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15 October 2014 -
Jon Bennett
President Harry Truman famously kept a sign on his Oval Office desk that read, “The buck stops here.” Perhaps it was a gift. A toss-up between that and that old office staple, “You don’t have to be mad to work here…” However, more generous historians see it as a symbol of leadership: I’m in charge. I’m responsible.
It’s a concept that retains popular appeal today, and underpins recent statements by Bank of England governor Mark Carney, who spoke at the International Monetary Fund’s annual meeting in Washington this week. He said that top executives had “got away without sanction’ in the aftermath of the financial crisis, and warned of change to come – meaning a new criminal offence of “reckless misconduct” in the management of a bank.
It’s easy to see how these proposals could be politically popular – but there is widespread concern in the City. For example, Conservative MP for the City of London Mark Field made an excellent case that the proposals are ill thought through. On the one hand, government requires banks to take on risk by funding small businesses and the mortgage requests of first-time buyers, but on the other requires them to adopt a more risk-averse approach. Threaten bankers with jail – and the proposals are such that they reverse the burden of proof, so the accused must prove they are innocent of reckless behaviour – and which brave souls would step up to the boardroom? How do you distinguish between a decision that was reckless, and one that was merely wrong?
It’s a fair argument. But other fields manage to set and maintain professional standards and find ways to determine if those standards have not been upheld. Doctors make mistakes the same as anyone else. But sometimes those mistakes are shown to be the result of negligence. If medical professionals can be held to account in such a way, and they take risks with people’s lives, then isn’t the same possible for those who take risks with money? Perhaps – but the medical professional is concerned with specific personal tasks and decisions that concern their patient, rather than decisions, frameworks, checks and balances that influence the behaviour of many thousands of banking staff.
The proposals are of major political significance. They will be seen to have succeeded if a small number of high-profile individuals are held to account when things go wrong. The mob will be satisfied by some senior bloodletting. It only takes a handful of scalps to proclaim that something has been done. We will be able to see for ourselves that leadership has risks as well as rewards.
But does jailing these captains of banking really achieve much more than sating the bloodlust of angry customers and taxpayers? While President Truman took responsibility for his actions, only a complete purist would argue he was personally responsible for every success and failure of his government as a whole. In reality, there is no, single buck. Some stop at leadership tiers far below the chief exec, and some land collectively with a team or board of oversight. It’s hard to see how proposals to jail just the top brass will change behaviour elsewhere. Their main achievement may be to simply reaffirm the great advantage of being senior in an organisation… just as long as it’s not that senior.
Jon Bennett is managing director of corporate communications consultancy Linstock Communications
For more on the issue of accountability, pick up Dr Peter Fuda’s book Leadership Transformed.
Image of Mark Carney courtesy of the Wikimedia Commons.
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