There’s a new book out about Fred Goodwin, the former Knight
of the Realm.
It shows what a control freak he was.
How come no-one spoke up at the time?
Because he was some form of sociopath apparently.
I’ve mentioned this before – is your boss a demented maniac? – but Fred shows all the traits in classic form and, having met him a couple of
times, he just instilled such fear in people around him that no-one would
challenge his view.
For example, every single morning at 8:30 he would have a conference call with his direct reports.
If you were in Gogarburn, the bank’s headquarters, you had to attend his office in person or, if abroad or on travel, you would conference call to the discussion.
Fred’s aim at these morning calls was to pick on someone and shred them, and he did this well by finding a weakness in their area of business. This meant that all of Fred’s direct reports would have a conference with their direct reports at 8:00 every morning, so that they were prepared for their humiliation. In other words, a daily ritual of preparation and humiliation.
Other examples of Fred's way of doing business include:
- Ordering thousands of round-topped filing cabinets
because the previous filing cabinets were non-compliant with his views, as the flat tops allowed people to leave paper on top.
- He insisted on control of the production of the
group's Christmas card, as he did not like the design approved by another
manager.
- He personally selected the colours of the RBS
executive car fleet - a Pantone 281 Mercedes S-Class – so that it exactly
matched the bank's corporate blue logo, and the interiors of the 12 cars had to
exactly match the same beige as the carpets in the RBS offices.
- Fred issued disciplinary warnings to catering
staff for bringing the wrong type of biscuits to meetings (pink wafers).
- He stopped a key bank meeting to get staff to
immediately remove a discarded cigarette butt on the front steps of the bank, thanks to a call from his mother who had spotted it when she visited the bank.
- He complained about people drinking and laughing
on the streets of the City near the London offices of RBS, because it
interrupted his thinking.
- When the Sunday
Times found out that Gogarburn bank HQ, had been built to his exact
orders and it included a ‘scallop kitchen’, he threatened to withdraw all
advertising from the newspaper and that the kitchen didn’t just cook scallops
but all sorts of seafood.
- Sellotape was banned in public areas of the
bank, as he doesn’t like its messy look.
- He was once arrested by police for taking photos
outside a bank branch, because the area around its cash machine ‘looked messy’.
It’s not surprising that some nicknamed Edinburgh Fredburgh, and it just goes to show how RBS may not be in the sad state it is
in today if only Fred had been obsessed about risk as much as carpets and
cabinets.
As Iain Martin writes in his book Making It Happen: Fred Goodwin, RBS and the Men Who Blew Up the British
Economy:
“The former accountant seemed to have very little interest
in the traditional components of a bank chief’s activities. He was obsessed with profit and growth; but
questions of credit and risk and the basics that govern how much is lent and to
whom, seemed to hold little appeal.”
What role did the obsessive Goodwin’s character play in RBS’s
downfall?
Quite a bit it seems, as Fred ignored a whistleblower who warned the bank was in dire straits.
Victor Hong was hired from JP Morgan as a senior risk manager in 2007, but he quit after just six weeks because executives would not listen to his concerns. The specific claim is that the bank was valuing securities at 90 percent of face value when they were trading as low as 20 percent at the time.
Professor Malcolm Higgs, a leading occupational psychologist
at the University of Southampton, told The
Independent it certainly can’t have helped matters.
“You occasionally
find this narcissistic tendency in CEOs.
They want to control everything, they don’t want to know that they’re
not perfect. It’s not conducive to successful leadership of a company.”
It’s worth noting that many other bank CEOs have similar
tendencies, such as Lehman Brothers boss Dick Fuld.
Shine on you crazy Diamond … or is that Dimon?
POSTNOTE
Standard Life Investments and Legal & General Investment
Management are considering suing Royal Bank of Scotland over a capital raising
by the bank under disgraced former chief executive Fred Goodwin in 2008.
See the Financial Times for more.
Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, TheFinanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal's Financial News. To learn more click here...
