They’re coming thick and fast, aren’t they?
First we had the “Cash for questions” scandal. Then we had the parliamentary expenses scandal. Then we had the “News of the World” hacking scandal. And somewhere amongst them all we had the great banking crisis. The crises have followed so quickly on one another’s heels that they have caused time to merge and it is now almost impossible, without a rumble through past newspapers, to remember when they all took place.
Now, notwithstanding that it is only 4 years since the near total collapse of the financial services industry, we seem to be witnessing a second great banking crisis. The £290 ($450) million fine imposed on Barclays Bank this past week appears to be only the first of a number of such fines being imposed on leading banks for manipulating the LIBOR inter-bank lending rate, and indicates that industry is still far from being soundly run.
Yet, while the fallout from this latest crisis has yet to become apparent, its place at the end of a whole sequence of scandals makes it clear that we face more than just a crisis of corporate governance in the banking industry. When juxtaposed with the 2010 riots and the anarchy of unadulterated looting that took place in conjunction with the riots, it is self-evident that we are faced with a society that is losing/has lost its moral compass. From top to bottom it seems that we no longer have the moral constraints that have hitherto shielded us from such widespread exploitation and its consequences.
No matter what you attribute this decline to – and I am sure there will be many different theories and explanations – I would suggest that it is indicative of too much power being concentrated in the hands of too few and a consequent sense of arrogance, immunity and impunity. Of course this is not historically unprecedented, but in order to create the necessary counter-balances we need to dilute this power.
How can you do this? You will not be surprised to learn that I believe it can be relatively easily done by creating greater employee ownership.
Of course there is no guarantee that a powerful leader could not still corrupt an organisation, but I would suggest that with greater empowerment and clearer organisational alignment around more democratic operations and clearly defined organisational values, with explicit ethical and moral guidelines and whistle-blowing safeguards, it would be more unlikely as there will always be someone who would be prepared to stand up for what is right.
As you probably know, this is a cause I have been championing for some time now. But it strikes me that my model of employee ownership does offer an ideal solution. And hopefully there will now be a few more people who agree with me, and who are prepared to give it a try.