Bank Imbalance

This morning the Board Chair of Barclays, the global bank, fired his CEO with analysts suggesting the speed of top line revenue growth, cost reduction and value creation has been underwhelming while acknowledging the progress the Bank has made in re-shaping its’ culture and shared values. The inference being that the bank has spent excessive time and resources on internal versus external issues. The point here is you have to do the following in  parallel, not sequential phases:

  1. Frame and commit resources to your strategic vision of the future
  2. Define and move swiftly through the strategy, tactics and execution towards your desired future state
  3. Define and make cultural changes to the firm’s operating beliefs, employee’s attitudes and their behaviour consistent with your new strategy and your desired future
  4. Allow for mid-course corrections to #2 and #3, where market assumptions and so forth change and need moderate or significant adaption
  5. Seek to exploit the results and value when you arrive at your desired future state (leverage and innovation).

Here is some key questions to ask in your own organisation and your clients:

  1. What proportion of management time, employees time and capital is being directed to internal issues versus external issues? Is that appropriate for the organisation at this stage of its’ growth strategy? If not, what needs to change?
  2. Does the firm’s leadership posses the skills and volition to make appropriate decisions rapidly and exemplify the desired beliefs consistent with the growth strategy? If not the leadership needs expert help to adapt or ultimately change those at the top.
  3. Is the business measuring what matters? Does it possess performance-based job descriptions and metrics for each individual throughout the organisation consistent with the growth strategy? If not, it needs immediate correction.
  4. Are they holding each other to account for accomplishment of key performance-based priorities? If not, starting with top management it needs to create or reinforce accountabilities down the line (carrots and sticks, monetary and non-monetary versions)
  5. Are they hiring, recognising and rewarding people for both the right behaviours and results consistent with the new growth strategy?  If not, it needs immediate adaption of the hiring, performance and rewards systems undertaken by line management not HR.

The banking sector is a poster child for excessive internal focus on compliance and costs. I sat at dinner last night with the regional head of a Top 10 global bank, who is accountable for protecting the bank from financial crimes and compliance breaches. He recounted his daily routine of corralling 12 CEOs of regional operating units, questioning their practices and where necessary forcing them to abandon clients, employees and products. What is obvious from the conversation is that in an effort to protect the bank’s bottom line there is a daily struggle to define “prudent risk taking”, to balance that with profitable growth and to use everyone’s time valuably. Isn’t that a skills set you would expect every banker to have learned at the start of their career?

The reality as Anthony Jenkins dismissal today shows is that those skills are in shorter supply than most imagined.

© James Berkeley 2015. All Rights Reserved.

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