Cheshire Building Society chief executive Karen McCormick has taken on an extremely challenging role. Claire Greenshields asks what makes her tick
As we settle down for lunch at Bramhall's Beluga Restaurant, Karen McCormick is nervous at the presence of our photographer and her reserved manner comes as something of a surprise."I suppose it's best just to chat away and try and ignore the camera," she says, with a lens two inches from her nose. It's reassuring to know one of the financial services sector's most robust leaders is only human after all.
She's made an art out of remaining calm under pressure. The first female to take charge of a UK building society for more than a decade, McCormick couldn't have taken her place at a more troubled time.
When in May 2005 the 50-year-old was given the chief executive's role of the country's 11th largest building society, it was also its least profitable.
Under the reign of previous boss Colin Whittle, profits slid by more than 25 per cent in three years amid threats of takeovers and accusations of fat-cat pay. The job of turning things around was one many would shy away from.
But not McCormick. After just a few minutes in her company, it is hard to imagine the level-headed Yorkshire lass getting ruffled about anything. Unimposing but entirely engaging, you can quite imagine trusting her to steer a ship through the stormiest of seas.
"I've never really felt under pressure," she says. "I sat on the board as non-exec director for five years and already had a good understanding of the Cheshire and the opportunities ahead of it. There have just been a few temporary obstacles along its path."
And if the new boss didn't have enough on her plate during her first year in office, she spent Valentine's day 2006 trying to come to terms with the discovery of a £310m lending fraud.
"We were just about to close our annual accounts when the head of audit walked into my office and announced we had a problem," she says. The current criminal investigation prevents McCormick going into any great detail, except to say that she hopes to get a substantial amount of the money back.
Having established the fraud was a one-off and with Cheshire's commercial lending department absolved of any complicity, the board was forced to report a £32.1m pre-tax loss, putting the institution in the red for the first time in its 136-year history.
With rivals smelling blood, the Cheshire became an acquisition target.
But McCormick's determination to stay independent says a lot about her
character. A commitment to customer care and developing strong community links is what motivates her to get up in the morning and rise to challenges.
"I strongly believe the mutual model is the way forward," she says.
"To make a success of it you have to be commercially minded, but the difference is that it's for the benefit of members rather than shareholders."
While the likes of Halifax and Abbey National have succumbed to the
pressure of carpet-baggers searching for windfall payments, McCormick is from a different breed of executives. For her, independence supports her philosophy of providing a personal touch.
"I'm all for creating a club feel, a sense of belonging to something that really matters to people," she says. "Once you get that you don't want to lose it and, providing we keep providing our members with what they need, we'll remain mutual."
In a drive to broaden its services, the Cheshire Building Society launched new subsidiary company Cheshire Mortgage Brokers in July 2006. With specialist knowledge of the mortgage market, the service will provide personalised financial property advice.
The focus on customer satisfaction is, at least in part, down to McCormick's strong retail grounding. From former roles, including people performance director at Sainsbury's and human resource and organisational director at retailer GUS, she understands the importance of keeping punters happy.
"It's like being any other type of retailer, except we're in charge of people's money," she says. "That's a huge responsibility and demands a
very special kind of customer service."
And delivering that is where McCormick's real expertise lies. In an industry that continually makes false claims about its willingness to respond to feedback, McCormick seems to really care what customers have to say.
"Since I've come on board we're talking to our members a lot more,"
she says. "The secret is to stay close to them and tailor your services to their requirements. Being mutual makes that much easier. Members can choose how they interact with us.
"Like everyone, we offer telephone and online services, but our real strength is in the society's concentrated branch network. They create an environment where people can build long-term relationships, seeking
guidance and advice on a whole range of things, which helps us stand out."
And as is often the case in business, sometimes you only recognise what's of true value when you're faced with losing it. "We were very concerned about how members would react to the fraud," says McCormick. "It's difficult to get your message across in the face of media headlines. But I was amazed by the support they gave us and we've been able to attract rather than lose members. That relationship of trust is Cheshire's greatest asset."
With that trust in place, McCormick has been able to work through some of the major changes necessary to get the troubled society back on track.
"My policy has always been to be transparent about what you do and
why you're doing it," she explains in her naturally reassuring manner.
"Then you're far more likely to get them on board. Set out your plans so they're clear to everyone and you'll be surprised what you can achieve."
So far her enviable people skills have helped build a new management
team, stripped of Cheshire's controversial executive bonus scheme and
replaced with a transparent structure of performance-related pay.
"I wanted us all to be part of the same structure," says McCormick. "When you have to make tough decisions it's important you're shown
to be consistent."
There's no jobs-for-the-boys culture at the Cheshire. Under McCormick everyone pulls their weight and proves their worth. That cultural change has helped lay the foundations for some major restructuring. McCormick has refused to shy away from big decisions and done whatever she feels necessary to make Cheshire more sustainable.
The overhaul led to the closure of three out of 52 branches and the loss of 70 jobs at its Macclesfield headquarters. Every cog in the wheel has gone under the McCormick microscope. Her eye for detail reinforced her reputation for change management.
After an 11-year stint at National Provincial Building Society, McCormick applied her skills to consultancy and spent five years advising organisations on strategic change.
Confident the changes are starting to bear fruit, she claims new savings offers are already boosting membership and better structures are now in place to help take the business forward.
Once the photographer has packed up and gone home, McCormick is more at ease. When asked what attracted her to this line of work she responds with a nostalgic glint in her eye.
"From a very young age I was always very interested in business", she says.
"I wanted somehow to make a
difference, to take something and be able to make it better. That's also reflected in my hobbies, I suppose - gardening, home improvement, cooking.
"Growing up in the 1960s you were very conscious of all the amazing opportunities there were in the world to make a difference. I seemed to have a knack of figuring out why one business had succeeded and another failed when they seemed to be doing exactly the same thing."
Since leaving school at the age of 18 to work in a small accountancy firm and study part-time as a chartered secretary, McCormick could look at company accounts and spot the missed opportunities. Time spent as a tax inspector for the Inland Revenue also helped fine-tune her radar.
"I realised it was all about the way people were applying their minds," she says. "I've learnt that to be successful you need clarity of strategy getting everyone moving in the same direction. Having
the opportunity to do that as a chief
executive, particularly of a mutual, is fantastic. At the end of the day, whatever state the economy is in, there's always some kind of need. It's how well you respond to that as a business."