Sir Philip Hampton shows ethical leadership or perhaps cautious pragmatism

Future Manyumba

Royal Bank of Scotland Chairman Sir Philip Hampton [right] turned down a £1.4 million bonus in January. Was it evidence of a ‘wind of change’ or a self-saving political statement?

On the 28th of Jan this year, Sir Philip Hampton announced that he would give up his £1.4 million bonus as Chairman of Royal Bank of Scotlan. Few people may disagree with his actions, accepting that the RBS team is doing a tough job. Indeed some would question why he should take such a personal sacrifice when his colleagues in the private sector are still getting astronomical bonuses by comparison.

Frontline leadership

The decision was symbolic in nature. His actions could prove to be a watershed moment in the history of the finance sector in the UK. Sir Philip Hampton has previously held successful positions with Sainsbury plc (chairman), Lloyds Banking group plc, BT group, British Gas and British Steel.

As the head of a bank which is 83% owned by tax payers, public opinion is something that bears a strong influence on decision making. What does it say when bank executives pay themselves huge bonuses when in essence the shareholders (tax payers in the case of RBS) are having to bear with the pains of the Government’s austerity measures?

Decision Dilemma

Sir Philip Hampton demonstrated restraint by example, demonstrating the subtle and pervasive powers of symbolic leadership. He faced the dilemma of either taking the money or suffering personal loss and alienation from fellow executives in the banking industry. Accepting the money at a time when the bank is cutting jobs (cost cutting measures) would have made him look hypocritical but giving it up risked demoralising other executives (within RBS) who ultimately may feel pressured to emulate him. I believe that his choice sent out a compelling ethical view point for business and industry.

The force of sacrifice

Within days of this action, the RBS CEO, Stephen Hester decided to emulate his chairman (some may say he was left with no choice). Within a week, executives of Network Rail also decided to forego their bonuses . Through his ethical symbolic actions, Sir Philip Hampton may have started a chain reaction which is going to transform the banking and private businesses landscape. The momentum is building with politicians and business community now calling for a public debate about the morality of executives’ bonus scheme during tough times.

Challenging times – Adapt or Die

A leader does not necessarily have to ‘stay the course’ just because it is his/her natural style but has to have the flexibility to adapt to the changing times.

Hero or Villain?

It is difficult to see the actions of one man changing the bonus culture of banks in the short term. However, his actions have shown participative and visionary leadership likely to have momentous influence in the long term. He has chosen to make his actions congruent with his beliefs. Now he can stand up and talk about the need to cut bonuses of bankers with moral authority.

Acknowledgements

Future Manyumba, a LWD subscriber, is originally from Zimbabwe, and is a Process Engineer with training and experience in hard rock mining in Southern Africa (gold, nickel and copper). His interests include geopolitical global issues, leadership and football.

Image of Sir Philip Hampton is from the RBS website.

5 Responses to Sir Philip Hampton shows ethical leadership or perhaps cautious pragmatism

  1. […] Visit link: Sir Philip Hampton shows ethical leadership or perhaps cautious … […]

  2. Paul Hinks says:

    Hi Future & Tudor –

    Thanks for posting this article –

    I believe the massive failings of the banking industry have focused the minds of the general public (who as humble taxpayers footed the bill for bailing out the banks) – it seems we’ve all become sensitive to the high pay and reward given to the very top bankers – it’s refreshing to see Sir Philip Hampton take a lead on this emotive topic.

    I’m thinking about the characteristics of ‘Authentic Leadership’ – Authentic Leaders are original & not copies – those who exhibit genuine leadership; lead with conviction; base their action on their values. I see these attributes demonstrated in Sir Philip’s actions.

    Understandably there’s a lot of public interest in the remuneration of those at the top of the Banking Industry – related to your blog is an article published in The Telegraph this morning (11/04/2012) titled: “ABI joins revolt over Barclays chief Bob Diamond’s £17.7m pay” – here’s a link:

    http://tinyurl.com/cpwqp9p

    Barclays Bank may not have directly taken state aid – but they have been supported indirectly by the state – in my mind it’s correct for the media to investigate & report Mr Diamond’s pay award in a responsible manner; there’s genuine public interest here, and clearly shareholder interest too.

    It’s interesting to see the reaction of the ABI to Bob Diamond’s pay award:

    “In particular, the ABI questioned a £5.75m contribution by Barclays to settle a tax bill he incurred when moving from the US to the UK to take charge of the bank last year.”

    “We’re not saying it’s the wrong thing to do, but shareholders will have to be satisfied it was the right thing to do,” said one industry source.”

    Perhaps Barclays CEO should take a moment to reflect on the actions of his opposite number at RBS.

    Personally I see Sir Phillip Hampton’s actions as very commendable – I’m sure the guiding values, principles and ethical values displayed by the RBS Chairman will help build trust with significant others – including us folk, the humble taxpayer.

  3. diego sandoval says:

    con respecto al sir philip lo felicito por esto que esta logrando y desearia saber si el esta encargado de las hacer transaciones de unas cuentras de unos difuntos en senegal ya que me an llegado una serie de correos con respecto a unas cuentas en ese banco y desearia saber para asi poder invertir ya que cuento con una cuenta hay.

  4. debz says:

    you should see what sir philip hampton and rbs are trying to cover up by reading the first two pages of http://www.natweststalker.com…they want this story buried…make sure if you read this you make sure it goes viral

  5. seidu maru says:

    major General Abdel adortaion younes this man account 9.5$ kin to the deposit miss Adoration Abdel he is right.

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