When Barclays chief executive Jes Staley attempted to unmask a whistleblower, prompting an investigation by financial regulators, he did more than just harm the public reputation of his bank. He will likely have set in motion a corporate culture problem, damaging the bank internally.
This is according to Ajit Menon, an organisational psychologist who makes his living heading up change management consultancy Blacklight Advisory.
Despite “culture” in banking becoming more of a prominent issue in recent years, Menon does not believe the industry has got it right yet. “There’s still a lot of dirt in the system,” he tells City A.M.
“The work we do mainly is to use the principles of organisational psychology and science to help leaders and teams and organisations improve their performance,” Menon explains. “I’m kind of a cultural detective. I get brought in to understand what’s going on in their culture, what’s going on beneath the surface.”
An example of what this means in practice: Menon, after signing a non-disclosure agreement, embeds himself in a bank, works with management, talks to staff and investigates how a company works from the inside. This could be used, for instance, to investigate why an employee might believe it is acceptable to engage in rogue trading. Menon and his team then make recommendations for how the business needs to change to prevent this sort of behaviour.
For instance, he might recommend that a management team shake-up its financial incentive scheme so that employees who are working in the right way, and playing by the company rules, are rewarded, while those not in keeping with these standards are penalised through their pay.
It is difficult to imagine some bosses welcoming this scrutiny, and admitting to having problems. “It is difficult work, because a lot of what we do is exposing the warts in their business. And so you need to have leaders who are ready to do the work,” he says.
“Most of our clients would be people who are ready, who want to go down the path, who really want to see what’s below of the surface and work on that basis.”
He adds: “I think the danger is when you have someone saying ‘yes, I want to do culture change’, which I’ve seen so much in the industry over the last 10 years, especially when Martin Wheatley was pushing it through the FCA. It became ‘let’s do culture change because the FCA is pushing us to culture change’, not because ‘we know we have underlying rot in this business’.”
Menon cannot name the companies he has worked with. But he is full of suggestions for those he has not investigated, with Barclays and Staley at the top of the list.
“I think inadvertently what he did was sent a message that, culturally, if you stand up against the organisation, a whistleblower is not protected,” he says. “I think that was a very strong and dangerous message. Because will whistleblowers come out now? Knowing the fact they could be looked at? I don’t know.”
Another high profile example is Libor. “If you look at the Libor story, and the whole Tom Hayes story from when it started to up to now, the people who have finally got themselves pointed at are the people who actually pressed the button and did the trade. A lot of this stuff was in the system. People knew this was going on, but nobody said anything. I think the system ends up colluding with it: It’s okay. That’s the kind of thing.
“For me, it’s akin to if you’re driving down the M25 and you know you’ve got to be driving at 70mph but you go at 80 because the camera’s not there yet. That’s what’s going on.”
Many banks and financial services companies would readily admit that they have suffered from cultural problems in the past. But the vast majority would also argue that this has been fixed.
Menon acknowledges that some firms, from the outside, appear to have changed, as evidenced by their slogans and company mottos. But he questions the depth of this change.
“It’s a good thing to do, right? It’s a fantastic PR exercise,” Menon says. “But it doesn’t work if it’s left that that superficial level.”
Surely there has been an improvement since the financial crisis, though? “A lot of work, a lot of money, a lot of consulting time has gone into this,” he says. “But it still takes a brave CEO or a brave chairman to stand up and say: ‘Let do this work… and see what’s actually going on in this organisation.’”