Leadership and the New Golden Rules

Intelligise LeadershipIn today’s paper I read that the Chancellor has backed the £9 million pay and bonus package given to Stephen Hester the man charged with turning around the fortunes of the Royal Bank of Scotland (RBS).

This begs the questions:

1. What is a CEO of a big financial institution really worth?

2. What is the definition of a very modern major general any way?

I had a meeting with RBS this week at their spectacular Gogarburn headquarters (just outside Edinburgh) and it struck me that RBS a once great company actually is still a great company – it had been failed not by its people but by its system of leadership.

The human brain (amazing as it is) is extremely limited (if you don’t think so you are not as clever as you think you are) and a business as complex as one of the worlds largest banks can not be run by one man. With staff in the hundreds of thousands a major financial institution has almost unlimited brain power. Surely modern leadership is all about capturing and utilising an organisation’s shared knowledge? It isn’t about having one man make all the decisions and everyone else fall into line.

The Chancellor explained “To earn his full £9 million Stephen Hester would have to generate £15bn profit” and here lies the problem. As I have pointed out above the logic is flawed, it is the combined effort of all the banks employees that will earn the £15bn and the new core skill of leadership is facilitation not the ability to enact a military style dictatorship by a solo super leader. To earn £15bn you bet the RBS will have to cut staff and given it is now a publicly owned company that will cause problems in public perception not yet unforeseen by government or the bank itself.

We now live in a society where you can find out when Stephen Fry is having a cup of tea even if you have never met him. The internet, mobile apps, knowledge management, social networking and 24/7 information access has given companies access in a previously unheard of way to the brainpower, opinions, experiences and attitudes of the workforce. Ignoring this and continuing with the “super leader delusion” that led the financial system to collapse is the very definition of modern major stupidity.

To be fair Stephen Hester may well see himself as a facilitator, a team leader, as passionate about his staff, and maybe he is. Put yourself in the shoes of any multi millionaire CEO and think about the lifestyle you would lead and ask yourself this question; How in touch with the lifestyles of receptionists, nurses, small businessmen, firemen, refuse collectors, teachers, even local bank branch managers, in other words your staff and your customers?

In every financial institution that failed there were dozens even hundreds of staff (frontline, middle and senior management) who knew what was happening but felt they couldn’t do anything about it. Even people outside the banks knew what was going on – I myself as a Director of Glasgow Chamber of Commerce had an opportunity to lobby David Blanchflower on the Bank of England Monitory Policy Committee to act quickly to head off a credit crunch led recession ‘this was back in April 2007’. He told me that “Scotland in particular had been performing well” and “he didn’t think that my premonitions of economic doom were merited”.

They called the leaders of the banks and fast growing financial institutions the “Masters of the Universe” we will get our economy back when we collectively reject the delusion of super leadership and understand that the real “Masters of the Universe” are you, me, the customers, the staff, ordinary people who have the conversations that create economies.

Is Stephen Hester is worth the £9m if he turns the bank round without loosing tens of thousands of jobs?  I don’t think one man or even a management team can achieve that but I will bet his staff know how. If he can harness their collective intelligence £15bn will be small fry but who gets the bonus?

Must we live in an upside down world?

Gordon MacIntyre-Kemp

Intelligise – Be Brilliant

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