Posts Tagged ‘banking crisis’

Change – Active & Passive

Monday, May 23rd, 2011

I was off to a meeting the other day and realised that something was different.  I won’t go into all the details (they aren’t relevant) but I recognised that something fundamentally different and because it had happened slowly, over a long period I hadn’t recognised it for what it was.  I’m sure that this type of change is far more widespread than people realise, but it is seldom documented in the management books as in some ways it isn’t very ‘sexy’  It contains none of the macho grabbing Life by the scruff of the neck type of strategies that are so popular in self-help and leadership books.  Sometimes Change just happens and the challenge is to firstly recognise it and secondly respond appropriately.

It can be a bit of a shock to realise that you either need to take positive action to change the new status quo or take advantage of it.  My point is that until you accept that it has happened and the things you are doing are perhaps no longer relevant you can not take  the appropriate steps.  The world around us changes, never more so than now amidst global financial instability, commodity price chaos and freak weather events.  Your business could easily be knocked off course by a Japanese tsunami if you are a dependant on say Honda or Nissan, or some micro-chip supplier over there.  Your clients may not be able to get the credit required to buy from you in today’s banking world.

When things change, you have to assess what your new options are and ask how these new circumstances might serve you.  What are the opportunities?  What new risks might you need to take steps to avoid?  It is also a good time to make sure that your goals are still relevant… we can sometimes chase something so long it becomes a habit rather than something we actually need or want.   In Britain we are used to the weather changing all the time, perhaps nowadays we need to realise that business can change almost as rapidly!

Video Blog: Organisational Change Lessons learnt from the Banking Crisis

Saturday, December 19th, 2009

I recently wrote an article on an allied subject, and was recently interviewed about this.  As ever, I’d be interested to hear what you feel about this…

PS>> This style of shooting was a bit of an experiment and we’d be very interesting to know how you feel about it

Banking – Has anything changed?

Saturday, December 5th, 2009

Over the last two years or so the repercussions of the sub-prime debacle have been rocking the world economy, and bringing down such global giants as Goldman Sachs & JP Morgan Chase. Every High Street in the country has been left with gaps where businesses have closed; even such household names as Woolworths have bitten the dust. In the UK we saw Northern Rock, Lloyds & RBS bailed out by the government and cost this country £!.5 trillion! Furthermore every home-owner has seen the value of their asset dive by around 25-30%, which will have had a catastrophic impact on many families. So, amidst this global upheaval, and almost a year after the main shockwave, I ask “Has anything changed in the banking sector?

I will be the very first to admit that I am no banking expert, but let us examine this through the lens of Change. The politicians had to act to avert an even worse crisis and they had to both reassure us (and our creditors & partners.) They then had to sell the cost of their actions to us. Thus we had Gordon Brown telling us

“Any system has got to be based on long-term performance and that will have to be policed in the future by the FSA”

in an effort to convince us that there would be no hiding place and that a new sheriff had just ridden into town and we were safe once again and could again rely on the proverbial strength of the British bank.

However, Alan Greenspan said recently

“I made a mistake in presuming that the self interest of organisations, specifically Banks, was such that they were best capable of protecting the interests of their own shareholders” and “Crisis will happen again but it will be different no two crises have anything in common except human nature”

In order for change to take place there has to be a number of factors in place:-

  • There must be a clear acknowledgment that either things aren’t working or can be done better

    Yes

  • A change in leadership, including new blood at the top tables

      NO

  • Rewards for changing and/or penalties for not doing so

      NO

  • Clarity about the role of banks… who do they serve? Their shareholders, the community, the country, their depositors, their borrowers???

      NO

  • · A clear idea / vision of what needs doing to make things different

      NO

  • Clear , powerful communication down the chain of command of how each person is now supposed to behave and how they will be measured and rewarded
NO     

  Given that they seem to have failed almost all of these pre-requisites, and indeed, given that their main regret seems having been caught with their fingers in the cookie jar rather than anything more fundamental (think of their apology to the Treasury sub-committee,) I suspect we can safely assume that they will firstly look after themselves, and then their shareholders and thus continue to do the things that make them rich.

Let’s be clear, I don’t care who gets paid £1m; or more! What I do care about is the reason that they are taking that home. What wealth have they generated? Who, besides them and their shareholders, benefits? As long as that is clear and commensurate with their level of pay, that is fine by me.

However, it seems to me that banks have two roles. Firstly, they are a utility that processes the financial transactions of borrowers and depositors, with a primary role to safe guard the assets entrusted to them, using their expertise to make this process smooth and safe. The other is as a speculator in a range of different financial ventures, where they should share risks and rewards with their partners and investors. I don’t think these two roles, or two sets of stake-holders sit very comfortably together.

“In times of universal deceit, speaking the truth is a revolutionary act.”  George Orwell

The people who are in charge are all bankers who have been absolutely raised with the traditional view of their role. Indeed, one insider, and multi-million bonus earner said that he was busier than ever as the reorganisation in the market place has just meant fewer players are carving it up and the ‘credit crunch’ has allowed them to dictate terms rather than compete.

Paul Moore, the HBOS whistleblower, was fired for telling his bosses they were getting it wrong; we need people like this to have the power to draw up new blueprints of how banks work in the 21st century.

Have each and every one of us mortgaged our futures and paid with our pensions just to keep the same people driving the same Porsches, living in the same mansions? Our lives have certainly changed, but I think it unlikely that the people who control this sector have…

I leave you with a few interesting historic quotes:-

“I see in the near future a crisis approaching that unnerves me and causes me to tremble for the safety of my country. As a result of the war, corporations have been enthroned and an era of corruption in high places will follow, and the money power of the country will endeavour to prolong its reign by working upon the prejudices of the people until all wealth is aggregated in a few hands, and the Republic is destroyed. I feel at this moment more anxiety for the safety of my country than ever before, even in the midst of war. God grant that my suspicions may prove groundless.” – Abraham Lincoln, (from a November 21, 1864 letter to Colonel William F. Elkins)

“History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling money and its issuance.” – James Madison (4th US President)

And the final Pièce de résistance… found in the press yesterday

What more can I say…..?  So I’ll leave it to the World’s most successful investor

“If you’re in a card game and you can’t figure out who the patsy is, you’re it.”  Warren Buffett

                                                                                                                                                    © I-Change 2009

Key questions for business…

Tuesday, February 10th, 2009

Today, the Treasury Select Committee will be grilling the four men who headed the big banks that caused this current crisis live on TV.  It does have a little of the feeling of Justice being seen to be done about it and whilst I am sure it will be a less than pleasant day for these four gentlemen, I suspect that there might be a long queue at the door of volunteers who would willingly endure this if they could swap their financial position for that of these ex-bankers.

It does raise a number of serious questions for the rest of us though:-

  • Who do business leaders owe a duty of care to? 
    • Does it go beyond the shareholders? 
    • Their ordinary staff who are sharing the misery? 
    • Their customers who are also in turmoil now? 
    • Society as a whole?
  • How should we measure success in a business?
    • Short term profits?
    • Long term growth?
    • Contribution to the greater good?
  • How do we reward successful business leaders?
    • Shares?
    • Salary?
    • Bonuses?
    • Positive regard / respect / public acclamation?
    • Security of tenure?

If you are running a small business these questions may seem to be simple to answer or irrelevant for you, but I would suggest that truly understanding the relationship of your business with those it touches is a key loadstone for steering you towards safety and success in these turbulent times?

I’d be very interested to hear your thoughts on these questions and this big, big issue….

“I know only that what is moral is what you feel good after and what is immoral is what you feel bad after.Ernest Hemingway

Resources:

A five step plan to save you £5,000,000,000,000

Tuesday, October 28th, 2008

Apparently the various world governments have now invested £5 trillion in propping up the banking system. That is a huge amount to invest in failure. I’m not suggesting that it isn’t required but would suggest that is worth pausing to consider that it isn’t only governments that can invest in failure, we all can. So often, when we have made a mistake, rather than seeking to learn from it and so avoid it in future, we can find ourselves justifying our actions, defending them and feeling that it “wasn’t our fault”, so we don’t need to change!

If you find yourself today, drifting down this path, STOP!

  1. Accept that we all make mistakes
  2. Forgive yourself
  3. Ask what can you learn from this
  4. Ask what steps you can take to ensure that you don’t need to find yourself here again
  5. Move on!

 

“Being happy doesn’t mean that everything is perfect. It means that you’ve decided to look beyond the imperfections.”