Douglas Board, a longstanding companion to Sparknow, has worked with us to develop our response to the Salz Review of Barclays, due to report later this spring. The introduction to Sparknow’s response follows, together with links to the whole response and to our approach to ethical auditing.
‘The assumption that bankers and banking are corrupt and morally bankrupt has permeated society and established a monolithic, caricatured story of good and evil.The immediate response from the industry will be a form of siege mentality with some vigorous and visible activity to root out the bad behaviour that ‘caused the crisis.’ This may satisfy those who want there to be blood. It will do very little to repair the damage and rebuild banking from the inside so that it can play its necessary and important role in society.
The Salz Review has been set six tasks. We think there should be a seventh.
The six tasks set for the Salz Review are:
- Create familiarity with Barclays’ principal business segments, including the key competitors and historical, contemporary and prospective challenges within each segment.
- Conduct detailed review of past events identified as having caused material reputational damage for Barclays and the industry, with particular emphasis on events since the start of the financial crisis.
- Review Barclays’ current global values, principles and standards.
- Analyse key policies and procedures to identify potential weaknesses in reinforcing mechanisms.
- Develop new global, mandatory code of conduct and recommendations for its implementation and ongoing assurance.
- Prepare a public report on findings and recommendations.
If that is all the Review did, it would (if its findings were accepted, which is Barclays’ public intention), accomplish something dramatic but unintended: the future failure either of the code it recommends or, at worst, of the Bank itself.
In the terms of the organisational theorist Argyris (1990) it would respond to a corporate and global crisis with ‘single loop’ learning of the simplest kind, as if trust in Barclays could be modeled as a room with a central heating thermostat. The room is freezing (trust is appallingly low): investigate how the Bank’s ethical thermostat (values and principles) was set and why actual performance deviated from plan; re-set the thermostat as necessary, along with stronger assurance measures to correct any deviations in the future.
A review in these terms is highly unlikely. It would represent locking the steering of the Bank firmly into the rear-view mirror, guided by one person’s judgment of principles and values at a historic point in time. It would be giving the Bank ethical fish with varying (but not indefinite) sell-by dates, not teaching the Bank to fish ethically.
Instead the seventh element of the Review will ask the reflexive, double-loop question: how will the Bank avoid the need for more Salz reviews in the future – or are periodic, top-to-bottom, public reviews by an independent lawyer, prefaced by pig-in-a-poke commitments by the firm’s Board (and possibly some major disasters) the pattern that all leading corporations should look to follow in the future?’
You’ll find the whole response, and other key papers and references on our ethical auditing reference material page.
Since the autumn, Sparknow has worked intensely, with Douglas, and more recently with David Snowden and Tony Quinlan, to develop a sound approach to ethical auditing that builds on the best of Sparknow’s narrative work over 15 years, and draws on our immediate associates and partners as well as extended networks of deep expertise in finance, risk and governance, knowledge management, learning organisations, leadership, brand, communications and engagement. You can read more about that on our ethical auditing page.