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The view from the top – a special episode with the CEO of Marsh UK & Ireland, Chris Lay

 

October 2022 | Episode 3 | 26 min

 

Chris Lay, Chief Executive Officer for Marsh UK & Ireland joins host Nick McClelland for this special episode of our ESG insights podcast focussing on risk management. Given the current economic environment and inflationary pressures this episode asks about the potential compromises organisations may need to consider. Chris talks us through how companies can navigate and overcome roadblocks on the ESG journey and also what the biggest organisational risks are including people risk.

Meet your podcast host

Nick McClelland

Chief Growth Officer, Mercer

  • The view from the top - Podcast transcript

     

    Podcast host:

    Nick McClelland: Chief Growth Officer, Mercer

     

    Guest speakers:

    Chris Lay:  Chief Executive Officer, Marsh UK & Ireland

     

    Nick McClelland: Hello, and welcome to Mercer's ESG insights podcast. In this series, we will be addressing ESG issues from a people, purpose and profit perspective. I'm your host, Nick McClelland, Mercer’s Chief Growth Officer, and each month I'll be joined by a variety of guests who will share ideas, experience, and actionable insights to help you on your ESG journey. On today's episode I am delighted to be joined by Chris Lay CEO of Marsh in the UK and Ireland. Chris, welcome.

    Chris Lay: Thank you.

    Nick McClelland: And I wonder if we could start just by you telling us a bit about yourself?

     

    Chris Lay: Sure. Well, as you say, I lead the Marsh business here in the UK and Ireland. We are a risk strategy and people business. So, we're helping our clients understand how to better navigate the world of risk that they face around them and how to succeed in the future. It's a fantastic job, I have to say, it's a brilliant business, I get to work with amazing people. I've been with the company for a long time.

    Nick McClelland: How long?

     

    Chris Lay:  35 years?

     

    Nick McClelland:  Wow!

     

    Chris Lay: And I've done many different things. And the great thing about our organisation being a global organisation in 130 countries, is I often say I've had 17 amazing careers with one company, but I've been able to move around the world and work in many different environments, which has kept me engaged through those 35 plus years.

     

    Nick McClelland: Very good. You've had a busy week, you've been traveling a bit, is that right?

     

    Chris Lay: Yeah, actually, this week - we have 45 offices in the UK and Ireland, so I've been in Belfast and Dublin this week.

     

    Nick McClelland: The best place!

     

    Chris Lay: And I always say the great thing about this business, I will say every day; even though I've been here for a long time; I'm looking forward to doing something I've not done before. And now that often happens in the world of risk. But this week I took the train from Belfast to Dublin and I've never taken that train before, so that was a first for me. So, every day it’s sort of exciting, ‘Oh, I've not done that before’.

     

    Nick McClelland:  Excellent. I know that train very well, I spent a long time traveling between Belfast and Dublin for rugby playing purposes back in the day, but that was about 20 years ago, so best left in the past. But listen, thank you very much for coming in today. I wanted to read you something to get started, and just really, maybe get your thoughts on that. So today there was an article in the FT written by Andrew Hill, it was called ‘Why the Future of ESG is at a Crossroads’.

     

    I'm just going to read a quick sort of opening extract, where he said: “The movement to encourage more companies to make a long-term commitment to environmental and social goals stands at a crossroads. The direction taken could determine how companies and wider society evolve over the next ten years”. He goes on to argue about a dystopian future where we're maybe faking it and looking at brand, or a utopian future where we're very genuine about the direction forward. I just thought I'd start and get your thoughts on that?

     

    Chris Lay: Yeah, it's an interesting article. And actually, I think what it highlights is that we live in a world of complexity and uncertainty, volatility and nothing is clear cut, and perhaps as clean as we'd like it. And even when we think we've got a position on something, the world around us changes, and perhaps there are other forces. But my own view on this is that, I think when it comes to ESG, risk-related issues, you do need to put some stakes in the ground, you know, have a philosophy that you can anchor yourself to as the world around changes.

     

    Why do I think that's important? Well, we all live in a world of stakeholders. So, for us, we're a talent business. So, if we want people to come and work for Marsh McLennan what we have to realise today is that they're interested in not just who we are, but what we stand for and how we do things. That's not changing. So, you know, our purpose and how we step up to sustainability, climate-related issues, our position on some of the big social issues of today. We don't have a choice. Well, we do have a choice, but there's a risk related to watering down our philosophies if we want to attract the right people. Our clients, if they're going to trust us to work with us, also want to know what we stand for, and how we actually show up in the world and what our view is on these issues. And so again, I think we have a choice, but there's a risk in that if we decide to water down or to, I think the phrase was used to sort of perhaps take more fate branded approach to some of these issues. We may find that certain clients choose not to put their trust in us. And then we have investors, and investors are asking the same question. So, when you think about our colleagues, the future talent, current talent, you think that our clients, think about our investors, and then probably the broader stakeholders in society. If we want to start changing our position on things we have to think about the risks, about whether people will make those choices to put their faith in us, to trust us. So personally, I don't think you have a choice. Because I think the risk of not holding our course and staying to our, our philosophy, is a risk that - is a big one. And I think many companies have got to sort of look at that, okay, and say ‘I've got choices here’.

    Nick McClelland: Yeah.

    Chris Lay: It makes it complex, doesn't it?

     

    Nick McClelland: Very complex. And I guess, we're recording this at a time when we're, we're in a very uncertain period; it's the week that we have a new Prime Minister in the UK. We're heading into clearly an uncertain period where the economic pressures on people, on business, are significant. And so, it feels to me like there are potentially pitfalls for companies as we go through this, because there may be the need to compromise on the weighing up, I guess, of short-term uncertainty, but holding the course on ESG. You said, you know, we have to do it, and we have to keep going. But are there some pitfalls there that companies are going to fall into a trap potentially? Or what are the compromises that companies will have to make during this period?

     

    Chris Lay: So yeah, it's certainly the landscape around us is forever changing. And so again, I think, you know, if you've got a philosophy, perhaps how that journey works out might shift and I understand that, we're living in a world now that seems to be de-globalising; people are dealing with supply chain issues that they perhaps have not had to deal with before. They're dealing with energy security issues that we've not had to deal with before. We've got regulatory and sanctions related issues that are coming out of conflict, the geopolitical environment. So, all of that perhaps changes the risk register for an organisation or the way an organisation sees the world and has to operate. Yeah, it makes it complex, it maybe makes people to put choices, but perhaps the destination of the journey doesn't change. So, I can understand that. It's perhaps like saying, “Well, my sat nav says I've got a roadblock here, I've got to figure out how to get to the journey, given that route may not be available to me, or that route looks a little bit difficult in the short term”.

     

    So, I think it's like that. And as I talk to our clients and our businesses, those are the sorts of conversations that we're having around, well I may not be able to do that today but I still need to be on that journey. So, does the complexity of the world around us stop us, for example, holding true to being more transparent, to getting more data, to understanding how we measure and present the journey that we're on around, sort of, ESG risk-related issues? And I think it's all about all of that, not just about the ‘E’ element. And if you've got that transparency and that data and that commitment, you might say, “Look, the timeline around a particular objective here might have to shift a little bit, or there's a risk-reward equation there. But can I articulate that? And can I explain why perhaps I've taken that decision? I'm not changing my goal. But I'm having to sort of, course-correct a bit here because of the environment around me”. I think that's powerful. I think the difficulty becomes when businesses, organisations are not able to articulate, and therefore, you know, whether you lack transparency, you lack data. And then stakeholders have got to try and figure out well what are you actually doing here?

     

    Nick McClelland: Yeah, I love that. I mean, I think the analogy around the roadblock is really apt, because it doesn't change that we need to get to the destination, there just has to be perhaps a slightly longer route around that, or a short-term need to deviate. And one of the things that I think, you know, our listeners will be leaders in business, they'll be coming at this from a risk perspective, an HR perspective, others are CEOs. You know, you've mentioned things like transparency, the messaging, the data required. If there's one, you know, as a CEO of a business yourself, how do you make sure the practical tips; maybe thinking of it that way for our listeners; how do you make sure that in those areas we are, you are, holding the course on behalf of the firm that you work for?

     

    Chris Lay: Well, for me, I think you know, I do believe in the old adage, what gets measured gets managed. I also think that trust is really important. And therefore, and trust is built through transparency and clarity. That means that you can talk about difficult things and perhaps easy things, but equally you know that you're going to be transparent and engage people. So yeah, so transparency and data for me are the things that sort of, can get us through what can sometimes be navigational issues. And I found that to be true, and it's sometimes I think people are worrying too much about the risks of being transparent.

    Nick McClelland: Yeah.

    Chris Lay:  And that's, I think, part of the conversation, how bad can it be? To actually tell it the way it is, but I think that I understand often people are sort of like, well do I really want to talk about that? What will people read into that? I think that's what I would encourage people to do, and so that comes down to understanding; if I don't understand where I am, then that probably leads me to do greater work around the climate resiliency of my premises, or the social appropriateness of my supply chain. And I need to dig in more to enable me to be more confident about being transparent and talking about those things.

     

    Nick McClelland: Do you think the – I just want to pull on that a little bit further -- do you think the confidence around transparency is because in the world of business, we're often expected to be almost immediately correct, immediately on the right line. And actually, part of transparency is maybe acknowledging that this is a journey?

    Chris Lay: Yes.

    Nick McClelland: Whether you look at it, you know, that every company is in a different place right now on their journey, and because it's a journey there's almost an acknowledgment there required that we're not perfect and we're on a journey here, so this is the direction of travel. Is that something that maybe stops the transparency that you're talking about?

     

    Chris Lay: I think that's a large part of it. I often say to people, I know we're a great business, but I know we're not perfect. But let's take an issue under the social umbrella, DEI, and what we're doing in that space, so I'll come down to a particular issue like ethnicity, and then ethnicity pay gap.

    Nick McClelland: Yep.

    Chris Lay: You know, who's publishing that today? Not as many as perhaps on gender, as legislation obviously, has changed requirements. Regulation has changed requirements. But if you get into the ethnicity pay gap, I've had conversations, we've had this ourselves as an organisation with other companies; well, my data is not good enough; people are not self-declaring; I can't get there. So therefore, are we actually, is that going to -- does this stop us publishing a result? Or are we hiding behind that as a reason why we don't want to publish the result?

    Nick McClelland: Yeah.

    Chris Lay: So, when does ‘good’ become ‘good enough’? Is 70 or 80% of data integrity good enough to say ‘oh by the way, we've got 80% self-declared, but we're going to declare it, clearly recognising there's a health warning’. But once we've done that, we're on a journey, we're explaining to people what it looks like, and we can have the conversation. I think that's the right approach. But I understand for many people, it sort of can often be a cover for a concern, a deeper concern. And therefore, balancing that is something which we often see, and you could play that out across many different things. Looking at supply chain, well the fact that I can't get into my tier two, three, four and five in a particular supply chain. But I sort of know that if I did, it will be a concern. Is that a reason for not talking about it? Or is it better to say ‘I can only measure so far here, but I'm committed to get there, and these are the issues and the complexities around it’.

     

    Nick McClelland: Yeah, absolutely. There's a whole area around people I'd like to talk about in a moment, as maybe a final topic, but the fact that you mentioned that; we had a previous guest on the show who talked specifically about the pay gap in that context. And her view, Michelle Sequeira, was that we -- not ‘we’ but the world, certainly the UK -- has a long way to go yet in that particular area, and had some stark stats, so I will ask our listeners to refer back to that episode for some real insight into that area. I do want to talk about people a little bit. So, and particularly employees of organisations and how they are; one, holding companies accountable more to these objectives and this purpose, purpose way of working, but also the risks that come with people today. And we talk about people-risk a bit across this organisation. And I just wanted to get your view, almost down an employee lens, and we've talked a lot about clients today and about, you know, our own direction on this path. But where are our employees at on this journey at the moment?

     

    Chris Lay: Well, it's interesting. I suppose we're in a workplace that has probably the largest stretch of sort of generations. And therefore, we come with the largest stretch of backgrounds and perhaps perspectives. I think we've also got the most diverse workforce we've had, even though there are many issues we're not at the stage we need to be at. So inevitably, therefore, it’s quite complex. But I go back to that point I made at the beginning, that our colleagues are our number one stakeholder group and we need to understand their perspectives. We need to help them understand, you know, where we are, we need to be clear to them, you know, what is our philosophy on a particular issue? So, what's our purpose? How do we run our business to deliver our purpose? And what's our philosophy around a range of important things that sit within that? So, I think it's back to transparency. And I found that if we are transparent with colleagues, even though we maybe find those conversations difficult and complicated, we're much more likely to engage them. I think part of the problem that we have is the whole complexity of what we're dealing with across ESG. So, and lots of individuals tend to take sort of sole issue campaigns forwards, and there aren't many sole issues because they interconnect quite a lot. You know, I was talking to a company just recently about hydrogen power, for example. Well, terrific that they were looking at some potential opportunities to use hydrogen power in that business. Certain colleagues’ concern about the risks of storing hydrogen at their facility, and probably other colleagues who are saying, well, is that really the right energy source? Because there are, should we not be going into electrification? But then there's others who are talking about some of the issues behind electrification. So how do you actually corral it? You're never going to have the answer that probably works for everybody, depending upon people's level of knowledge, their insights, and how important they see this issue versus that issue. So, I think it's extremely difficult. I often say to colleagues, when we're having these conversations, say, I'm just one of the team. Can we all come into my office? Can we put all the information on the table? Can we have a conversation about this? It's not somebody leading a business versus the people in the business. We're all the business, we're all leaders. Can we all actually have the same conversation rather than our micro-conversations?

    Nick McClelland: Yeah.

    Chris Lay: So again, that leads to a little bit more around the transparency to highlight the complexities or say what are the choices that you would make here, that might get us on that journey more effectively? And by the way, I think though, having that level of -- encouraging that level of challenge is a good thing. So going back to the analogy of the navigation roadblock, whilst you might have thought you were on the fastest route, faster routes can emerge and change, particularly with technology advances around us. And so engaging colleagues, I mean, whether you like to call it hackathons or innovation sprints or what have you, but we should always be thinking, you know, we know what we know, we made some decisions, but the world's moving quickly, there may be a better way of getting there. The more people we have around the table with more insight and knowledge, the more interesting perhaps we might have --actually, there's a better opportunity! We didn't need a roadblock, we just needed to get together and stress test and challenge what we thought was a good way. So, I think engaging is important.

     

    Nick McClelland: Yeah. I know, I really love that. I think that it links together really well the importance of that transparency internally as well as externally. That actually, if you bring your people on the journey with you, you involve them in the discussion, you put all the issues on the table, and people can see the complexity.

    Chris Lay: Yeah.

    Nick McClelland: It might stop that sort of more linear view you were mentioning to one particular issue, and allow people to understand, but also be part of the solution finding in the future as well.

     

    Chris Lay: I mean, for example, I recently had a conversation with some colleagues about the UN sustainability goals, or Sustainable Development Goals, which I think as I’m coming from memory now, there are either 17 or 19, I can't quite remember, but it's that sort of number. I said, well do you think we can attack 17 or 19 things all together at equal pace? Or would you pick five?

    Nick McClelland: Yeah.

     

    Chris Lay: Of course, people's priorities are different, but we have to decide where to prioritise our effort and our resources so that we can actually make the most progress. That’s just a good example of -- I'm sure as we look towards, sort of COP27 on the climate front, you know, a year on, as we move from Glasgow to Egypt, people are going to be saying; well actually, the world's changed dramatically. Technology has moved on. We've learned a lot about different things. Would we change our approach to certain things? I mean, and particularly given the geopolitical environment, do we have a better understanding of the need for us to actually have adaptation in the developing world? It was much more difficult to have some of those conversations a year ago with colleagues, for example, because it wasn't so apparent to them, what was going on.

     

    Nick McClelland: Yeah. No, I love that. And I think I'm hearing a lot about this term ‘course correction’ at the moment. I think it applies here, because there's so much change at such a high pace. And that's the world we live in now, that's happened throughout my career; a bit shorter than your own; but change is speeding up, and we have to have the adaptability, as you just said, the course correction capability to know that, actually the fastest route is developing over here, not here. So, I really like that.

     

    Last thing today, Chris, people have had a lot thrown at them the last few years, not least the pandemic, which you know, I know we don't love saying the word but that has had a big impact in the well-being side of things, particularly mental health, and we're becoming much more aware, understanding of that, within society but also within business. We've got some significant financial pressures that individuals are facing, which of course will link through to their mental health and has impacted their physical health also. That’s a lot of pressure to put on people. And I mentioned people risk earlier, but in an organisation today, and you're a risk expert with a huge amount of experience; how important is this concept of people risk in the risk-register today and managing an organisation effectively?

     

    Chris Lay: Irrespective of where people, the people asset sits in a business -- some businesses like ours, its only people, others they may have a smaller, people may be a smaller element, it may be much more about the manufacturing or the technology, what have you -- irrespective of that, I would contend that people risk is the number one issue. Even in the world of automation; and we're doing a lot at the moment with electrification and automation of cities, and self-driving cars and so on. It's still about the people who are actually there trying to figure out how to integrate this in society, and so on. So, I think it's the number one issue. And it's a very complex issue. But every time I think about people, I do go back to a slogan that a company used in an advertising phrase some years ago “It's good to talk”. And I do tend to think that the starting point for all of this is conversation. I don't know what I don't know. And if I'm having a conversation, I might understand something about somebody. I'm grateful that we're in a world now where we do talk about a lot of things that were once not talked about, it helps us understand each other, how better to compose teams, how better to actually get the most out of each other. You know, our current partnership, social partnership in the UK is ‘Ambitious about Autism’. And we're understanding much more about neurodiversity in the workplace for example, that's just one example that I think we had a very different view on a few years ago. And we're excited about some of the things we're discovering about how that can enable us in areas of our work as we go forwards, in brilliant ways. So yeah, I think having the conversation, but making sure that we understand that, you know, as I've always said, if I've got one hundred people in a team, and they can show up sort of 10% more engaged because we understand them, and we're able to work together more effectively as a team, that's a huge productivity shift. Apart from the fact that it makes me feel good that people are enjoying themselves in the workplace and feel that they're actually, their voice is heard and they're engaged. We should look at it that way I think, and particularly at the moment because, you know, labour supply is constrained in many areas. I think there's an unlocked opportunity by getting, by not just thinking about the numbers, and the vacancies, and the need for roles. But actually, how to have the people who have committed themselves to us be more brilliant in their role.

     

    Nick McClelland: Yeah, absolutely. And actually, we will be doing a future session specifically on how we help employees develop new skills, develop the workforce capabilities in that sense, because, again coming back to it, the shortage of supply effectively requires us to think differently about how the individual works within their career path in an organisation. So, I know a lot of companies who are struggling with that today.

     

    Chris Lay: I talked to a company recently who was saying, you know, I've got over hundred, over one thousand vacant positions at the moment -- it sounds, it's a big number, they’re a large organisation. But what's interesting, at one level the focus is on the one thousand vacant position, not on the tens of thousands of people who work for us. Now, I'm not saying they're not focused on that, and we're not all focused. But we can get overly obsessed on that issue. And we do need to think about, you know, what may be stopping those who work for us really delivering to the, on the edge of their capabilities.

     

    Nick McClelland: Yeah. And I think that comes back to almost conventional thinking, that we understood; going back to the point about change of speed and the fastest route. Maybe conventional thinking is limiting business's capabilities to quickly move through those blocks. And I think that's, you know, an opportunity for organisations like ourselves to help our clients through those journeys, which is exciting, in many ways.

     

    Well, listen, on that note we'll finish up. Thank you so much for coming in today to see me, really appreciate it. So much to take out of the conversation. I daresay we could probably have a follow up at some point in the future, so I might hold you to that, if that's okay? On that note, I hope you've enjoyed today's episode and thank you for listening. As ever, if there are other issues that you'd like to cover on the series, please let us know via the podcast website. And some of the topics we've discussed today like people risk, we've got reports that are actually just fresh out, that will be linked on the podcast webpage as well. Thanks for listening. See you soon.

     

    You can subscribe to keep up to date with our latest podcast episodes and if you have any questions, please do not hesitate to contact us at mercer.uk@mercer.com. Visit our ‘ESG hub’ for all of our latest thinking and insights.

       

 

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