Let me put on my old cracked record.
We put people who stole trainers in the riots a few years ago in prison.
Management of RBS have scammed the entire country for many years now. Costing us billions and billions. More than a few pairs of trainers. And instead of locking any of them up we are paying them another £500m in bonuses.
Puke
I have never been to Memphis, There - I admitted it.
So it's only being honest to say that my "sense" of the scariness of parts of Memphis came originally from the movie The Blindside. However - Although in the movie a part of Memphis called "Hurt Village" was portrayed to be as about as safe as downtown Damascus right now it is also true that according to this article three areas in Memphis are among the most dangerous in the USA.
Scarier still - the three worst areas in the USA according to the same article all belong to Detroit!
Now I have been to Soweto. To many white South African's we met in Johannesburg before going, the visit that Mrs Bozo and I made there in 2009 was an act of madness. And let us be honest - many of the amazingly warm and generous black South Africans we were hosted by in the township advised us not to wander the streets around our hotel at night.
My point is this - generally speaking I didn't feel that scared in Soweto - maybe I should have - but I didn't. But both the article linked above - and the movie - gave me a very strong impression that parts of Memphis were arguably far more dangerous than Soweto.
Is it just me that wonders how parts of the richest (and we are led to believe "free-est") nation on earth are scarier than a thrid world township with a history of homicidal racial violence?
In the 20 odd years since the failure of the Soviet experiment (and we have to admit it failed) the west has seen the rich get richer, and the poor get poorer - every year. Every single year.
And, when the banks caused the almightiest financial disaster the world has ever known. That process actually accelerated! We bailed out banks whose balance sheets were destroyed by imprudent investment decisions - and then subsidized the bonuses still being paid to the losers who made those decisions! Except they aren't losers are they?
We are.
They get richer and richer.
No one ever ever ever got arrested for the dodgy dealings surrounding the crash. A crash that caused more harm to the world than the riots of a couple of years back - for which hundreds of people were jailed!
The reason that Memphis - and Detroit - and increasingly parts of my own fair city are becoming more dangerous than Soweto is complex. I admit that. But anyone who doesnt think that the rich getting richer and the poor getting poorer doesnt play an enormous part in the process is - well - a bit dim.
Of course if we keep voting for these policies we will have to live with them. We do after all get the government we deserve. But Let us not expect our country to become a nicer place to live.
Unless you are rich of course.
We are a funny country - or maybe we are a funny species.
Let me give some contextual examples as background.
Do you remember Hunter and Purchase, exhausted mentally and physically - and apologising in tears to the country that they only got Silver?
Do you remember Rebecca Adlington tearfully saying she felt she had let everyone down when she got bronze and not Gold?
(Let us not mention the millionaire soccer playings limping out as usual with no apology at all)
Do you remember Tom Daley ecstatic about his Bronze - even though he had Gold from the world championships and he himself and the country both had higher expectations.
Tom was happy... not sad .. and not apologetic. And I believe rightly so. "Diving is such an on-the-day sport" he said. "All you can do is your best on the day and hope that the years of training get rewarded with a medal."
How mature! He came 16th in the opening phase and barely qualified for the semi-final. But, David Boudia - who won the Gold - had come 18th and qualified dead last for the semi! It is indeed an on-the-day sport. And Tom had every right to be happy - and in my view so did Becca and Hunter/Purchase - and the four rowing boys who missed Gold by 0.2 seconds.
Ok, I hear you cry, enough context, what's your point?
Well shortly after the Games I heard that David Cameron had said we needed a new focus on competitive sport in schools and an end to the "prizes for all" philosophy.
And I agree with him.
Then, on Tuesday I was at a meeting with a client in which we discussed a performance and reward project I did a year or two back for a major global blue-chip employing over a hundred thousand people. This project had as its challenge (and it was a big challenge) the task of moving middle management away from rewarding people for how hard they tried or how hard they worked and instead rewarding them for what they achieved.
All of this comes together in my mind. Because medals for all is wrong.
I know why many people like it. They don't like that the poor geeky kid who is rubbish at football and cannot run or swim for toffee always comes last and gets jeered at by his compatriots. Well for a start let us acknowledge that this is two separate problems. The problem of kids jeering at- and being cruel to- one another hasn't been solved in many thousands of years of recorded civilisation - and you aren't going to solve it by giving the kids who run slow prizes. The second problem is that (in my experience at least) most kids/people are actually good at some sort of sport - but there isn't enough sport diversity in schools to find out what the geeky kid is good at. You may say that sports clubs abound - but if he has never seen a squash court - who decides to go to a squash club?
The BBC (as Bozo has bemoaned) along with the other media have placed athletics at the pinnacle of Olympic endeavour - and let us face some facts - 65 UK medals - 8 of them from athletics. Sport is bigger than running jumping and throwing - and it is certainly bigger than premiership football - but that is another blog altogether.
And, you ask, what has all this got to do with performance and reward? What is the link between poor reward strategies and giving geeky kids medals for coming last?
Well first - the major selling point of prizes-for-all is that people believe (and rightly so I think) the old saying that: "It doesn't matter if you win or lose, so long as you tried your best!".
But - if someone comes last - or second last - or even fourth - how do you know they tried their best? How? Given human ability to game and con any system ever devised - one of the easier challenges is not bothering to come better than last - and not trying at all - especially when the reward for last is the same as the reward for first!
Companies that like low differentiated pay - and low differentiated bonuses and equal rewards for all employees in the spirit of "fairness" are of course just being UNFAIR to the people who achieve the most. If 20% of your people produce 80% of your value (and Pareto seems to work in most instances) is it fair to pair those 20% the same as the others? Really?
Bill Shankley once said "If it doesn't matter if you win or lose, how come we keep score?"
You see in Sport and business both we need to reward people who are doing their best - but to know they are doing their best we need to measure their performance.
Tom Daley provides us with a good example. Scoring over 500 in a diving competition is considered good. Its about 83.33 points per dive. 9 of the 12 finalists managed that. I am led to believe that Tom's 557 points would win a lot of competitions quite handily. The winner - was we have noted - came 18th and barely scraped into the semi. The fact was that Tom was brilliant on the day - and two blokes were more brilliant. Tom was worthy of his Bronze - worthy of being happy - and worthy of being judged to have done all he could on the day. Certainly worthy of being called successful. If you had asked Victor Minibaev ahead of the tournament if he would take a place in the final and 527 points - he would have said yes - and he placed fourth! I hope no one is Russia thinks Victor failed (If he was Australian he would have been run out of town).
You see the point is we know by measurement that Tom performed well. His reward was well earned.
There was British bloke who came last in the 800m race that saw a new world record. His time was both his personal best - and the fourth fastest time ever by a Brit AND would have won the last 3 Olympic 800m finals! Does anyone think Andrew Osagie was a failure? He did his best - prove-ably - by measurement and by historical analysis - and his reward? Nothing. Nada. Niente. That is the harshness of sport.
Actually there may be one member of the British media who thought Andrew was a failure. She interviewed Ben Ainslie and asked if Britain's 1 Gold and 4 silvers at sailing were a failure!! How dim.
The thing is - you cannot give prizes to all (nor yet bonuses). You have to reward success. And, you have to be measuring things to know if someone is trying their best/improving/achieving.
Prizes for all do not work. Because it encourages people not to try at all.
And, frankly - if you can discourage your staff from working very very hard whilst achieving nothing of value - well that is a good idea too.
So what is all this about?
Well no matter how well Andrew Osagie ran - he didn't get rewarded - and he shouldn't. Was he a failure? No. Should he get a medal? No.
And there are many people in your organisation who fit that profile. It's sad but true.
Because if you reward Andrew for doing his best - well the point of achieving excellence - and the incentive to do it - will be lost to your organisation forever.
So ask yourselves:
I wrote last week about how heartbreaking it was for fourth placed Elizabeth Simmonds. We can measure that she didn't fail - but the system is clear - you need third to get the medal - the system is clear and transparent. She got the right reward.
Is your reward system as clear and transparent as that? You may have such good measures in place that you can give "medals" to your foruth - or even tenth - place finishers - but if your reward system gives bonuses for people for turning up, doing their day job - and maybe staying late a few times - without measuring what they actually achieve - you have got it wrong - and will be unfair to your most productive people -and drive a culture of mediocrity through your firm. The harsh realities of how UK Sport has funded different disciplines based on success has accurately reflected the harshness of global elite sport - and has driven a culture of excellence through some disciplines that have produced shiny medal results for all to see.
If they respond in a "soft" way to the performance of UK Swimming against expectation -I predict it will have negative repercussions for the culture of excellence. I it heard loud and clear when former US Olympic champ and World record holder Michael Johnson said on Gabby Logan's show "the most refreshing thing I have seen this time - in all the years of working for the BBC is that the culture of rewarding mediocrity has gone."
...............
Now... there is PS/Aside/Coda to this involving banking...
You see proponents of Bill Shankley's view abound in investment banks and use it to justify their own bonus strategies. But banking isn't a game of football. Paying a man £5 million for buying a load of sub-prime mortgages that make money by the end of the year isn't the same as giving a winners medal to people who win the cup final.
Because nothing you did to win the cup final last year carries a risk over into this year. But as we all know - those sub-prime mortgages became both unsellable and worthless. They generated billions in losses. But the man who bought them still has £5 million in the bank doesn't he?
You see the final whistle is a good time to measure who won the cup final. The final whistle of the final game is a good time to measure who won the Premiership. The winner crossing the finish line is a good time to measure who won the 800m. After the 6th dive seems a good time to measure who won the diving.
But is the end of the financial year really a good time to measure who should get paid what in banking? When the evidence that asset values can go from 100 to 0 as quickly as we saw in 2007-2008? Is mark-to-market as sound a concept as you think? (especially when market measures like LIBO are discredited and rig-able)??
Reward success - all in favour - reward extravagant success extravagantly - all in favour.
But please, please, please let us measure the right things, measure them honestly and measure them realistically.
There are a lot of countries less well-off than the UK - it would be facile to suggest otherwise. Of course Greece might be better off if people actually paid taxes, but that is another blog. There is no doubt for those of us who live here however that the UK has been down for a while. Since Gordon sold his soul (and our financial future) to the banks for a handful of corn the recession here has bit very deep. And its depth - as in all recessions has been variable - and suffered mainly by the poor. Hence inner city rioting.
And yet here we stand following the glorious success of the 30th Olympiad in London. Success on so many levels.
Will the feel-good factor carry over into normal life - and crucially - economic life - in the months to come.
History has mixed lessons in this regard. Quebec was rather keen on separating from Canada until the massive debts incurred by the 1976 Olympics required them to go cap in hand to the Federal Government to ask for cash. The city carried Olympic debt for over 30 years.
Los Angeles made money in 1984 - but mainly because they refused to spend any - with most venues being old.
Barcelona managed to overrun their budget by about 400% - but the games did transform the Catalan capital from a nice and relatively unknown city into a "must-go" for Bridget Jones city-breakers all over the globe.
I am not in the know as far as London 2012 finances go - but I am confident our media would have uncovered a 400% budget overrun before now!
Bozo was among a crowd of Brits who feared that our capacity for embarrassing cock-up would unleash itself on our games.
And Bozo is eating his humble pie with relish. Because what we unleashed on the games was our capacity for going the extra mile, our capacity for making sure things worked, our capacity for smiling and cheering and welcoming visitors. And the performance of the team played no small part in that.
So, assuming that we aren't going to be paying tripled rates for the rest of our natural lives, will London - and indeed the nation - reap a feel-good benefit?
I rather suspect we will.
I rather suspect that despite the continuing bad prognosis for Euroland and the continuing nervousness about our own debt that some strange psychological magic might work itself into the economy.
I do not want to end a feel-good blog with a diatribe against anyone - not even clowns in suits - so let me put it this way.
If we see economic resurgence in the country - I hope the benefits are felt in the same proportions by those people who have suffered the pain of the recession.
Because after putting on our best face for the world for 17 days - wouldn't it be nice if we could actually become a society that could show a best face all the days of our lives....
I had hoped to be able to write a nice blog about Beth Tweddle. About the inspiration she has been to a generation of aspiring gymnasts. About the fact that one day an Olympic Gold medallist will be saying to the BBC interviewer:
"I got into this because I saw Beth Tweddle...!"
But that little statement will have to do - because the folk at Standard Chartered Bank have allowed us to once again encourage people to join the campaign for ethical behaviour and a legally obligated contractual clause in executive contracts that demands ethical behaviour. Go HERE and LIKE the campaign and then spread the word as far and as wide as you can!
So in case you have been on the moon - or so obsessed by the Olympics that everything else has passed you by and are wondering what Standard Chartered have done, you can read all about it here.
A U.S regulator has labelled the bank a rogue institution and has claimed they have evidence that shows the bank schemed to launder $250,000,000,000, which for all we know has been used to finance terrorism and build nuclear weapons.
How does an Institution take part in that?
Well about 20 odd years ago in a scandal over insider trading and other assorted skullduggery various highly respected and very well paid Wall Street figures were indicted. This caused a certain amount of shock and horror at why such respected and rich individuals could or would do such a thing. An American newspaper quoted a financial markets insider as saying words to the effect that if you don't understand the motivation to steal $500 million then you are living on a different planet.
So, institutionally, it being unlikely that Standard Chartered Bank has as a core value the funding of terrorism it would seem that profit was the motivation for laundering $250,000,000,000.
So, individually, how do those people actually engineering this get involved? Are the senior executives involved all secret sponsors of terrorism? Well I suspect not - but who knows. I suspect - and frankly I do not know what the status is of the bonus and remuneration schemes of Stanchart - that the individuals who generated this profit for their bank were rewarded by pay rises and bonuses.
Whilst this is speculation on Bozo's part - I would be far more shocked to find out that that this was the result of stupidity rather than cupidity.
It is becoming increasingly clear that money - at least large amounts of it - will consistently outweigh ethics in the minds of people in the financial industries. Not the poor folks who work in call centres and on counters who see very little of the money that is being made hitting their pockets - and who are first to pay with their jobs for any cock ups. But for the folks who do see substantial bonuses - it seems that those bonuses are a bigger trigger of behaviours than the desire for ethics, morals, standards and reputation. As it is this scandal may well bring down the entire bank. The shareholders ought to care. And today - for the first time since it started they are suffering. They may say they didn't know. I ask. Why not? This idea that you pocket the dividend and ask no questions is a non-starter. As this bank goes down maybe their shareholders will become supporters of ethical behaviour at senior executive level. Because when this scandal gets more deeply analysed it will be fund to see who was involved and how they personally benefited.
You do not need to be an expert on reward and remuneration like Mrs Bozo to know that there is a deep flaw in how the financial services industry rewards its people. As she always says:
"What you tell you people in how/why you reward them speaks louder than any other message you send them"
If you tell me I am unfair to the industry - I shrug my shoulders. They don't care who slags them off especially not Bozo, they console themselves with their wealth and decide my criticism is envy and not a desire to live in a society that values one or two things above money. If the industry doesn't want criticism it should stop ignoring ethics.
If there was an Ethical Behaviour Clause in the contracts of the senior executives they would not be getting rich right now. And if they have done nothing wrong, they would be.
So why would anyone resist an Ethical Behaviour Clause?????????
There is only one reason...so join the fight now folks.
Find the campaign here and go comment.
As a postscript. I was doing some background research about the insider trading scandal of 1989. And I found myself on the wikipedia page of Michael Milken. I was astounded to see that the first paragraph describes him as a financier and - wait for it - philanthropist! The fact that he was indicted on 98 charges of insider trading and related skullduggery and sentenced to 10 years was buried in paragraph two! Who wrote that? Of course Michael only served 2 years as he was let out early in exchange for ratting out all his mates. in a four year period in the late 1980s (i.e these are dollars of 1989 not today dollars) Milkem was paid over $1,000,000,000. As mentioned above, people wondered why he was tempted to lie cheat and steal. But lie cheat and steal is what he did. And, 25 years on, lying cheating and stealing is still the order of the day.
Sigh
I know you are all surprised that I have waited until today to blog on the HSBC money laundering fine.
Of course it does keep the scandal in the news cycle a smidge longer.
Never a bad thing.
But what made me saddest was not my old friend Stuart Gulliver's inability to "reassure regulators the bank did not facilitate the financing of terrorism and other criminal activities..."
So RBS do not want to reveal their internal documents to the criminal investogots dealing with the LIBOR rigging scandal.
I assume this is some sort of corporate taking of the 5th amendment...
Read the Telegraph version here
I am sure RBS have nothing to hide... Aside from their involvement.
What we already know about RBS is damning enough:
And now it seems the senior execs and traders are as unethical as they were useless. Mind you - if you get paid gazzilions in bonuses for losing all the money they have lost - what exactly is being incentivised anyway?
The thing that made me laugh most was the loser who said RBS had to pay competitive bonuses in order to keep their best people!!
I would have thought that describing any set of individuals as "best people" might require them to have made a profit? Seriously - the bank was a major disaster - are you really asking us to believe there is anybody there you cannot do without?
Are you asking us to believe that in this market where it seems HSBC, Citi, JP Morgan and UBS have all got a problem revealing documents - that their is a buoyant market fro people being sacked by banks?
If so - why?
I do not know what cash benefits Barclays had from fixing LIBOR.
I do know that any share price gains it helped them get have been eroded this week!
I do not know if cash gains exceeded the $450m fine (plus Bob's extravagant reward for presiding over the cock-up)...
So the question is, given the unknown cash value of the benefit and the fine...it is unlike the net gain(if any) has come close to exceeding the share price devaluation of the past week in terms of total affect on shareholder's pockets.
So if even Bozo can put aside the appalling moral and ethical exhibition and deal with shareholder value. Why cannot shareholders?
It wasn't shareholder pressure that drive out Bobbie D was it? I mean he seemed to be surviving the decline in share prices - it was the media and the government who made the stink.
So, this man has trashed shareholder value - got paid £20million for doing it - and the shareholders weren't in uproar?
You see, we cannot legislate away bad moral codes or unethical leadership. We cannot - its too hard to force compliance - the tax bill for a regulator to have resources would be scary!
So I think - if this economic rationality, capitalist system is to work - the shareholders have to give a toss no?
We know the remuneration committee system is flawed beyond rescue. The Barclays committee has the guy from RBS, whose committee has the guy from WPP (I merely speculate) it is all totally "you scratch my back I'll scratch yours" so any notion of oversight or looking after shareholder interests has long gone by the board! So what else can there be?
Well let me float another idea that is typically BozoBrilliant - and typically will never catch on.
Why not require any senior executive to sign an ethical behavior disclaimer as part of contract. In other words - if we get stung bythe regulators - lose a court case about behaving improperly or shafting our clients - get done for mis-selling products (or polluting the Gulf of Mexico - and here I am referring to Haliburton not poor Tony - the CEO of Haliburton got paid ridiculous amounts - and Haliburton were quietly proved equally liable with BP....) So - if any of that stuff happens - bonuses and golden parachutes and all those other incentives are made null, void and unenforceable.
Senior executives need to control the activities of their subordinates - lack of knowledge or intent is just as big a failure! If you aren't in control of what is going on - why should we pay you all this money??
Surely one shareholder somewhere thinks this idea makes sense? Or would they all rather encourage "so long as you don't get caught"....
So, Bob has gone, and reportedly taken a £20 million reward for presiding for all this wrong-doing.
One still wonders how stealing a pair of trainers can get a teenage kid with a failed education jailtime but presiding over a fraud that leaves millions of people cheated gets you £20 million.
Well maybe you don't but I wonder.
I read (well more noticed) in The Standard that a witch hunt of bankers would place the city's position as global financial centre at risk. (You can tell why I didn't want to read the rest).
Really? And we care why?
Because these selfish immoral, cheating, lying scoundrels will all move to Zug? Or Shanghai? Really? And because they will employ their foreign au pairs in a foreign country?
It is just possible that the message this sends is not that society is in trouble. It is that society is already lost, game over, Satan wins!
We all scream about law and order because a few kids with no hope and no future torch a shop and nick some phones. Yet we (or at least The Standard) think we have to chuck law and order and right and wrong over the side when the perpetrators are responsible for a few billion in invisible earnings.
As far as I can work out - judging by actual events and actual decisions made by Law Enforcement agencies and Barclays Bank:
Is that really the society we live in?
And we aren't outraged?
Seriously?
So - it is official - the UK and US regulators have made it official - the price of ethics, integrity, honesty and that whole kit and caboodle of things that used to be considered of inestimable value have now been valued at $450,000,000.
Phew - aren't we all glad that we no longer have that big question mark over the meaning of inestimable?
So - it seems clear that fixing the LIBOR is not actually an illegal act - or surely someone would be tried in court right? I mean it only fixes the rate on $360 TRILLION of loans - so its no big deal right? I mean fixing it by a tiny tiny fraction of one percent only changes the value of these trillions of global loans by a few hundred million dollars a quarter!
This is not a victimless crime. Every time LIBOR is set a gazillion lenders get paid (and a gazillion borrowers pay) - interest. And every time that setting is falsely rigged - one side or the other is defrauded. Yes. Defrauded. They are victims. If they are a pension fund, then the pensioners get defrauded. (It always makes it sound more evil when the victims are pensioners doesn't it? - that may be a dodgy journalistic mechanism - but sometimes people are not seeing crime for crime and the points need to be reinforced.)
Bozo thinks fixing LIBOR ought to be a crime - as people get defrauded.
If you disagree - you surely at least think it is unethical - that it is a breach of trust implicitly placed in the market mechanism?
And is it not tragic that things like ethics and moral values are now priced so cheaply?
As for Bob Diamond... I know he thought that the festival of football between Spain and Portugal would keep him off Bozo's page today - but sadly Spain and Portugal were an insult to the word beautiful game (OK the two words...) and as a consequence Mr Diamond can get both barrels.
He is forgoing his bonus for 2012. Wow! Rich man gives up chance to be a few per cent richer! What a headline that would make in the "not very exciting news of the day"
The culture in banking is simple to understand. It can be summed up thus:
"I want to get rich. I will work very hard and long hours to do it. But if that doesn't work I don't see any problem with lying, cheating or stitching up my customers and the markets to make sure I get what I want. What is right is someone else's problem. What is good for society is the government's problem and I pay (some) of my taxes so that absolves me of all guilt for that."
Bozo is going to give up thinking that unethical and immoral are reasons for these people to not do something. So... Isn't it about time someone got sent down?
In 1756 Admiral Byng, after failing to push a convoy through to relieve the island of Minorca, was court-martialled and shot. To this day - although opinions differ - most students of Naval history think it was a bit harsh.
Of the event Voltaire said
"(IN England) ... it is considered a good thing to kill an admiral from time to time to encourage the others."
Hmmm - well Voltaire was a clever guy - maybe he was onto something....
He's a nightmare
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