Why everybody hates Centrica

Nick Baird, Corporate Affairs Director at Centrica talks to Daisy about how important (and challenging!) it is for businesses to partner positively with government. We discuss how big corporates can speak authentically about climate change and community, and the challenge of communicating about big topics when you are in the midst of constant reorganisations.

We also discuss: 

• Why he moved from government to the private sector and how they differ
• The interaction between climate change policy and corporate reputation
• The enormity of climate transition and the increasing importance of ESG
• Green jobs
• How big companies can talk authentically about community
• The overwhelming importance of relationship building for both commercial goals and reputation, and
• Why reputation professionals need to talk the language of business.

Find all of our episodes - and full transcripts for each one - at https://www.buzzsprout.com/1121639

Transcript

S1E9 - Why everybody hates Centrica

[00:00:00] Nick Baird: Hi there. I'm Nick Baird, corporate affairs director at Centrica.

Daisy Powell-Chandler: Welcome to Why Everybody Hates You, an audio support group for reputation professionals. If you have any responsibility for how people talk, think, and feel about your organisation, then you are in the right place. My name is Daisy Powell-Chandler and today I'm speaking to Nick Baird, corporate affairs director of Centrica about why everybody hates him.

Nick Baird: So, I didn't entirely accept the premise of the question. We've had some quite good customer NPS scores over the last period we had. We had quite a good lock-down in the sense that we helped a lot of vulnerable customers with their bills and we did, as you know, a partnership with the Trussell trust food [00:01:00] bank and have delivered four million meals to vulnerable families.

But you are, of course, right. We've had over the last few years some pretty negative press, an uneven relationship with the government and we're now in the middle of a tough reorganisation with potentially around 5,000 redundancies and changes to people's terms and conditions.

I mean, there are a range of reasons for this, but the biggest one, overwhelmingly I would say, is the cost to the economy of net zero and how it's being paid for. So, people want the cheapest possible energy bills and largely see it as a vanilla product, which they just want delivered cheaply and efficiently, but we are in the middle of a major transformation [00:02:00] of our energy to meet our net zero targets. That has significant costs and those costs are largely borne on the energy bills. So, while many other elements have contributed to, or contribute to, what an energy bill costs, the most significant rise over the last period has been the policy costs of the energy transition.

And so that led, of course, to the introduction by the government of the price cap. And the cap is essentially designed to reassure customers that the transition has been delivered at the lowest cost possible. But, if we're going to address this properly going forward, we do need much more of a proper debate, [00:03:00] more broadly, with the public about not just the cost of the energy transition, but the fact that, of course, it has ultimate benefits, both in terms of carbon reduction, but also actually in terms of our purses, because a key part of it is we'll be using less energy, and the technologies will help us to use less. But also, what people and individuals actually need to do to contribute themselves to get there. In many ways it's quite abstract to a lot of people, the energy transition. But I think we're entering into a phase where it'll need to be something done by people not just at 3,000 meters by governments and large companies, but by people individually. 

So we need that to start and I think once we have that debate going, and [00:04:00] when our sector are seen much more as a contributor to that process, rather than just somebody who costs a lot of money for a vanilla product, then I think that will help with our reputation. 

Daisy Powell-Chandler: And has that challenge shaped the way in which your corporate communications programme has evolved over the last few years? Has that been a big driver of the way in which you've approached reputation? 

Nick Baird: Yeah, so I would say it definitely has. And I think the key considerations that we've thought about, firstly authenticity in this space, because there's a great risk of greenwash. Everybody is piling into the space and it's right. Almost all companies need to be engaged in this in [00:05:00] one way or another. But what is differentiated about this company? What is the genuine contribution it can make to the green agenda? And in that space, we very much looked at what we are as a company.

We are service engineers and we are those people who support the supply of energy. So, it's very much in that area around how you fit and solve the necessary problems for homes and businesses in their own transformation. It's very much around…so one of the things that there's not very much on people's agenda at all yet, but absolutely will be soon, is of course all the heating systems in this country, whether in homes or businesses needing to be replaced, either by electric heat pumps or [00:06:00] by re-purposing boilers to use a clean gas, such as hydrogen. And that's clearly a space for us. So, owning authentically the space of the home and making the home green is one thing that we’ve been particularly thinking about.

Secondly, and I think this has been particularly since the huge impact that's been on all of us around COVID and the pandemic: what are the trends that we're seeing in that space which are relevant to this agenda and will continue and will not just leave when the pandemic hopefully leaves? I would say that is focus on communities, [00:07:00] localism, resilience, and security. Again, we've been thinking about how our own company fits into those spaces. 

And again, local energy markets, how people perceive the whole issue of climate to them and their communities I think is very significant. I think most people do think of it in terms of what do we want to do with our communities rather than much broader aspects of climate change. Also, they want a secure supply of energy. So, how we fit into our local communities is another key aspect of what we want to communicate about ourselves going forward.

Daisy Powell-Chandler: Do you think it's ever possible [00:08:00] for big national/international corporates to talk about those kinds of issues in an authentic way? 

Nick Baird: Yes I do, because fundamentally, what are many big corporates, certainly this big corporate? They are people working in their communities. Our service engineers are essentially people who work to fix and solve particular sets of problems in their communities. They're out in their vans, visible in their communities. As I mentioned, they've been working in their communities across the country with The Trussell trust food bank charity delivering meals and there they are trusted figures in people's homes and they are known in their local communities. Increasingly we want them to engage with community networks and schools in their communities and their [00:09:00] local councils, their local charities, their local commercial operators. And that all ladders up to a big corporate, but that is fundamentally what this company is composed of.

Daisy Powell-Chandler: Hopefully, a great network of advocates for you.

Nick Baird: Yeah, indeed, and vice versa. The more partnerships that we can build locally to address the issues of climate and the environment in a local context, so much the better for us, and so much the better for those communities.

Daisy Powell-Chandler: Absolutely. There have been challenges along the way though, and you mentioned earlier that big reorganisation that you're going through at the moment. Does it feel frustrating? Because this isn't the first set of redundancies you've been through over the last few years. Does it feel like that has set back your ability to make these other broader, more [00:10:00] strategic, points that you constantly have to talk about reorganisation? 

Nick Baird: Yeah. So, I think of course that's true. And of course, there’s two aspects of it. I’d say we've had a really challenging external environment as we have built towards the price cap which now exists. So, that has been a constant negative that we have had to manage in terms of our cons. And, as you say, the reorganisation has been fairly constant over the last period and I think the reason for that is that, although for the last period, I think most of us feel we were on the right strategy, the issue is that as it were new Centrica, a new British Gas, has grown more slowly than old Centrica and old British gas has declined. [00:11:00] We needed to, with hindsight, act more quickly and more forcefully. And that adjustment has come more slowly, with hindsight, than it might’ve done. So it is frustrating, but it is nonetheless very necessary. This is now a highly competitive market.

As is well known, when I joined our share price was £3.50. Now, it’s in the forties of pence. We lost a million customers in the last two years where we were a FTSE100 company and now we are a FTSE250 company. We have to get our costs in the right place so we can actually compete in the market in which we are operating. But once we can do that, and [00:12:00] as you said, it's been frustrating, taken quite a long time to get to that place, we can be a platform for significant new green jobs, particularly in that space of what service engineers can do going forward: the fitting of the heat pumps, the fitting of EV chargers, the rollout of the smart meter network (which is completely necessary as the base grid on which our renewable energy system will operate), the insulation of homes…all of those things are areas where we can create jobs. 

That is the necessary path, I believe, for our reputation, both as a company and as a sector, to get into a better place. It is essentially that we will be going with the grain of a transition that is absolutely necessary for people. [00:13:00] And it's widely recognized as necessary, rather than just being the expensive providers of a boring product.

Daisy Powell-Chandler: That does seem a much more inspiring vision, I'll give you that. But what I'm quite interested to understand is what attracted you to Centrica because you don't come from a classic corporate comms background, do you?

Nick Baird: No, that's absolutely right. My own background is government. What attracted me to Centrica was partly about, having spent 30 years in government (and I’ve just now disclosed to you how old I am…) latterly with quite a lot of engagement with the private sector (in my last job in government I ran our investments and export agency UKTI), wanting to test myself in the private sector and wanting to test myself in a sector which was highly political and involved a lot [00:14:00] of engagement with government regulators and a lot of reputational challenges in the media and the wider society. And energy is so totally that. I think the politics of this sector…it's essentially a sector which has two huge political elements. One is that energy is a basic human right: people have to be able to heat their homes and they have to be able to like the lives and energy kind of makes the things that they want and need operate. Secondly, there’s this huge climate transition that needs to be made. You just have to say that, those two things, and that shows you why it is such a political issue.

Of course, [00:15:00] there's an argument for saying that if it was such a human right you shouldn't have to pay for it at all! But that's not the business model on which we operate. But people do then instinctively believe that you should pay as little as possible so that everybody can afford it. but we have this big transition at the same time, which has to be paid for one way or another. And it has a short-term cost. Short term, very significant cost for long term massive benefits. 

Daisy Powell-Chandler: And so you wanted to test yourself in the private sector. What have you discovered? Any surprises? 

Nick Baird: So, some surprises and some continuity, if you like. The continuity is that in any large organization, whether it's private sector or public sector, in order to get things done, you have to be a very effective networker: you have to identify within [00:16:00] a larger organization all those who have a say in what you're trying to take forward and influence them effectively. I would say in terms of surprises, that the degree of engagement between company and government, it needs to be framed and seen as a partnership and to be intense and constant, I would say.

And I think that those companies who are able to identify in advance the political issues that are likely to come and impact on their world and to be thinking in advance about how you build a partnership in a space that might become a conflict: that [00:17:00] that's a really important skill. I think it is an important skill commercially and reputationally. It is absolutely of significance. We saw it through the price gaps: absolutely of significance in terms of the bottom line, but it is also crucially important in terms of reputation. I would say that in the end, of course there are circumstances in which you have to kind of stand firm if you are seeing something which you feel as a company is really not going to make sense for your customers and for the sector. But you're normally on a hiding for nothing if you're heading in a different direction to the government. So being able to detect how you can design things in a way which [00:18:00] is a partnership, and how you can avoid conflict by actions you take before something becomes a big problem, those are big learnings for me. Easy to say, not easy to do, but absolutely critical. 

Daisy Powell-Chandler: Any tips for our listeners on how they can do those better?

Nick Baird: Yeah. So, I think in terms of overall management of reputation and making sure that these issues are fully understood by the broader business, I would say the first thing is to be able to talk the language and to use the tools that businesses themselves use for running their own business. [00:19:00] So I do think that reputation can and should be operated in an insightful, KPI based, data rich way. I think it is more effective, both on its own merits but also in terms of persuading business leaders, that actually it means something - it's not just hot air.

Secondly, I think it is really important to always start with the aim of building a partnership with your professional stakeholders. And I think thirdly now, really understand that the zeitgeist is in a place where companies [00:20:00] are expected to think about their social and environmental impact. When I started in Centrica, we hardly had any conversations with our investors about climate change. Now they're a dominant factor of those conversations. I think it's another thing: it was there before coronavirus, has been amplified and will last beyond coronavirus. It's almost a kind of “what did you do in the war daddy?” question. People now do ask questions both internally and externally: “So what, great. You're making that money. Excellent. So, what are you doing for society as well? How are you bringing something to society?”. I think recognising that and making it central is [00:21:00] now critical for business leadership.

Daisy Powell-Chandler: That’s everything from us. A big thank you to my guest, Nick Baird of Centrica. If you've enjoyed this episode, I hope you'll join me in two weeks time for our season finale. To make that easier, please do find us at whyeverybodyhatesyou.co.uk and click subscribe on your favourite podcasting app. I would also be really grateful if you could leave us a review if you get the chance, as reviews help new listeners to find the show. Thank you for listening to Why Everybody Hates You, and remember: you are not alone.