Fred Goodwin – bad hosting cost him his knightood?

1 Feb

Fred-Goodwin - not 'Sir' FredFred Goodwin, former CEO of Royal Bank of Scotland (RBS), has been unprecedentedly stripped of the knighthood he was awarded in 2004 for services to banking.   UK readers will be familiar with the story: Goodwin led the takeover of ABN Amro by RBS in 2007 which ended up being a major contributor to RBS’s failure and bail-out, costing the British taxpayer £45bn in bail-out money.  Goodwin then left RBS with a huge payout and a £705,000 a year pension, to which he managed to cling (citing contractual obligations) until late 2009 when some he relunctantly surrendered £200k pa.    

Discussion in the UK media today is revolving around the idea that Goodwin has been stripped of his knighthood for getting RBS into such deep trouble – the BBC’s business editor Robert Peston said Mr Goodwin was in a “class of his own” in terms of the risks that he took at RBS.  However, I don’t think this by itself explains the huge and continuing outcry at Goodwin’s behaviour.  Goodwin had the support of his board and Chairman in leading RBS down the garden path.  Other banks made similar (if not quite so large) moves.  The global financial system has felt unprecendented strain since 2007.

I think that the public (and the politicians) gut reaction that Goodwin was beyond the pale is not down to bad business decisions, but rather to bad hosting.  Let’s look at the situation through the leader-as-host metaphor.

You are invited to join a particularly swish barbecue party and arrive in great expectation.  The host greets you with bad news – there’s been a catastrophe.  He bought a huge new barbecue which exploded and nearly all the food is gone – in fact you’ll have to bring a vast supply of food around to save him and his family from starving (despite them living in an expensive house, driving Ferraris and so on).  However, there WAS one piece of steak which survived…and the host’ s having it.  He gets to eat while his guests not only go hungry, but bring him vast amounts more food.  What’s worse is that he’s not really sorry – he says he is, but that doesn’t stop him insisting that the remaining food is his and keeps on eating it in full view.

One of the interesting things about good hosting – which we all know unconsciously but rarely reflect on – is that the host serves themselves last.  Their first responsibility is to their guests – to share out whatever there is, and to get more supplies if necessary.  Once the guests are catered for, the host can eat – while keeping an eye out to ensure for everyone else.  There is a natural sense of justice in hosting, one we react to instinctively.  Perhaps we can’t avoid accidents, but it’s encumbent on leaders to ensure that the clearing up is carried out ethically as well as effficiently.   Goodwin’s pension, which was doubled the very weekend RBS collapsed, still took the view that he was entitled to the money, despite over 90% of RBS’ investors voting against it.   The host served himself, leaving his guests hungry, broke and furious.   It is pointed out (by Sir Jackie Stewart ant others this morning) that Goodwin has not commited a crime of any kind.  True – which only goes to show how deep the ethics of hosting run.

So, was it the exploding barbecue which did for ‘Sir’ Fred?  Or his lack of hosting and awareness afterwards?  Perhaps if he’d been seen to make more effort at looking after others in the aftermath of the RBS collapse, he would not be keeping the company of the likes of the traitor Anthony Blunt as one of the very few people to be stripped of a knighthood by Her Majesty.

You can download my paper on Leader as Host, Host as Leader – a new yet ancient metaphor FREE at http://www.hostleadership.com.

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5 Responses to “Fred Goodwin – bad hosting cost him his knightood?”

  1. John February 1, 2012 at 12:26 pm #

    Or as most mothers teach their kids at birthday parties – “Don’t just help yourself Fred! Go round and ask anyone else if they want a piece of cake!”. Like to know what Fred’s mother would say or have said about her son’s greediness.

  2. Steve Onyett (@SteveOnyett) February 1, 2012 at 2:08 pm #

    Could not agree more re deep rooted sense of outrage at poor hosting. However, while being no apologist for bankers I still feel the decision is wrong and another example of Government responding to what they think the populace wants rather than a thought through ethical position.

    (Non -ethical in that in reality the collapse involved many others and was systemic, they gave him the gong for services to banking- are those achievements now nullified?, the sacking of CEOs is a ritual, feeding the mob in a way that creates the impression that leaders are essentially omnipotent and able to direct complex, unknowable systems – not a model of leadership that I think either of us could ascribe to, etc., etc).

    Now you could argue that this is good hosting behaviour on the part of Government because it is responding to what most of the people at the party might on their first reflection want. However, as a person holding what is perhaps a minority view at this party it makes me want to get my coat on and leave. I don’t want to be part of this party anymore (not even the one in opposition that I was a member of for years before they started aligning themselves with the mob – e.g. on sentencing reform, votes for prisoners, etc). In fact I feel totally disenfranchised and am looking around for a new party to go have fun with. I should really go get my tent out the attic.

    So maybe useful to explore the ethical dimension of host leadership and how it accommodates difference among guests when collective action is required.

    Thanks as ever Mark for getting me going.

  3. plexity February 1, 2012 at 4:18 pm #

    Hmmm.

    As you know, I’m a big fan of your hosting notion in the context of leadership, Mark.

    (And I now realise that ‘in the context of leadership’ is as important as ‘hosting’, as my exit line illustrates, I hope.)

    I agree that Peston is wrong (as well as being a candidate for most annoying voice on Radio 4) and that there is more to it, but this time your hosting-based explanation isn’t working for me. I don’t get how you are mapping ‘hosting a barbeque’ onto ‘running a bank’, and you want me to buy this weird exploding barbie thing as well?

    What’s wrong with the good old British ethic of fairness, of fair play? And Goodwin being the scapegoat on the crest of a meme?

    The utility of a notion is related, partially at least, to the clarity of its limits. If you only have a screwdriver, everything looks like a nail.

    and with that platitude, I’ll get me coat.

  4. Adam Turner February 2, 2012 at 12:15 am #

    Hi Mark. Its a great metaphor. Appreciate the perspective. I think some folks think the party is still in full swing, I don’t think they are sober enough to realize the party has finished and the police are on the way to shut it down!!

  5. Mark McKergow February 2, 2012 at 6:43 pm #

    Thanks everyone for your replies so far.

    Plexity – I think this is different to fairness. Of course fairness is a part of it, but there is something about the position of host that demands more than simply ‘fair’. Goodwin has come in for unparalleled criticism, yet he’s not at all the most ‘unfair’ example around. He, I believe, argued that it was fair he should keep his pension, and in some (limited) ways he had a point. However, that point dissolves in the bigger context.

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