Everyone has heard the old saying: “A fish rots from the head first!” In the business world we have a similar expression:
“Organisations are shadows of their leaders; that’s the good news and the bad news! If there is integrity in middle management, it comes from the top. If there is arrogance, deceit and manipulation of the rules down below, you can bet it also comes from the top.”
So let’s look at the recent, and by no means the first, debacle of financial irregularities by the big banks. Barclays was fined £290m ($450m) last week by the UK and US authorities after an investigation into claims that several banks manipulated the Libor rate at which they lend to each other. Basically, this is price-fixing for personal profit. Some other recent irregularities at our “too big to fail” banks are:
- Mis-selling personal payment insurance to people who either did not need it, would not be able to claim on it, or did not know they had been sold it.
- The UK’s big four banks were found to have mis-sold complicated financial products to thousands of small businesses.
Then of course there is the recent massive loss by a “rogue” trader at J P Morgan Chase (about $5 Billion and counting). Not to mention the mega-billions given to the banks for bailouts.
Now, we hear from the head of the Bank of England, Sir Mervyn King that the “culture of banking must change“! Bob Diamond, CEO of Barclays, has apologised but refuses to resign.
Since when is an apology from the CEO a culture change?
Several years ago, when this whole banking mess started to be revealed to the public, (insiders always knew the culture inside big banks was corrupt and self-serving) I wrote an article entitled: Why Banks Should Focus on Culture, Now More Than Ever. The issues today are even more pressing than before, and the tools for culture change are even more important.
And the major ingredient in successful culture change is a focus on leadership and internal procedures. Only if both are upgraded can there be a sustainable shift in culture.
“On the sea there is a tradition that with responsibility goes authority and accountability. Men will not long trust leaders who feel themselves beyond accountability for what they do. And when men lose confidence and trust in those who lead, order descends into chaos and purposeful ships into uncontrollable derelicts.” Wall Street Journal, Editorial 14 May, 1952.
As global citizens and taxpayers who are beyond tired of paying for the lack of leadership at the global big banks, we encourage the regulators, and Mervyn King, to do their duty and hold the leaders of the big banks fully accountable. In my mind, an apology is not accountability! Time to get some new, more responsible leadership who cast a more positive leadership shadow that others can follow.
Tight Lines . . .
John R Childress