UK Parliament

Leadership: Libor, Barclay's and Executive Accountability

I have been fascinated as I've read the reports on the investigation into interest rate manipulation by Barclay's and other banks, the resignations of that bank's Chairman and CEO and, particularly, the "spreading of blame" that's now occurring as everyone who knew better is figuring out a way to run for cover.

Here's my take on this from the leadership perspective:

For all that Mr. Diamond explained to the Parliamentary Committee that his people had been asking the US and UK regulators questions about what they were doing/could do - and being given no specific guidance regarding their actions - they knew better.

People inside an industry - or holding any particular job, for that matter - know and understand better than anyone else the nuances and consequences of their actions and decisions.  That's why they take those actions and make those decisions.

Because, one way or another, those actions and decisions serve them.

So...

Should there be more and better regulation - particularly for those industries that are supposed to exist not only for profit but also to support the society in which they operate?  Sure.

Will regulation ever address all the agendas and actions of the individuals within any industry?  No.

Does it then fall upon the most senior executive to make clear - to the point of termination - that any action that could conceivably mar the reputation of the organization is unacceptable and will not be tolerated?  Yes.

And that's where Mr. Diamond and his colleagues continue to go wrong.  They're happy to say, in retrospect, that what was done "sickened" them - but that doesn't do anyone any good.  In fact, that, too, is self-serving.

Ultimately, this becomes about you - not them.  If there are reputation-risking actions and decisions going on in your organization, you either know who or where those are taking place.  That makes it your responsibility to stop those actions - now.

This is about morals and ethics and integrity.  Not business.

It's time for leaders to lead.

CUSTOMER SERVICE: Why I Hope Gordon Ramsay Never Opens a Restaurant in Paris


This is a post from my personal blog, Leslie, Life and Paris - but because the topic is customer service, I thought I'd share on this site as well. Enjoy!

I don't like Gordon Ramsay.

No, it's not because of his over the top, oh-so-offensive persona on his television shows.  Nor is it because he swears so much and is so willing to be abusive to those around him.

Or not quite.  Because it was a form of that abuse - in a policy sort of way - that led me to my conclusion and the fact that, for years, I've boycotted his restaurants.

And have told everyone I could that they should, too.

Here's why.

A few years ago I was in London on vacation, staying at the Connaught Hotel in Mayfair and, basically, doing myself proud.  This was the longest, most luxurious vacation I'd ever given myself and I was pulling out all the stops.

Place Vendôme, Paris
As part of that adventure in the luxe life, I had contacted the concierge at the Connaught prior to my arrival to make arrangements for theatres, dinners, a tour of the Houses of Parliament (little did I know that a few years later I'd be asked to give testimony on small business development there!) - and even a personal automobile tour of the central boroughs of London with one of the better-than-best "Blue Badge" tour guides.

I was beyond excited.  This was the London trip of my dreams.

One of the restaurants for which I had dinner reservations was a Gordon Ramsay property.  This, I was assured by my helpful concierge, was going to be the dining experience of a lifetime.

It was - but not in the way I expected.

I arrived at the restaurant, seriously duded up (St. John, doncha know). I figured it was up to me to live up to the experience and represent myself well. After walking through the bar, I reached the maitre d's stand and, while he was taking care of the couple ahead of me, I took a look into the restaurant.

What struck me immediately was that there was what could only be called a "line-up" of single women at tables for two, all sitting facing out toward the entrance.  Some of them had books or magazines.  Others were simply trying to look as if they weren't being stared at by everyone who walked in the door.

There was an empty one of those tables at the end - and, while I noticed it, I didn't really pay it any attention.  I was too busy looking at the rest of the restaurant (white linen, gleaming silverware and glistening glasses), the servers (very elegant in their black and white) and the diners (tables of single men, couples and larger parties) dotted throughout the rest of the restaurant.  It was lovely - and it smelled good, too.

The maitre d' - a small, slight man - came back and asked my name.  I gave it to him and he responded that, yes, he had my reservation and that I should follow him - at which point he turned his back to me and walked quickly and directly to that last empty table in the line-up.

That wasn't okay with me.  Not by a long shot.

It's hard enough for women - particularly women of a certain age - to take themselves out to eat alone.  Especially in fine restaurants.  From diners to dining establishments in the US, there's that built-in, always to be expected, slightly pitying, definitely demeaning, "Just one?" that we can expect - always followed by some version of the same by the server as they decide whether or not to remove the 'extra' place setting you'll not need.

At Gordon Ramsay's prices and on the trip of my dreams, there was no way I was going to be put in that box - especially by some little, snooty guy who I probably could have beaten up without trying very hard.

Instead, as he stood over the table waiting for me to conform, I very quietly said, "This table is not okay with me.  I don't want to sit here."

Looking and sounding highly affronted, he sniffed (seriously - he sniffed) and then said, "Well, then, where would you like to sit?"

I took a moment to look around the restaurant again, selected the table I wanted and walked over to it.  He followed and, as he joined me, I said, "Here."

Huffing out a clearly offended "Fine," he waited for me to sit, gave me the menu and then, after slightly tossing his head, he huffed away.  (It was very dramatic in a musical comedy sort of way - which I don't think was his intent.)

Reception Room, Hotel de Ville, Paris
I opened the menu and, even as I was wondering whether the food would be better than the dining experience so far, my waiter appeared, greeted me, asked me if I'd like a drink or bottled water and then left me to my study of the menu.

A few moments later, he came back with my sparkling water and a lovely plate of appetizers.

This was a surprise to me as, of course, I hadn't ordered anything yet and it was quite a bit more than an amuse bouche to awaken and prepare my taste buds for the treats to come.  This was a veritable sampler tray.

As he put it down before me, he said, "This is from the staff.  We're so proud of you!  The host is always putting single women at those same tables and we always feel so bad for them.  You're the first woman who's said no and insisted on a different table!"

And that set the tone for the rest of the dinner.  Not only did I have what I ordered served beautifully,  but, somehow, there was also a little something extra that was given to me by one of the chefs or the staff - always with the same message.  They were so proud of me.

So was I.

And that brings me back to Gordon Ramsay and why I hope he never opens a restaurant in Paris.

One of the great joys I discovered upon coming here is that it is perfectly normal and acceptable for women to eat alone at any time of the day in any cafe, bistro or restaurant.  No matter how casual or formal, all diners are treated the same - male or female, single or groups.

It's a joy.

So, while Ramsay has two restaurants outside Paris and is just about to open one at the Paris Las Vegas Hotel, I hope that that's as close as he ever gets to the real thing.

Because what I know from all my years in business is that the little wimp of a maitre d' would never have gotten away with his dismissive and demeaning treatment of women if it weren't perfectly okay with his bosses - the restaurant's owner.  And that's Ramsay.

Let him keep his chauvinism and his cooking out of this town - because, as good as his meals might be (and my dinner was delicious) - he has no idea of how to create a civilized dining experience.  At least not one of interest to any woman of taste and style.

Like me.

M&A and the UK General Election

Well before the British General Election was held on May 6th, the consensus was that there was going to be a "hung" Parliament.

You've got to hand it to the British for using an expression like that.

What it comes down to is that everyone expected - and they were correct - that no one political party would achieve a majority of votes.  As a result, there would be (at its simplest) two options:

  • Either the party with more votes would form a "minority Government" (which would have meant that they had to hope that they could get any of their legislation through) or 
  • That the party with the majority of votes would be able to form a coalition with another party to create a working majority.
The Conservative Party (the majority vote winner) went for Option Two.

That's because David Cameron (the new Prime Minister) was able to do a deal with the Liberal Democrats and, particularly, their Leader, Nick Clegg (now the new Deputy Prime Minister).  As a result, Britain has its first coalition government since the end of World War II.

Of course, as soon as the deal was done, the questions came fast and furious.  Would it last?  Could it?  Would it be possible for the two Leaders to work together?  Would they be able to keep their respective troops in line?

And, because it's Britain, the betting parlors got involved pretty quickly figuring out the odds - and taking bets - on how long it will last.

Most interesting of all are the questions about what will happen to both parties - but particularly the LibDems - the longer this coalition lasts.  Will they have any reputation left?  Will they be seen as an entity unto themselves?

In effect, will the party have its own value proposition to offer up to the public leading them to the possibility of ever being the party in power - rather than the "king-maker" as they are now?

Call it a coalition if you want, but what you're looking at are the dynamics of a merger by any other name.

M&A activity is up.  Companies which are cash rich are looking at as many distressed companies with products/services/patents as they can use and buying them up fast.  (Why do you think HP bought Palm?  It was the patents.)

Big and small, across nations, there's as good as a fire sale going on for companies that bigger boys can buy on the cheap.

Some are mergers.  Others are outright acquisitions.  Both are fraught with problems - because the key to M&A success isn't in the products, services or patents.  It's in the long-term ability of the companies - which come with completely different cultures, no matter how much they may resemble each other - to work together successfully to achieve the goals of the company that did the buy.

Why do you think Warren Buffett makes a condition of purchase of any company by Berkshire Hathaway that the management has to be strong and stay in place?  Berkshire doesn't manage its companies.  It expects performance.  Because when Buffett buys a company, he's buying its value - and the long-term success of that value comes from having a successful management team in place and staying there.

No culture difficulties at all.  It's an acquisition, but, from the company's perspective, everything is the same - only better.

Not true with the vast majority of mergers and acquisitions.

Recently I was asked to read an article for peer review on managing the run-up to M&A.  (It's not published yet.  When it is I'll provide the link.)

One of the points that the author made was that three out of five deals "do not live up to expectations" (an understatement if I ever read one).  Not because the deal was a failure on its face - but because the companies couldn't work together successfully to achieve the agreed goals once the deal was done.

This is how it happens - no matter the industry.  Big Boy company sees something they want.  They do the buy (merger or acquisition).  They find out that even though they've paid out all sorts of money to retain key people, the productivity drops, things aren't happening, the product pipeline is drying up, costs are increasing...

If you get into cross-border M&A (and that includes between States in the US, let alone international M&A), the problems become even more legion.  And expensive.

Sadly, the business landscape is littered with smaller companies that participated in a merger or acquisition with stars in their eyes - only to find themselves out of business.

That's why the UK election was such a fascination to me.

Think about it.  Cameron needs - at the same time - to work cooperatively with Clegg to achieve the goals that the Conservative Party (the majority) ran on and promised.  At the same time, Cameron has to do everything he can to destroy the LibDems (his coalition partners) so that, at the next election, they don't have a look in and the Conservatives can take their constituencies and their seats.

Simultaneously, Clegg, while he's working cooperatively with the long-term enemy and know the risks, has to help his coalition partner get things done yet show enough differentiation that, as the next election gets closer, not only can the LibDems do an identifiable split from the Conservatives, but make the case that they could have done a better job on their own.

Both of their jobs are to simultaneously work together while doing their best to undermine and destroy the other.

Nice.

This is going to be an interesting period while we watch the M&A activity on all fronts - business and politics.

For your part, if you're thinking of or entering into any M&A activity, look closely at the management with whom you'll be working - not least why they are willing to get into bed with you and what they want out of it.

M&A always looks good on the surface but when, as in the UK elections, the best outcome is to "keep your friends close but your enemies closer," there's probably a better way to do business.


Bigger Does Not Equal Better

There's an interesting article in today's NY Times about Senator Christopher Dodd (D., Conn.) wanting to create a new financial services super-regulator. It would be established by combining four existing regulatory agencies while, simultaneously, reducing the authority and reach of the Federal Reserve.

Interestingly, there is a similar argument being put forward in Britain by the Conservative Party.  Their Shadow Chancellor of the Exchequer, George Osborne MP, wants to combine all financial regulatory responsibilities under the auspices of the Bank of England.  In the process, two other agencies would be incorporated into what would become one exceedingly large one.

The problem in both countries, from what is described, is not one of size, power or remit of the individual agencies.  The problem is coordination, clarity of responsibility and authority - as well as systems of accountability - among and between the existing entities.  That's what needs to be addressed - and it won't happen as a result of combining groups that don't mesh.

To get my drift on this, think M&A gone bad and you'll know where I'm going.  Better yet, if you're in the States, think Department of Homeland Security and you'll know exactly what I mean.

Too many organizations - public and private sector - are convinced that bigger equals better.  Not always - and especially not in a case like this.

Sometimes it is in the organization's (for which, in this case, read country's) best interest to allow each entity that owns part of a larger system to be specialist in exactly what it does.  That way, it can go narrow and deep in its activities to ensure that those within its remit are being well and clearly looked at and after.

The responsibility then lies with the corporate parent (for which, in this case, read Congress or Parliament) to ensure that those responsibilities are laid out clearly, lines of accountability are drawn and no competition for "favored" status exists or can be offered those being regulated  (a particular problem in financial services regulation).  Most importantly, the agencies should develop and execute proactive plans for coordinated, ongoing information sharing and joint action.

It's that last one that is the deal-breaker - because it is the lack of that planning that has caused politicians on both sides of the Pond (as well as their citizenry) to be so dissatisfied with the status quo.

Putting together the financial services agencies in either country isn't going to net the politicians what they say they want.  Nor will it give the public what it needs.  In the words of W. Edwards Deming, "The intent is noble.  The method is madness."

My recommendation to any executive who is considering going this "bigger is better" route is to go back to the drawing board and look at your intent - then look at your organization as it is and how you want it to grow.  Then you'll be able to decide how to get there - just as big as you want - without creating chaos and lost opportunity in the process.