A colleague, one who served both in the Vietnam and the banking industry emailed the following: “A friend of mine who reads lots of military history observes that the officers who become generals are the ones who get no dings on performance evals, and the way to get no dings is to avoid doing anything wrong, and the way to avoid doing anything wrong is to avoid doing anything other than follow orders. Kinda like (many) bankers.”
Taking up a similar theme, in a recent column Peggy Noonan bemoans the self-promotion and ego gratification that many believe now typify many in the senior military: “The other day on his Daily Beast blog, Andrew Sullivan posted a letter from a reader noting the way officers are now given and relentlessly wear on their dress uniforms ribbons, markers and awards for pretty much everything they do-what used to be called fruit salad. Mr. Sullivan posted two pictures… one of General David Petraeus and one of Gen. Dwight D. Eisenhower. This is the Eisenhower of D-Day, of the long slog through Europe in World War II. He didn’t seem to see the need to dress himself up and tell you what he’d done. Maybe he thought you knew. He didn’t wear all the honors to which he was entitled, though he could have used them to dazzle the masses if that had been what he was interested in. Top brass sure is brassier than it used to be. And you have to wonder what that’s about. Where did the old culture of modesty go? Ulysses S. Grant wore four stars on his shoulder and nothing else on his uniform. And that was a fellow who’d earned a few medals.”
What’s this got to do with banking? Unfortunately, quite a bit. Bankers often “follow orders” to get ahead, failing to confront important issues. Related to this is the significant aroma of fear that one can detect when speaking with bankers at all levels despite what is a relatively quiet, albeit largely stagnant, economic environment. Many C-level management and senior management are working overtime not to build revenues but to manage the various regulators (often uncoordinated and sometimes in conflict) poking around their institution. From my conversations with some regulators it seems that they are blissfully unaware of their impact both on the time allocations of bankers and the quality of the customer experience. But they should be. A consulting colleague at a large international consulting firm recounted a conversation that one of his senior clients at a major bank had had with a regulator. The gist of the regulator’s comments: “Why are you trying to add new customers when you still have to address compliance issues for your current customers?” That is not a statement that encourages innovation, growth or shareholder value.
Versus top management, many in the lower tier of management and non officer ranks are simply worried about their survival as banks rethink branches and their product offerings while further exploiting technology. Under these circumstances following orders makes more sense than speaking up.
On reflection, I can think of at least a dozen examples of bankers who tried to do more than follow orders, who rocked the internal boat, and then were either dismissed or exiled within their banks. These bankers spoke up, were viewed as being too aggressive or not team players, and suffered the consequences. In one case a banker who was hired to shake up the wealth group pushed too hard, alienating the bank’s Chairman. That Chairman, now Chairman of a defunct bank, said he wanted change but refused to take the steps required to accomplish it. Instead, he focused on maintaining his bank’s (hidebound) culture and highlighting the acceptable (but not great) results from that unit. Rather than trying to redefine the bank or rise to the next level of performance, that Chairman, among many others was defensive and preferred to congratulate himself on what he had accomplished versus pushing for enhanced performance.
A more serious example of a person bucking the culture and becoming a victim involves MF Global, an investment bank run by Jon Corzine, the former Governor, Senator, and co-head of Goldman Sachs. As discussed by William Cohen in a Monday Bloomberg View column, Michael Roseman, the company’s chief risk officer, began to ask questions about the extent of the company’s risk exposure on European debt. Corzine went to his Board for approval of a higher exposure limit, got it, and also had the reporting lines changed so that Roseman reported to him rather than the Board. He then fired Roseman, sending a clear message across the company.
In fact, risk management personnel are among those whom smart leaders want to push back. Unlike Roseman who appeared to have fulfilled his role appropriately, too often I have seen credit officers who go along, bending to the pressure (sometimes gentle, sometimes not) of line management. In more than one case, weak credit officers who went along helped to grease the skids for some failed banks. Going along got them a raise and an “attaboy”, but also helped to destroy their banks.
As for the medal and “fruit salad” mentioned above, at some of the largest banks as well as some regionals and community banks, top management is largely cut off from their “troops” on the ground and protected from bad news. During my career, I have had the opportunity to visit many executive offices and executive floors, even one with a working fireplace. It is not the private floor that is the problem but the disconnected attitude that it sometimes supports. Years ago, one bank-wide cost cutting project resulted in eliminating free coffee and food across the bank…but not from the protected senior floor. That group, needing junk food much less than others, never shared even in that minor sacrifice.
Oftentimes it is a challenge for those who have achieved great success to avoid letting it get to their heads, but the tendency can be avoided. A few years ago I was at a community bank. We were working through the day and when it came to lunchtime the Chairman went to pick up the order. That egalitarian move said a lot more than all the speeches bankers make about how important their people are. I am not suggesting that Chairmen become delivery boys. (The unkindest among you are probably thinking that your Chairman would mess up the order.) What is important is that they minimize the trappings of their office and go out of their way to remain connected across the bank and encourage the type of pushback that results in innovation and excellence rather than mediocrity. Eisenhower or Petraeus as a model? An easy choice.