Leadership Lessons from HBOS and the new social class of Loads of Money Elites

April 8, 2013

Loads of moneyThree previously much-lauded leaders from the banking group HBOS are severely criticized in a parliamentary report in the UK. There are powerful lessons to be learned. Insights from a new social class indicator are also worth noting.

This week a popularization from an academic study suggested a new model of social class in the UK. One category is being considered to be at “the top” of the seven classes, and receives the meretricious label of the elite group. Equally clear is the group occupying the least desirable social niche, the newly identified Precariat.

The abuse of labels

One of the lead researchers, Professor Mike Savage of the London School of Economics is quoted as saying

“It is striking that we have been able to discern a distinctive elite, whose sheer economic advantage sets it apart from other classes… At the opposite extreme, we have discerned the existence of a sizable group [the Precariat] – 15 per cent of the population – which is marked by the lack of any significant amount of economic, cultural, or social capital.”

Is it a simple linear scale?

My reading of the popular reporting of the study is that the seven categories are being placed along a “top to bottom” spectrum as if a simple linear scale exists through which individuals may or may not be socially mobile. But that is a different and more technical story.

My main point is that the bankers at HBOS serve to illustrate the new social concept labelled the elite ‘class’. Weber used such classifications as idealized descriptions of his sociological concepts. Here they are value laden. The elites are “top” people, because we attribute positive connotations to those with loads of money. They are seen as the worthy wealthy. Our Chancellor, George Osborne, is among those vocal in identifying the undeserving and feckless at the “bottom” of the social pile.

The HBOS Three

To return to HBOS, the three members of the elite class named and shamed in the report are Former HBOS chief executive Sir James Crosby, brilliant Harvard graduate Andy Hornby recruited by Crosby, and who replaced him as CEO in 2006, and Lord Stephenson, chairman of Halifax [the H of HBOS]

Let’s cut off their honours

The commission report recommended social sanctions on the three leaders, withdrawal of honours, and prohibition from posts involving financial dealings.

The Guardian unsurprisingly was indignant:

“Primary responsibility for these failures should lie with the former chairman of HBOS, Lord Stevenson, and its former chief executives, Sir James Crosby and Andy Hornby,” concludes the report. It is astonishing that, almost half a decade after the implosion of HBOS, a parliamentary commission with a roving brief has provided the first official account of what went wrong.

Royal Bank of Scotland will always hold top spot in British banking’s hall of shame by virtue of its sheer size and the ludicrous top-of-the-market purchase of ABN Amro, but HBOS stands alone “as a home grown failure in traditional banking”, as the report puts it. The commissioners have killed stone dead the notion that HBOS was, in some vague sense, an innocent victim of the hurricane in financial markets around the time of the collapse of Lehman Brothers in 2008.


Greece Demonstrates, Syria bleeds

November 14, 2012

In Greece, Political leaders continue to battle for the country’s economic survival. The ruling coalition is introducing increasingly unpopular austerity concessions. Refugees from Syria find there is little compassion for their plight. Leadership lessons are hard to find

The political and economic turmoil in Greece continues.

Last week [7th November 2012] judges and doctors participated in a general strike. As politicians deliberated, over 80,000 angry protestors including a group of policemen in uniform, demonstrated outside the Parliament buildings.

The Greek dilemma

The Greek dilemma is increasingly seen as misery and decline inside the Economic community, or misery and decline outside it.

If Greece leaves

The most vulnerable members of the Economic community such as Greece, Spain and Portugal all have the most recent history of military dictatorships ‘rescuing’ the country at its time of need. Is there any evidence of that about to happen? It seems at least a possibility, if Greece leaves the EEC.

Meanwhile, in Syria

Meanwhile the national turmoil has implications for the bloody conflict waging in neighbouring Syria. [14th November 2012]. Even the cold statistics make heart-breaking reading.

The Syrian Red Crescent charity says two and a half million people have been displaced within Syria, and a UN refugee agency considers the estimate on the conservative side. Nearly half a million Syrians have fled to neighbouring countries, the UN says. Figures of more than thirty people have been killed since the uprising against President Assad began over the last eighteen months.

Civilians flee in their thousands into camps on the Turkish border.

Life savings for an eight mile boat journey.

I watched a BBC Newsnight report last night, which showed desperate Syrian families prepared to spend their life savings in a risky crossing of eight miles, into Greece. Hardly surprisingly, those who arrive find the bitterness of people at their own plight, and a mood of heightened xenophobia against immigrants in general.

Leadership, what leadership?

I would like to draw some instructive leadership lessons from these stories, but they are hard to find. Perhaps there is the paradox to consider of the weakness of strong leaders and the limits to autocratic rule. Maybe we should think about the inter-connectedness of events which make dominant theories of leadership too simplistic to help us understand events and find actions which protect the interests of those most at risk.


Chavs, plebs, and military language: Andrew Mitchell’s outburst

September 25, 2012


This week in the UK, Andrew Mitchell, a Government Minister and former military officer, faced a career-damaging episode in a dispute with police, when he was leaving the Houses of Parliament. It was to become a news story and an example of inappropriate use of military language

The critical encounter was over in minutes. In essence, what is undisputed is that Andrew Mitchell, a senior Government minister, attempted to leave the Houses of Parliament in London on Wednesday 19th September [2012] by bicycle. He was prevented from using the main gate and was requested to leave by a smaller pedestrian way adjacent to the main gate. The minister later conceded that he had become angry after ‘a hard day’ and had spoken inappropriately to a police officer.

The F word and the P word

What became the core of the dispute is what was later reported by the police. The offending words according to the police including a few popular expletives, and one curious term of abuse “plebs”.

A pleb is shorthand for plebeian or a member of the general public, and implies inferiority to a ruling elite. It is not a particularly widely used term. When uttered it is often used by someone in authority with a whiff of irony and a dash of patronising about “the masses” or “the great unwashed”.

Plebs, chavs and military language

At a meeting with military officers a few years ago, I was surprised to hear the term “chav” which appeared to be popularly applied in a somewhat similar fashion. The “chav” analogy may be irrelevant, beyond my casual assumption that “military language” is another British euphemism and implies a way of speaking which is too offensive to be repeatable in public. Mr Mitchell was a former army officer.

Background to the developing story

The Sun newspaper broke the story over the weekend [September 22nd-23rd]

Andrew Mitchell — newly-promoted by PM David Cameron — raged: “You’re f***ing plebs.”
John Tully, Chairman of the Metropolitan Police Federation has backed The Sun’s account after speaking to the abused officer.

Mr Tully reportedly said: “I know what the officer has told me and I know who I believe.”

“I know Mr Mitchell has apologised and that’s good, but it’s not enough.”
The cycling Tory’s outburst came the day after two women PCs were shot dead
An eyewitness said Mr Mitchell, 56, also branded them “morons”.

Speaking on a visit to Greater Manchester Police headquarters in the wake of the murders of Pcs Fiona Bone and Nicola Hughes, Mr Cameron said: “What Andrew Mitchell said and what he did was not appropriate. It was wrong and it is right that he has apologised.

Later

The Sun’s very close relationship with the police was examined in the Levenson enquiry. Once again it seemed to have good inside sources. Its lead on Mr Mitchell was picked up by other print and electronic media. The police story appears to be officially recorded as a logged incident expanding on the earlier Sun version
“Mr Mitchell was then silent and left saying ‘you haven’t heard the last of this’ as he cycled off. “I forward this to you as all officers were extremely polite to Mr Mitchell, but such behaviour and verbal expressions could lead to the unfortunate situation of officers being left no option but to exercise their powers [of arrest] I write this for your information as Mr Mitchell’s last comments would appear to indicate that he is unhappy with my actions. I have recorded this fully in my pocket book.”

How not to apologise

The Guardian considered that Mr Mitchell’s subsequent apology to the press [the morning of September 24th] compounded his problems, quoting a few useful “does and don’t” for effective apologies.

The political battles ahead

Mr Mitchell remains beleaguered. The timing of the event, during the national conferences of the main political parties, suggests that the story will unfold further over the next week or so.


10 Headaches for the Drugs Industry

September 22, 2012

GlaxoSmithKline has pleaded guilty and agreed to pay $1 billion in criminal fines and $2 billion in civil fines following a nine-year federal investigation into its activities. The Pharmaceuticals Industry is facing dilemmas which threaten its existence in its current form. Here are ten dilemmas which are keeping executives in Big Pharma organizations awake at night

Onece upon a time, the search for scientific knowledge was associated with contributions to human well-being and enlightened progress. One of the great economists who held that view was Joseph Schumpeter, who also visualised great knowledge-creating laboratories. Such medical laboratories came to pass. Many millions of lives have been saved through their products. Even the humble aspirin was made safely and widely available by such technological processes, as were increasingly sophisticated vaccines and drugs. But today, the firms operating the research laboratories have acquired an increasingly poor image for criminally corrupt business practices.

Their leaders, if they have not resorted to effective drugs, may well spend sleepness nights worrying over the emerging dilemmas

[1] The demise of the ‘funnel’ model of discovery of new drugs. This was the standard business model for finding the next generation of mega-drugs. The model has struggled to retain credibility as fewer financial winners emerged out of the funnel.

[2] Fines for criminal wrongdoings. The global pharmaceutical industry has racked up fines of more than $11bn in the past three years for criminal wrongdoing, including withholding safety data and promoting drugs for use beyond their licensed conditions. In all, 26 companies, including eight of the 10 top players in the global industry, have been found to be acting dishonestly.

[3] The scale of the wrongdoing, revealed for the first time, has undermined public and professional trust in the industry and is holding back clinical progress, according to two papers published in this week’s New England Journal of Medicine [September 2012]

[4] Prosectution of business leaders. Leading lawyers have warned that the multibillion-dollar fines are not enough to change the industry’s behaviour so that criminal prosecutions of executives may be considered more seriously in the near future.

[5] Corporate social responsibilities. The drug companies would like to concentrate on profitable areas and leave research into socially important areas such as alzheimers disease to governmental and other not-for-profit agencies.

[6] Big Pharma’s image problem, fuelled by such high-profile scandals, may have made doctors so suspicious of the industry’s claims that it is warping their clinical judgement

[7] Cynicism of pro-bono efforts. Pressures continue for low-cost drugs delivered to the poorer countries in the world with increasing opportunities for reducing the security of intellectual property such as patents. Industry’s pro-bono efforts are viewed cynically.

[8] Conspiracy theories abound in popular culture. These feed into TV and movie dramas in which leaders of drug companies are part of secret and illegal alliances.

[9] Drug compaies perceived as thoroughly corrupt. Drug companies may be the next industry sector to become increasingly regarded as institutionally corrupt, and its leaders will take their place alongside financial executives, politicians, journalists and the police, in future legal investigations.

[10] More government intervention rather than self-regulation of industry practices will become increasing easy to introduce.

Conspiracy Theory or Leaders We Deserve?

There has been an enormous level of interest in the working of Pharmaceutical Companies as part of a gigantic conspiracy theory. I took a look at the blogs which appeared most prominent via a Google search. The conspiracy theory implies that the big companies are broadly colluding with powerful elites including prominent figures in Governments, the Federal Drug Agency, and in some variants of the theory with other more shadowy groups who meet in clandestine fashion.

One way in which conspiracy theories persist is that they are very difficult to test applying the canons of empirical analysis. That, incidentally, is one interpretation of what a theory is, an abstraction helping to explain the world in which we live.

An alternative abstraction is to consider the wrongdoings in drug companies as episodes to which there is a pattern which does not require the presence of a wider global conspiracy or an ultimate (evil) architect. I like the label of Leaders We Deserve as a start to approaching the means whereby organizations develop their cultures and behaviours.


In a season of setbacks for charismatic leaders, Boris Johnson’s star is in the ascendant

May 5, 2012

The newly elected mayor of London is presented at his most Churchillian in a post-election image. If Francois Hollande [and Roy Hodgson in sport] have had the better of more charismatic candidates recently, Boris scraped through against Ken Livingstone

The results for election of Mayor of London was held up until late in the night, before news of the victory for the incumbent, Boris Johnson was confirmed.

The polls always had Boris ahead of Ken, although there was a narrowing of support in the final days of the campaign. The eventual winner emerged on second preference votes. This seems to have reflected a swing in national sentiment towards socialist candidates.

Both main candidates, conservative Boris Johnson, and Labour’s Ken Livingstone are controversial individualists who have repeatedly shown independence from party loyalties. That may explain a difference between Johnson’s success and the wider political failure of the conservative vote to hold. There is a mood afoot that rejects politicians of all three major parties.

It had been an acrimonious campaign, but in the end Johnson was hailed by his rival conceding defeat as probably the next leader of the conservative party.


Donald Trump’s Love-affair with Scottish Golf Courses takes a blow

April 24, 2012

Donald Trump American entrepreneur, TV reality show star, and wannabe Presidential candidate is a golf enthusiast who has invested heavily in the leisure industry of Scotland. But he appears to be having a tiff with Scottish politicians

Mr Trump claims that Scotland’s First Minister Alex Salmond had reassured him that proposals to build an off-shore wind farm close to his championship golf course would never win political approval.

The betrayal

But yesterday, [April 23rd 2012] according to the Scotsman:

Mr Trump said: “I feel totally betrayed and lied to by the Scottish Government. I was really misled and mistreated.”
The tycoon made it clear that, should the wind farm get the go-ahead, then the Menie [Aberdeenshire] development would end once the course is opened and construction on the planned clubhouse is completed. It will be a golf course and it will be a beautiful clubhouse and that will be it. That’s not what I want. We have a concept for a hotel which will blow everyone’s minds but I can’t have a hotel looking into those windmills.”

Another account of the turbulent meeting can be found in the Guardian.

Leaders we deserve have followed the Scottish business activities of Mr Trump for several years. His business style seems to have contributed to problems in implementing some of his cherished visions.

In 2010 we reported The Independent as saying:

The billionaire Donald Trump last week clashed with protesters opposed to his controversial plans to build the “world’s greatest golf course” near Aberdeen. Quarry worker Michael Forbes, who is refusing to sell his property which adjoins the £750m scheme, claims Mr Trump’s workers unlawfully annexed his land. The clash is the latest skirmish in an increasingly bitter battle to prevent Mr Trump from developing the site. More than 7,000 local people have signed up to join the “bunker”, co-owners of an acre of land sold by Mr Forbes [a local land-owner] to disrupt the US tycoon’s plans. The philanthropist and co-founder of the Body Shop (Gordon Roddick) and Green MP Caroline Lucas are the latest to join the campaign.

Wind Farms OK, Donald Trump not OK?

It will be interesting to see whether Mr Trump is succeeding in his dilemma of winning over regional opposition to his business interests while achieving his business goals.

Acknowledgement

Image from Ecohooks website and the pithily titled post: Donald Trump Pissed about Offshore Wind Farms


Social Media and One-way Traffic Systems

November 8, 2010

Public Service institutions may be sticking too closely to old assumptions about communications as they start using social media channels. There is evidence of too much metaphoric one-way traffic, in situations which cry out for two-way systems

This is a local story (although it may have wider interest). Regular subscribers will know that I work in the Manchester metropolis. Recently, [Nov 3rd 2010] something struck me about the way local authorities involve in social media as evidenced by their Tweeting activities.

The Manchester Police get it

I was most impressed last week when the Greater Manchester Police decided to have a 24-hour period tweeting everything that was happening on the beat. Great, I thought. Leaders of our thin blue line have got the idea of social media. Fast friendly communications. Well done.

So what about the local authorities?

Then Twitter suggested I might like to follow the tweets of Manchester City Council. Why not, I thought? If the police are starting to experiment with Twitter, maybe the regional politicos are at it as well. So I got on to the Manchester Council Twitter Site to find out. I rather liked the personal tone of some of the messages. But there was something not quite right. I had a growing feeling that a lot of the traffic was a bit ‘one-way’. That is to say it was sent out into the internet without a great attempt to connect up with the audience. I had noticed the same sort of thing in the operation of celebrity twitter sites.

So I looked at the sites of a few more local authorities. The sense of one-way traffic systems persisted. As a matter of fact Manchester turned out to among the sites which did provide more personalised messages which inviting two-way traffic. However, I began to think of a way of measuring the amount of one-way traffic around any paarticular site.

The signal for one-way traffic

The ratio of followers to people being followed may be a crude starting signal. Celeb sites tend to have a ratio showing many people following, to few people they follow. This is one-way traffic. [There are also a few sites which have the opposite ratio of following many people to having few followers. This is a different kind of one-way traffic.]

The follower/following ratio

Whipping on an academic hat, I suspect there will be value in examining more closely the follower/following ratio. It’s tempting but a bit simplistic assume that a ratio of 1:1 will be appropriate in every case.

Manchester City has a ratio of ‘following’ to ‘followers’ of about 1:3, which is higher than most sites I visited. Stockport Metropolitan Borough, in contrast has a percentage of about 1: 200.

There is someone out there

So I sent Manchester City a tweet [Nov 3rd 2010] “@ManCityCouncil Why do public service sites think social media is about sending your message out to a receptive world?”

To my pleasure I got a reply later the same day, which sort of confirms my point about the receptivity of the Manchester Council site. There is someone out there in a two-way traffic system. Stockpost has not as yet replied…

The dilemma of firewalls

The challenge of achieving the full potential of social media is made more difficult by the presence of fire-walls and the concern of ‘leakage’ of sensitive information beyond them. These issues concern many executives in public and private sectors alike. The dilemma is an important one, and calls for leadership, judgement, and creativity.

From reactive to proactive?

The brief experiment helped change my jaundiced view about Manchester City Council’s receptivity to the community based on one set of social media. More broadly, the initial evidence suggests that here is still much that can be done to go from reactivity to proactivity, as one-way become converted to two-way communication systems.