know that simple apathy has always played its part at voting time, and still does, but there appears to be a clear and growing need within societies themselves to place more effort into looking into the many causes and possible solutions to lower voting. An excellently designed and well written AGM pack is essential to get a society’s message across but if that’s still not converting members to vote then what’s to be done? I’d argue there’s still plenty to examine.

For example, bigger societies can look at the complexity on the AGM voting papers and their corporate governance code preferences.  Do members really want societies to ask them to vote to re-elect every single director every single year?  It may be recommended best practice under the code but it also makes for one very large and off putting voting paper, most likely to be ignored in most homes. Putting directors through the election process only every three years would help make that voting paper much slimmer, more approachable and probably result in more members voting each year.

Next let’s tackle that most played out case made by the loudest members at AGMs.  Their prime suggestion on how to get more people to take part in the ballot surrounds the nomination of member candidates. Their argument runs, ‘If a member stands for election to a board and is on the voting paper then more people will be inclined to vote’.  Most likely this is true and in theory it could happen, but it simply won’t as modern barriers are just too high.  A member will either fail to get the number of nominations needed to stand or find that the society board or the regulator blocks their nomination for lack of appropriate experience.  So let’s put this aside and discuss more realistic ways to boost voting instead.

We know well that there’s a clear relationship between saving rates and votes. As levels of interest paid on savings have gone down and down so have the voting returns. One approach for a society seeking the near certainty of a higher than average vote is to keep key savings rates high, Coventry already does this effectively and has consistently reaped a better level of voting than most other bigger societies. Not all societies can pursue this approach as they have different business shapes, sizes and product sets to consider but there are some things that all societies can do. For example, commit to careful and regular communication from the top outside of AGM time, have a strong brand message, community involvement and great customer service.  All these elements can help drip feed a feeling of popular approval and will help get those votes secured when it comes to the moment of asking.

While the movement still rightly looks back and reminds us of its democratic roots in the nineteenth century it also needs to look at the methods it uses to get its votes in today.  With research showing that younger members are the least likely to vote, innovation and creativity are needed if they’re to do so. Many societies now run impressive social media and encouraging younger members to vote, not just engage, via these channels is becoming increasingly important alongside a programme to educate younger members about the relevance of voting. And while all the research shows that older members vote in higher numbers let’s not force them to vote online at the risk of them not doing so at all and bringing the vote down even further.

It shouldn’t be inevitable that voting levels at bigger societies fall further but year on year that is mostly what’s happening.  Actions can be taken by societies to address the issue now, look ahead to their next AGM, and strategise on how to bring about change. No one wishes for it to need another global financial or banking crisis to provide the push for a greater show of society support, societies themselves should use every means they have to get the votes up.  There’s a duty to do so, a building society member’s vote is a unique right, too important to become just a meaningless mark in a declining example of democracy.

Let’s stop the voting slide now.

*Yorkshire, Coventry, Skipton, Leeds and Principality

(The writer is a former Head of Member Engagement for Nationwide Building Society)

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