What do bankers tell their parents?

Back in January 2010 I wrote in A Moral Profession about a post by Stefan Stern, passing the parent test, in which he referred to the remark by Stephen Hester, chief executive of Royal Bank of Scotland, to the Treasury Select Committee: “If you asked my mother and father about my pay they would say it is too high.” Stern went on (and this is what caught my eye),

We should always be ready to explain to close family members what it is we do at work, and why. The FT columnist John Kay prefers this sort of practical morality to any sort of imposed code of behaviour. If you would be embarrassed telling friends or family about aspects your job, the chances are you should not be doing it, he has said.

This came to mind yesterday for two reasons: first the furore over Jimmy Carr’s tax avoidance; and secondly because of the remarks by Mr Justice Peter Smith in relation to the discontinuance of disqualification proceedings brought against the directors of the Farepak group. The judge’s full statement is here.

Mr Justice Peter Smith was pretty damning about the way the case was brought – and there will be more when the costs application is heard. At paragraph 76:

The result was that by the close of the Secretary of State’s evidence all of the main players who have been called in effect did not support the Secretary of State’s contention that the defendants had done anything wrong.

But he reserved his most withering remarks for the way that HBOS had behaved in the period prior to the Farepak group’s insolvency. Paragraph 116 is particularly damning:

The bank had, as I have said, almost a pride in their strong attitude, but they went beyond that of course because they in effect forced the directors to carry on in September/October collecting deposits, that at a time when they believed there would be an insolvent solution; they had missed it in August, but they expected it to happen later. During that period, as I have said, their exposure was reduced by £4 million, of deposits that came in in that period, and £6 million was used to carry on trading the companies, which were then sold in the pre-pack.

And in paragraph 117:

HBOS knew that those deposits would be paid and would be lost if their expected solution went out and that the only beneficiary of those deposits would be HBOS and secured a maximum return for HBOS.

And then in paragraph 122 :

This is not a court of morality, but I would suggest that HBOS really ought to look at the collections that they took in September and October and seriously consider whether or not they ought to make a further substantial payment to the compensation fund. It seems to me that what happened there, whilst apparently legally acceptable, might not be regarded in the public’s eyes as being acceptable. I cannot force them, it is entirely a matter for them.

HBOS is not happy with the statement and has said that the bank and its staff “acted entirely appropriately” and that the bank

made entirely reasonable decisions based on the information available to it at the time. . . The bank will of course consider the judge’s comments but does not agree that it acted inappropriately, as the judge has suggested.

Well (the Mandy Rice-Davies defence), they would say that, wouldn’t they.

I wonder how they are explaining things at home.

Employer brand?

Once a week in the FT’s Business Life column, Stefan Stern tells it like it is.  If you have no time for anything else, read him. Today’s column is as good as ever, Why you should pay attention to your employer brand. It is, or should be, common sense: and as important for law firms as for any one else: especially in the present economic climate.

You need to present a coherent and plausible sense of yourself as an organisation. That means having a robust employer brand: knowing who you are, and being able to tell a good story about yourselves.

This happy scenario will not come about by chance. It requires leadership and a sustained communications effort. You may need to bring to the surface your organisation’s values and attitudes that have remained tacit or undiscussed until now.

How did you deal with your lay-offs? And how will you deal with your next round of recruiting?

A different S word

Read Stefan Stern’s latest column in the FT, Time to get your strategy right. It has been a pretty grizzly year, and it is not getting easier fast, but we will come out of this recession: and professional service firms, like any other business, need to be ready. So, as Stern opens, “We need to talk about strategy” – but, and this is where it starts,

. . . business leaders ought to recognise, as they catch their breath after months of turbulence, that the strategy they were pursuing until recently is unlikely to be right for today.

It’s not just that markets have changed. Your organisation has changed. You may have all been through a near-death experience. Even if you avoided calamity, it is unlikely that colleagues are the same carefree people you remember from a year or two ago. Most businesses have been making serious cutbacks. Co-workers may be doing their best to look calm and positive. But they can see unemployment rising and know that sustained recovery is a long way off.

A true thug

A very timely column by Stefan Stern in yesterday’s FT on the Bully-boy school of management. I am sure that he didn’t have Gordon Brown in mind when he wrote it (or did he?).

Organisations are made up mainly of ordinary people and most will contain their share of racists, sociopaths and bullies. That’s life. There may not be much we can do about that. But, if the CEO’s corner office is inhabited by a bully who cannot or will not be faced down, that business has a serious problem, culturally and operationally. And when it all ends in tears, it won’t just be those being shed by the bullied victims.

What is true of business is equally true of politics. And if Nick Clegg’s attack on Brown at PMQs today wasn’t bad enough, then how about Stephen Crabb’s. Lloyd Evans, posting in The Spectator’s Coffee House blog says it all (last sentence)

Only one MP, Stephen Crabb, prodded the PM out of his statesmanlike comfort-zone. Crabb had a carefully worded question about reports of ‘bullying in the senior ranks at Whitehall’, a witty reference to press gossip that the Brown volcano has blown its top several times lately and rained brimstone on junior functionaries. Brown was taken by surprise and pulled a strangely eloquent face – flushed, angry, embarrassed, cornered and cruel all at once. ‘Any complaints are dealt with in the usual manner,’ he said coldly, and thus convicted himself in the minds of the public. Only a true thug would pull such a twisted and heartless expression.

The problem is that Labour tribalism is stopping them facing him down. See Nick Cohen’s piece in this month’s Standpoint, Fear and Filth at Brown’s Number 10.

Holding on to optimism

A very good public lecture at the University of Exeter yesterday evening on Building the Energy Future, given by James Smith, Chairman of Shell UK.

Very upbeat (“we need to hold on to our optimism, but realise that optimism alone is not enough”) and honest. And this morning Stefan Stern in the FT on why Managing the mood is crucial,

Leaders have to be resilient. At the moment the bad news is coming not single spies, but in battalions. Tough trading conditions like these test character as much as business acumen. Your physical and emotional response to these challenges is just as important as the decisions you actually take.

If James Smith’s performance last night is typical of the man (and I am sure it is) then Shell UK must be a great place to work.

P.S. Note to Steve Smith (University of Exeter VC) ~ these lectures are too good to miss: there should be a podcast.