Can the ghosts of Christmas past restore confidence in the banking sector?

We’re used to seeing various manifestations of “humbug” and avarice on our screens over the festive season and Scrooge has seldom been so widely and viciously lampooned than now. But did anyone notice that the 2011 festive season featured a number of documentaries tracking the long forgotten philanthropic roots of many of our banking institutions, especially the good works of their founders who literally had to re-distribute their carefully accumulated wealth to stand any chance of a place in heaven?

One of the organisations highlighted was the Lloyds group. Its founding fathers include Sampson Lloyd II, persecuted for his Quaker beliefs but ironically lauded for his generosity and “good works”.Contrast this story with that of the man who only recently took the top job, Group CEO António Horta-Osório. He had to take time off work last November to recover from the exhaustion of attempting to single-handedly tackle the problems of the beleaguered brand. But now that Horta-Osório has returned to work, could we see a different chapter in the history of the evolution of Lloyds and a return to philanthropy? Well, charity begins at home as they say and the best gift he can offer society is to help restore stability to and faith in the sector. As part of his reformation, Horta-Osório has apparently said that he will cut the number of executives who report directly to him and has promised to delegate more. For the modern, stakeholder-besieged CEO, this is a brave and probably quite a tough decision which has already been criticised in the media. But is this a sign that the CEO is not up to the job? Is it unfair on the three or four executives who may now have to report to the finance director and could ‘lose the ear’ of the CEO? Could it be that the critics have missed the point?

Horta-Osório’s track record is impressive. That’s why Lloyds hired him last year after all. As for whether some executives will lose touch with “the boss” well some would argue that having a boss who turns up for work but can’t function is a lot worse.

The recovery of the leadership mantle at Lloyds very much depends on how honest and astute the CEO and his top team have been this last year when identifying the core issues their organisation and sector faces. There is obviously a need to encourage a different relationship model with external stakeholders by embracing more evolved leadership internally. Leadership should be spread across their pool of talent, be more collaborative, be relationship not just transaction based and be guided by the core values of the business, including those heritage values that represent both the formal and informal foundations of the business and the mutual societies the group has bought along the way.

Lloyds are not alone in this regard. I have a long and deep knowledge of the sector having worked in-house at a senior management level and with most of the major players on the consultancy side.  Stable senior executive tenure is crucial. So it’s good to see the Lloyds boss retain the backing of the board.  Everything depends upon planning for the medium to long-term, having a vision and being around to implement it. Restoring a true performance culture and development mentality in order to share power and influence is just as important. Leadership needs to be a collective notion, conveying first among equals status to the CEO, not that of a multi-armed deity.

Uncharacteristically for his ilk, Horta-Osório has acknowledged his challenges openly in public, demonstrating an engaging vulnerability and humility that could help in the long run. He is actively seeking to decentralize power and influence across the organisation which could also be good news. But this must be part of a deliberate strategy of returning to a values-led culture and ensuring that leadership development is back on the agenda of the top table and will be managed systematically. It needs to be introduced across the organisation so that there is a coherent level of power sharing, effective coordination, and communication up and down the line.  The culture must be transformed to ensure that local leaders are truly empowered, involved and engaged.

Some Lloyds investors have said that their confidence in Horta-Osório’s ability has been dented. But if our recent executive breakfast is anything to go by, he isn’t alone in feeling the pressure from all sides and in seeking to sponsor powerful collaborations across the business silos to nurture the brand from within.

Investors would do well to look to leaders who are strong enough to be honest about their vulnerabilities as well as strengths; who talk about emotions; values and behaviours in a positive way and have learned from the ghosts of Christmases past, be they harbingers of doom or benevolent spirits.

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