HBOS and RBS – an everyday tale of self-delusion

HBOS & RBS LogoFred Goodwin of RBS and James Crosby of HBOS both presided over the destruction of their banks, but in very different ways. Goodwin approached his role in an adversarial style that has become legend, whereas Crosby seems to have basked in a sea of bonhomie.  The parliamentary commission on HBOS was damning about many aspects of how it was run and most of the press focussed on retribution. Of critical importance here is, in fact, not accountability, but the issues of responsibility that these sad events highlight.

To challenge Goodwin, in seems, carried high levels of personal risk. In HBOS the atmosphere was completely different. According to Non-Exec Director Sir Ronald Garrick “the HBOS Board was by far and away the best board I ever sat on”. And yet, each bank nearly bankrupted both themselves and the UK economy.

Although different, what the individuals involved failed to do was listen. Here, listening means being curious and therefore interested in what other people are saying. One can only guess at what made Goodwin, Crosby and the rest uninterested in the opinions of others. In the case of RBS, it meant challenge being overruled. In HBOS, it meant  strategy being developed and implemented without challenge. In both cases, however, there seems to have been a significant degree of self-delusion. Goodwin apparently had an overwhelming belief that he was right. At HBOS, as the parliamentary report concluded, it was a “triumph of process over purpose”.

Whatever organisation we run, whether it’s an SME or large corporation, the danger of self-delusion is always there. In both RBS and HBOS, there were people issuing warnings, but who were ignored. Until a leader decides that everyone is worth listening to, the danger of unacceptable risk remains. Leadership is about many things, one of which taking responsibility for asking yourself:

How often do I find myself curious about opinions that I don’t like?

Listening, it seems, to those that you don’t respect or like very much can be one of the key traits of effective leadership


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