David Dodd, chief executive of Darlington Building Society

Aug 31 2010 by John Hill, The Journal

AFTER 35 years in the building society sector David Dodd is now head of one of the region’s two remaining mutuals. JOHN HILL finds out about his thoughts on the financial crisis, his interest in people and his love for music and running

FOR nearly four decades, David Dodd has been gathering knowledge of building societies. In fact, he has been in the sector for the whole of his career, aside from a spell as a pig clerk for West Cumberland Farmers.

“My job involved finding out the weights of the pigs that came in for auction, and putting those figures through the adding machine to turn that into money,” he says.

The 16-year-old Carlisle native quickly jumped into a job at the Cumberland Building Society, at a time when building societies were expanding. About 35 years later, Dodd became a chief executive for the first time with the Darlington Building Society, but now the garden wasn’t as rosy.

Like many financial institutions, the Darlington Building Society had problems. The group had announced a £2.5m loss in 2008/9, its first in 152 years, and one of his pressing tasks was to shave £1m from running costs.

He said: “If you could pick a time to become a chief executive, this would have been one of the worst.

“I was honest from the outset. I told the staff where we were, and what we needed to do. We knew we had to take some costs out of the organisation, and the main cost in a building society is people.”

Darlington Building Society was back to a profit of £555,000 the next year, and Dodd expects another profit this year. However, he is mindful that 30 staff took voluntary redundancy or early retirement in the intervening period, while others shouldered extra work for no extra pay.

He said: “Some of the people that went had been with the society for up to 30 years. When you watched them walk out the door on the last day, to say it was emotional was an understatement.

“Even though people had gone, their work hadn’t, so we were asking those that remained to do more than the jobs they had. We also froze pay and closed the final salary pension scheme.

“It was an incredible ask but no one made a negative comment. They pulled together, partly because we were honest and partly because of the culture of the Darlington Building Society. They realised it was the only way to do it.”

Many financial institutions have since emerged from the red, but the stains remain. As a result, the remaining building societies have reached back to the concept of lenders woven into their respective communities. Dodd observes Darlington Building Society has personal underwriting of mortgages, and members can contact branch staff by phone. However, he admits it will “take a while” to change public perceptions about the financial industry.

He said: “There’s a gap in the marketplace which is perfect for building societies. It’s all about reconnecting with your membership and with your local area. But we should not look at it as filling the gap for 18 months and then moving on again when the sun comes out. It’s no good just saying you’re the good guys in white Stetsons and expecting people to trust you.

“The easy thing would be to say it was all the world’s fault and not ours, but we had a subsidiary called Darlington Homes building and developing new properties. A lot of our loss came from there, as the value of new-build apartments fell dramatically. With the benefit of hindsight you obviously wouldn’t have done it because it made a loss. But we had completed profitable developments with Darlington Homes before, and one North East development sold out before it was even finished.

“It wasn’t necessarily a rush for profit. The thinking was we could feed the profits back into the building society to offer better returns to members. Diversification gave you a buffer in case things went wrong.

“We’re now working on a five-year plan, and have reduced the size of the balance sheet deliberately to make sure capital is strong. There’s not going to be huge growth in housing finance over the next few years. The days of looking at 60% growth are gone for financial services organisations.

“It’s not going to happen overnight and you mustn’t look at it that way because then you look for shortcuts.”

In 36 years, Dodd has worked in many of the sector’s nooks and crannies, from the investment department to accounts, mortgages and branches. He always had an interest in banking at school, and in an odd coincidence, his home during his teen years was a pub just outside Carlisle called the Greenbank Inn.

He says: “Living in a pub owned by your parents, you were the envy of all your pals, but the distractions were obviously immense.

“I would come home after school and stock the shelves, and later I worked behind the bar.

“My dad used to say that when he arrived he couldn’t find three people to play dominoes with, and when he left he couldn’t find a free table.”

Dodd’s first banking interview was with Barclays, who offered him a job in London that he turned down as the capital was “another world” at that age. After his spell as a pig clerk he joined the Cumberland, and was encouraged to knuckle down by a 23-year-old investment department manager called Sinclair Graham.

He says: “Sinclair was very hard-working and had exceptional knowledge, and as a young person that really rubs off on you. He’d just finished doing his building society exams, and pushed me to do them as well. He was also a drummer in a band, which helped.”

Dodd completed his exams, and was later advised to study for an MBA by then-chief executive Ian Kitchen. He regards this as one of his best career decisions.

He says: “The MBA gave you a better look at business as a whole. At an Open University course you meet people from different walks of life. You realise other industries have similar problems to yours, and complex relationships they have to balance. You don’t feel unique and feel the world is picking on you.”

Over the next five or six years, Dodd studied while rising through the ranks to assistant general manager. However, the work levels took a toll on his family life. His new partner Carol had daughters called Philippa and Kristen, and his son Matthew from his first marriage would visit twice a week.

He says: “It’s very difficult when your sole contribution to the family is being at a desk and studying until 10pm. Looking back I have no idea how they put up with me.

“I wouldn’t like to do it again, but I wouldn’t like not to have done it.”

Dodd fondly remembers graduation day for more reasons than one, because it was also the day Carlisle United’s goalkeeper Jimmy Glass clouted the famous goal that kept the side in the football league in 1999.

“It’s certainly a day you don’t easily forget”, he says.

Seeking a new challenge, Dodd had left the Cumberland for Darlington Building Society in 1998. He took on the job of general manager, and remembers falling in love with the town.

He says: “I remember we looked around one Saturday. We parked the car in the middle of town, got ice cream from an ice cream van and explored. It felt like home.”

He also rediscovered his love for running, and in the next few years trained regularly with Darlington Harriers Athletics Club. He won a Building Societies Association conference fun run in Manchester in 2004, raised more than £5,000 for St Teresa’s Hospice by running 13 half-marathons in a year, and ran a total of 1,168 miles to support the Chernobyl Children’s Project.