Fred 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 efficiently. 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 committed 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.