Trust and integrity are essential to good business. And when it comes to banking and financial services, they are literally the foundations the industry is based on. So when the global economy experiences such an unstable period as the one we are currently in, and worse, the banking sector is being blamed for the worst excesses, how do these global brands that are based on harbouring trust retain their integrity in the eyes of their customers? What approach do their leaders need to take to steady the ship and navigate a route back into their customers’ trust?

When success can turn to failure

Through our work with leadership, development and organisational change, we have witnessed first-hand the different styles of some of the industry’s top leaders. Although Fred Goodwin’s name is now synonymous with the banking crash of 2008, at the time of the NatWest takeover his style of leadership was heralded for its strength and decisiveness. As we all know, this was soon followed by an unceremonious exit, his reputation in shreds and his style a very public example of how unchecked success can quickly lead to systemic weaknesses.

The acquisition of NatWest was a true David and Goliath story. As RBS was a small Scottish bank acquiring a much larger competitor, at the time and in the years afterwards the deal was praised as a successful blue print for how you bid, acquire and integrate an organisation. The deal was very structured, very clear and very deadline driven. There was a real sense of possibility, with Goodwin a leading light of this brave new confident approach. But in the end, the effect of his style, which has been discussed and documented at length, was to remove practical opposition and diminish the underlying value of the highly skilled and experienced personnel within his team. 

Balancing accountability with flexible leadership

Leaders who are successful over the long term know that it is important to change and adapt – to be flexible and agile. Most important, is the need to install a culture where being challenged and listening to the views of others is valued. When Fred Goodwin was in charge the evidence shows that no one really challenged him. Not only did people jump when he said they should, people asked ‘how high?’ This could easily be confused with strong leadership, but in the end, it was the main reason for his downfall.

As a leader, it is always good to question what your broader responsibility is. There is a constant need to balance your role as head of a multi-disciplinary team with being an ambassador and guardian of a brand. One way organisations attempt to deal with this is by publishing ‘value statements’. From Virgin Money’s promise to ‘make everyone better off’ to RBS now with their goal to ‘restore the bank’s undoubtable strength’; their effectiveness is limited to how broadly the statements are promoted across all levels of the organisation. Fundamentally, leaders need to empower their staff. A leader cannot be in all places at once, which means their staff need to have the confidence to communicate, challenge and role model on their behalf. People only live the values they have bought into and that are role-modelled by their leaders.

Strong teams share both success and accountability

Initially, Fred Goodwin benefitted from the strength of his top-down approach. And if he had left RBS in 2007, his reputation as a great leader would probably still be intact. So did he just fall foul of bad luck and poor timing? Unfortunately not. In the end he was shown to have as many vices as he had virtues. By championing a system that dutifully saw much of the praise pointed in his direction, it was appropriate that, as commentators and employees would say, the blame, when it came, fell the same way.

Perhaps the greatest lesson to be learned is that no leader, no matter how great, should go unchallenged. A strong leader recognises this and welcomes challenge from all levels of their organisation. They know that the end goal is to keep brand integrity intact, while maintaining the trust of all of those who buy into that brand – especially when the leader in question is partly responsible for the financial security of a country’s citizens.

At Potential Squared, we work with global organisations to help their leaders balance decisiveness with flexibility and agility. Contact us to find out what we can do for you.