Third time lucky
What links Boeing, the Post Office scandal and possibly Lloyds Bank? The answer quite obviously management that wants to take risks.
Boeing was turned from an engineering giant to an untrusted, incompetent brand in about ten years. Management was not interested in problems, only in solutions. Those responsible for maintaining standards were sidelined, ignored, passed over and forced out, because they stood in the way of profits. The cheapest solution was considered the best solution, design and therefore safety was out-sourced. The result has been a collapse in standards, after which it is pretty difficult to make profits and a company that has to try to re-create an environment of 100% safety, checks, more checks, engineering excellence and probity. Never easy especially when you have got rid of the people who believed in that stuff and replaced them with money obsessed, over promoted, chancers. Where was the industry’s regulator when all this was going on? Nowhere to be seen, they had been “captured” by Boeing.
As for the Post Office, what is there to say? Even after being paid a fortune to run a small bank, very badly, the overpaid leaders of the Post Office have yet to address their role in the scandal. But the fact is that they were perfectly willing to destroy their staff ‘s lives rather than deal with the obviously gapping holes in their company. Were they lazy, incompetent, criminal, nasty, stupid, greedy or bad managers? It is impossible to say, although a combination of all the above seems likely. But yet again they put their comfort, convenience and rewards ahead of the organisations greater good, they tried to destroy the truth-sayers and they demanded huge pay rises at the same time. If there was any regulation, it was invisible.
In both these cases a decent, well educated, responsible, competent manager should have done the right thing and put the long term interests of the company ahead of their own short term interests. But they didn’t and nothing happened to stop them.
And now we come to Lloyds bank. It has decided to get rid of risk assessors and managers because they are a “blocker to our strategic transformation”, in other words they are holding the company back. Apparently 2/3rds of management think they are blocking progress, to which the obvious answer is to fire 2/3rds of the managers, not the risk managers.
Even if no one at Lloyds remembers the numerous and very expensive mis-selling scandals, they should at least remember the credit crunch; or they could have a look at Boeing or the Post Office. It might be nice if the banking sectors regulators called them in for a chat, by which I mean a shouting at or maybe they will get away with it.
But I very much doubt that will happen. The lesson for regulators is that companies will always try to get away with dodging regulation, taking more risks, throwing off checks and balances.
Light touch regulation is no regulation.
But I doubt whether they will learn anything either, they are also under pressure not to hold companies back; the trouble is the results are not better, bigger companies just bigger, worse messes and more cost.
The very thing the regulators are there to avoid.
Economics, trade and Brexit, not necessarily in that order but the dog always comes first.
By Jonty Bloom Media
Its a wider problem of the erosion of collective responsibility. The whole notion that we have a wider responsibility when we make decisions has been diminished by a Hayekian/Randian ideology which proposes that naked self interest is in the public interest. Sure this ideology promotes some of the worst of people, but it also tells "followers" about the standards to which they should hold. It derides public service since, to quote Reagan, "government is the problem." Wealth is a equated with social value. Self-forgetting is for losers and monks/nuns who are weird. Its a philosophy for the bad and the morally weak. Lets hope the lesson is starting to sink in.
Well said Jonty. And now I fear Nationwide is going down the same path with the purchase of Virgin. They want to do business banking FFS. Being a Mutual there are no big shareholders with research departments to look at the books and stand in their way. The new chief exec has carte blanche to overreach.