Tag Archives: CEO

Book Review: Clearing the Bull, The Financial Crisis and Why Banks Need a Human Transformation

Book review – A very interesting review and response from an HR professional to the HR issues raised in Clearing The Bull.

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Human Risk 4: Steve Ballmer, The Decline Of Microsoft

This is the fourth in a series of articles on Human Risk. The first three can be found here, here and here.

Microsoft CEO Steve Ballmer, who took over from Bill Gates in 2000, recently announced that he will be resigning within 12 months. The fact that Microsoft’s shares jumped almost 8% on the news is testament to the widely held belief that Ballmer is primarily responsible for the decline of Microsoft relative to its much nimbler rivals such as Google and Apple.

By some estimates as much as $24 billion was added to the market value of Microsoft on Ballmer’s announcement. This is proof, if ever any was needed, that culture and risk are twin sides of the same coin. The only question is; what if any, were the specific cultural issues that caused one of the most important organisations in modern history to decline in value and competitiveness? Continue reading

Bank Risk Culture: Why Leadership At The Top Is Single Biggest Source Of Risk

The following is the fifth in a series of articles on bank risk culture. The previous articles can be accessed here or by clicking the HOME tab on the blog.

No discussion of risk and culture is complete without examining the role of leadership in defining both. This week’s article will demonstrate that poor leadership is the single biggest source of risk to an institution. It is also a source of risk which no amount of risk management or focus on risk culture can overcome. Continue reading

Where was HR in the Financial Crisis?

The folowing article was posted on the People Management blog on March 13, 2012.

Conventional wisdom has it that the subprime crisis was all about the failure of regulations, governance and controls. Presumably, in order to safeguard against the next crisis, the prescription has to be more regulation, more governance and more controls.

The problem is this is exactly what was prescribed after every previous financial storm, such as the LDC (less-developed-country) debt and junk bonds crisis, and the dotcom bubble. This inability to recognise the true causes and remedies of financial crises means they have become like a recurring decimal, seemingly without end.

If we look beyond the confines of convention we will see that the subprime crisis was about human failure arising from poor values. We can specifically relate this to HR by looking at the CEOs involved. They have been accused of megalomania, of having aggressive, oversized egos, and of creating unwieldy, poorly integrated, high risk-taking organisations. The question, therefore, is this: if leadership was a main source of failure, where then was HR?

Every year, HR departments spend millions evaluating employees, performing staff surveys and ensuring that organisations recruit and retain people with the right values. Why were such standards not applied at the very highest, and thus incredibly important, level? Is there any truth to the dictum that HR does not speak truth to power?

For a long time HR has complained, and rightly so, that it did not have appropriate access to executive management. That has now changed in most organisations. Now that HR has that access, it needs to determine how to make best use of it and very clearly articulate its concerns about executive management directly to executive management.

However, that on its own would not be enough. In banking in particular, HR must place itself in a position to assess the impact of executive behaviour on the economic and competitive sustainability of the organisation – as well as what precisely needs to be done when such behaviour is found sadly wanting.

Leadership was not the sole human factor in the subprime crisis – but it’s a great place for HR to start.

Jonathan Ledwidge is conducting a survey on current attitudes to banks, including questions about their values, and invites readers to participate via bit.ly/PMledwidge