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The ‘culture of banking’ is, for very understandable reasons, a focus of attention for many people at the moment.  Government ministers, banking regulators, central bank teachers along with media commentators all impact the general public and are all agreed that something must be done.  The short-term decision making, coupled with high bonuses and salaries are seen as contributing factors for the global recession.  There is no doubt a lot of truth in this but as an analysis of what needs to change in the banking system it is very flawed.  I presented a paper at the recent Division of Occupational Psychology Conference, with my colleagues Professor Chris Clegg and Rose Challenger from Leeds University Business School, where we examined the culture of banking taking the Lehman Brothers’s collapse as our starting point: What could we learn from this event about the culture of banking and consequently the reforms that are required?  We applied Socio-Technical Systems Theory to gain an appreciation of the full range of reasons why this long-established and highly regarded investment bank went under.

People   There were serious faults in the leadership, particularly Richard Fuld and Joe Gregory, both long-established within the bank. Their tenure in the top jobs was marked by a period of enormous growth and profits but also by failings of short-termism, over-optimism, overconfidence in their own abilities, fundamental attribution error (ie. believing that everything good that happened was due to them and anything bad due to external events).  More sinisterly, there was a climate of groupthink – people feeling they had to agree with this powerful duo or suffer the consequences.  There were notable examples of warnings being ignored by the leadership and the messenger then being dispatched from the organisation.

Goals   The objectives for the bank were growth, size, and profit.  The bank wanted to see itself rise up the league table of banks on any number of measures.  Ethical and moral implications of decisions were of less importance than the achievement of the goals established.  But the banks are not the only ones guilty of not examining the impact of goals.  The Clinton administration wanted to see home ownership amongst poor people increased.  There was a belief that the banks were discriminating against certain groups and, by use of fines and punishments, it managed to get them to change their lending policies and approaches.  Politicians it can be argued did not see the long-term consequences of their actions.  Similarly, the ratings agencies, whose job it is to regulate the credit worthiness of organisations, countries and products, saw the opportunities of making a fast buck.

Systems/processes   Within the bank, the risk function was given less prominence than other areas.  For some critical decisions, the Chief Risk Officer, who had raised objections, was asked to leave the room.  But the regulators, the SEC, the Federal Reserve, the ratings agencies did not adequately follow their own systems and processes.  The regulators decided that a light touch approval was the best way forward.  The ratings agencies were profiting handsomely not just from examining the various products the banks were ingeniously coming up with (most notoriously Credit Derivative Swaps and Collateralised Loan Obligations) but also for advice on how the products should be structured.  Significantly, legislation, in place since 1933 (The Glass-Steagall Act) was repealed which meant that investment banks could now get their hands on customers’ deposits.

Culture   There was a culture of short-term thinking, growth at all costs and greed.  Bonuses were large and not just for the bankers but for ratings companies and the mortgage sellers who were effectively doing nothing more than giving money away.  People with no income, no jobs and no assets, called NINJAS, were receiving 100% mortgages and sometimes more.  The prevailing mindset was that: House prices never fall.  Since the 1930’s they had never dropped by more than 5%.  This lack of analysis coupled with over-optimism and greed contributed to the frenzy.

Within the bank the mortgage business was rewarded not just by salary increases and bonuses but also by increased influence over bank strategy, greater freedom and more risks.  This line of business was allowed to start using the bank’s own funds.

Technology   The products that were created were so complex that many people who should have been independent were completely taken in.  The deans of leading business schools, academic economists, and leading government advisors were so bamboozled by the technology and the products that they contented themselves with commenting on the outcomes and not on the fundamentally flawed processes.  In addition, the bank’s own risk calculating equations failed them.  These were based on historical trends and on turbulence in the markets.  As these products were relatively new, were successful and were stable, it appeared, they were low risk.

Infrastructure    The global nature of the markets meant that these products were being spread around the world.  This was no longer something that could be considered localised.

An examination of just one organisation shows that this was not just the fault of a bank but of a system, encompassing government, legislation, independent advisors, rating agencies and non-executive directors.

Whilst it is right that we expect banks to change, we need to look closely at the roles played by others in the system in order to create the desired culture.  A fundamental question to be answered by those seeking to change banking culture: Was this a failure of design or implementation?  The answer to the question, will determine the nature of the reforms needed.

The best blogs are supposedly written about things of immediate interest to the author, so having recently had a baby boy, the topic of maternity leave is very much at the forefront of my mind.  I was surprised to learn that one in three women (39%) find it difficult or very difficult to return to work1. Given that it is estimated that between 80-85% of women2 will become pregnant during employment, this is an issue that will touch most organisations and managers at some point.  I think the key to managing pregnancy is getting it right from the start, therefore, coupling the literature with my own experience, here are my top tips for managers for successfully managing maternity leave.

1.  Make sure you know maternity policy and how to manage pregnant employees fairly

Being treated fairly throughout pregnancy is a key factor in returning to work. With planning and support before maternity leave, a woman is much more likely to return to work, saving the employer from the costs and disruption of finding and training a permanent replacement.3  Being familiar with policy and legislation around this will not only help you adhere to the legal aspects but will also help you to proactively provide that support.

2.  Talk it through with your employee

Once you know all about the policies and the process, take the time to talk to your employee about what it means for them, how it will work and deal with any queries or questions – especially if your organisational policy differs from the legal minimum. Flag any potential sticking points up front, for example, any dates when holiday should be taken by.  Making sure everything is clear at this point will prevent any issues further down the line.

3.  Make sufficient time for a formal handover

It is surprising how easily this can slide when times get busy. However, a formal handover, where responsibilities are allocated and passed over, is vital and will minimise stress for everyone once maternity leave begins.

4.  Discuss keeping in touch

Keeping in touch during maternity leave is vital in helping an employee stay connected to the workplace. Many women report feeling ‘out of sight out of mind’ whilst off work. Staying connected can help maternity leavers stay abreast of new issues in the workplace and increase confidence when returning to work.  How this is done is a very individual thing and may well change as maternity leave progresses. My top tip here would be to agree this ahead of time so that the maternity leaver doesn’t feel either bombarded with communication or out in the cold. This approach worked really well for me;  at the beginning, a copy of the business brief and short conversations were great. Now,  later in the year, keep in touch days help me keep up to date with clients and new projects.

5.  Listen and be flexible

Managing someone during their pregnancy is not always the same as managing them when they are not pregnant. Illness or fatigue may impact their ability to work to full capacity some days; they may try to do too much for fear of being seen as ‘incapacitated’ or they may be exactly the same as before. They can’t plan how they will feel physically or mentally, so if ever there was a time to regularly check in and be flexible with an employee, it is during pregnancy. I very much appreciated the flexibility I was shown and, to be honest, it makes me feel much more positive about returning to work.

So, there are my top five tips but I’d love to hear others from people reading this. I’ll blog again later in the year with more tips about returning to work.

1NCT (2009) The experience of women returning to work after maternity leave in the UK

2Lyness, KS, Thompson, CA, Francesco, AM and Judiesch, MK, 1999 “Work and pregnancy: individual and organisational factors influencing organisational commitment, timing of maternity leave and return to work” sex Roles, 1999, 41 458-508

3Houston, D and Marks, G. (2003) 'The Role of Planning and Workplace Support in Returning to Work After Maternity Leave', British Journal of Industrial Relations, vol. 41, no. 2, pp.197-214.

In his post-match interview, Andy Murray talked about how three gold medals in a 44 minute period had affected his performance in the Olympic Tennis final. In particular, he talked about the sense of momentum created by Team GB.  We all know that momentum exists and have all experienced the same feeling of a shift in energy. Yet this is a relatively unexplored area of performance psychology. There has been little research into momentum at work and so our understanding is drawn mainly from the descriptive accounts during sporting achievements.

Broadly defined as an enhanced psychological mindset that will influence performance, momentum is a subjective feeling experienced on both sides of any competition, linked to both success and failure. There appear to be three primary conditions that result in a sense of momentum:

1.    Firstly, there is a clear positive shift in the perception of one individual that results in an increased sense of personal confidence, control and optimism. Importantly, this leads to a greater surge of drive and energy, as Murray demonstrated on court. 

2.    Secondly, there is an equally negative shift in the mindset of the opposition that results in a loss of focus and reduced self-confidence. This loss of focus leads to lowered energy. Roger Federer’s performance was notable only for his lack of usual self-assurance, focus and drive.

3.    Thirdly, there is a swing in the balance of power. In each case, a relatively small trigger of some kind – maybe a slice of luck, a moment of unexpected success or a stroke of brilliance - shifts the energy from one party toward the other. Vicky Pendleton, in her final race, probably felt this more than most when she was harshly relegated.

Hence why this is a fascinating area to explore. Momentum can at times be critical in achieving success and bring teams together with an almost untouchable performance, but is still almost impossible to predict how and where it will emerge.

From a leadership perspective, however, we know that the most successful leaders have two critical qualities that relate to momentum: self-awareness and self-regulation. Leaders who recognise shifts in their own emotion and focus – perhaps a reaction to a failure or a sense of optimism about an outcome – are more likely to understand what is happening around them. Equally, those who can manage internally the emotional ‘monkey’ (to borrow Dr Steve Peter’s Chimp Paradox analogy) are more likely to retain focus, drive and energy, regardless of which way the momentum swings.

So whilst initially it seems hard to imagine that three gold medals in a stadium on Saturday evening could affect a game of tennis several miles across the city, that sense of belief and achievement growing in the culture of ‘Team GB’ could well have been a key trigger in the mind of the new Olympic tennis champion.

I have just come back from a phenomenally exciting day at the Olympic stadium watching the athletics.  What a fantastic experience to watch people performing at their peak.  But the thing that struck me most was the amazing atmosphere - it was absolutely buzzing.

And along with thousands of others, I participated in many of the Mexican waves that regularly swept around the stadium.  In between jumping up from my seat and waving my arms in the air I got thinking about the psychology behind such an activity – how on earth does a Mexican wave get started?

Researchers in Hungary and Germany have modelled crowds performing Mexican Waves and have found that:

  • It typically takes 2 dozen people to start a Mexican wave
  • The wave typically starts in the shape of a small, tight ball, then gradually spreads out into a line as more people join in
  • Approximately 3 out of 4 Mexican waves move in a clockwise direction
  • The typical speed of a wave is 22 seats per second
  • The typical width of a wave is 15 seats (6-12 metres)
  • 20 seconds after the first group start, at least 50% of people in the following columns need to get actively involved in the wave in order for it to be successful.

One of the things that was most noticeable in the Mexican waves at the Olympic stadium was that the waves that started spontaneously were much more successful (in terms of participation and duration) than those started by the commentators encouraging a Mexican wave to begin.  This is nice example of crowd behaviour – when we are in a crowd, we are more likely to behave in line with what other people in the crowd are doing, rather than in line what one person tells the crowd to do.

This is a particular element of self-categorization theory, known as depersonalization.  In essence, when we’re in a crowd, we base our behaviour on the norms, goals and needs of the wider group.  This is one of the reasons we witnessed people looting in last summer’s riots who would never normally steal anything and why this year we see Mexican waves ripple around the stadium.

For those of you out there about to go to an Olympics event – enjoy.  If I had a chance to go again, I would, like a shot, just to soak up that atmosphere.  And if while you’re there, it crosses your mind to try and start a wave, here are a few top tips:

1)    Get a buzz going with the groups around you – remember you need about 2 dozen in a ball shape to get the wave moving

2)    The success of your initial start depends on the next few rows of people, so build on any excitement in your block of seats – adding to their cheers will help

3)    Choose a time when people are neither too bored nor too excited / distracted by the track & field activities – this is a key component of wave success

4)    Don’t sit next to the empty banks of seats!  Once going, the wave will jump these, but they will make it harder to get a wave started.

The moment is upon us. Athletes are arriving at Heathrow. Olympic traffic lanes are open. Commuters are bracing themselves for the potential transport nightmares. The advice of the Government (though not Boris Johnson) has been to work from home in order to reduce  traffic and increase productivity. This sounds sensible, yet for many reasons will not be an easy option for employees or their leaders. One important reason for this is that we are social animals. We have evolved for close contact with other individuals and small groups. This means that we communicate most effectively when we are visible to others: when we can see, hear and ‘smell’ the truth. And we tend to communicate poorly when we are working at a distance.

At home, we no longer have the option of ‘chance meetings’ to catch up on what’s going on, or the ability to wonder into the next office just to chew the fat – tactics that most of us will rely on to communicate with colleagues. Instead, we have to think ahead and plan communication.

Technology to enable remote communication has of course improved considerably over the years. Unfortunately, our understanding of how to use technology hasn’t. Leaders have the option of using phone, email, text messages, web-based video or even full video conferencing. Our research into remote leadership found, however, that many leaders over-relied on their own preferred methods of communicating - email and telephone - without knowing what their teams actually prefer. In reality, people have varying communication needs, but at the very least will expect a degree of personally tailored communication from their leaders.

And at an individual level, our research with Cisco also highlighted some of the important personality factors that enable us to be more, or less, effective when working remotely. For example, those who adapt readily to working remotely tend to be more extravert and sociable, more organised and more open to new experiences. Not everyone will share these characteristics, so a degree of awareness and support from leaders could go a long way to improve the speed and ease with which their teams settle into remote working.

Even though remote working seems relatively easy and straightforward, we are not all equipped psychologically to work from home or to lead at a distance. Employers may see remote working as a solution to cutting costs and avoiding transport problems, but taking us out of this environment requires a lot of thought and effort from the leader. Otherwise, we really will become a nation of cheese eaters for the next month.

There have been two recent high profile failures of leadership in the headlines: Rupert Murdoch at News International and, perhaps even more dramatically, Bob Diamond at Barclays Bank.  Isn’t it interesting that both are prepared to take credit for the success of their businesses, but much slower to accept responsibility when things go wrong?  Bob Diamond has made an estimated £98M in the six years since he has been at Barclays, much of it in bonus payments for the success of the bank.  No doubt he would say that he deserves this due to his effective leadership.  So far, however, there is no sign of a similar degree of responsibility for the recent LIBOR scandal though.  Why is this?

From a psychological perspective Attribution Theory can help us to explain this behaviour.

Attribution theory is the process by which individuals explain the cause of either their own or others’ behaviour.     For example, I’m a good driver, and when I cut someone up in a roundabout it’s because I’m in a hurry to get to an important meeting.  When someone else cuts me up it’s because they are a bad driver.  In the context of Barclays:  Bob Diamond sees himself as  a good leader who has contributed to the significant growth of the Bank, hence he deserves his bonus. However, the recent LIBOR scandal is not his fault, but the fault of certain traders.  These are bad traders.

Essentially it is a form of rationalising ones own actions. The impact on others, though, is that people who tend to rationalise like this come across as unprepared to accept responsibility and as arrogant. Ultimately, as in Bob Diamond’s case, it results in leadership derailment and an apparent inability to learn from critical mistakes.

Prepare yourself…the following is a rant about being sick.

Bob Diamond said he was “physically sick” when he read the email of traders bragging about fixing interest rates. He made his now-famous statement before the Treasury Select Committee as a form of contrition and public appeasement.

Now, is it just me, or is that just a clear illustration of a man who is in no way sorry or guilty for his actions, but instead the words of a man whose stomach fell when he realised how much trouble he was really in?

Our fight or flight response subconsciously prepares us for survival – either through running away or standing our ground. In doing so, it is not uncommon to feel physically sick; it is our body’s way of coping with the sudden surge of adrenalin needed to deal with the impending threat. What it does not do is signify remorse or guilt. If anything, it merely goes to support the view that he does not fully understand his own ethical complicity in the scandal.

Instead of focusing only on punishment, public hangings and increased regulation, now is the time to be focusing on the psychology of ethics. What is it about individuals and the organisational structures that surround them that lead to unethical behaviour? Organisations have been banging on about leadership and integrity for decades but very little is ever done about it. Instead of demanding (insincere) apologies, we need to use the psychology of individuals and organisations to better realise the true benefits of ethical leadership.

At the latest government inquiry into the behaviour of the banks, Bob Diamond said of his own staff at Barclays that they and their actions were “reprehensible”. These were the staff responsible for fraudulently manipulating the LIBOR interest rates and their emails alone were enough to make Diamond feel “physically ill”.

So if that’s the way that they left an experienced and hardened global banker feeling, what impact has it had on us? The single biggest reaction has been shock at the sheer lack of honesty in the actions of some individuals in the banking sector. The latest headlines suggest that these reprehensible behaviours may be widespread across many other banks. So, there could be more resignations, more shock and more disappointment to follow.

Once again, at the heart of this latest incident sits integrity. Definitions of integrity vary wildly, but all include the words honesty, truth and transparency. Integrity in leadership is of course not a new concept. It is not something that emerged in reaction to the banking collapse in 2008 or in response to the behaviour of Fred Goodwin or Bernie Madhoff. Integrity is a core quality of leadership that has existed in the literature for generations. Indeed, in Kouzes and Posner’s survey of admired leadership qualities, integrity is consistently the most important quality that we look for in our leaders.

And yet talking about integrity for a generation has had no influence whatsoever on the action of leaders in the banking sector. Or many other sectors come to that. Why? The main reason is that while everyone talks about integrity and nods in agreement about its importance in leadership (who would be crazy enough to disagree?) in reality few organisations are brave enough to measure it or reward it as a behaviour.

In coaching psychology there is a phrase “what you focus on, happens” and in organisations the phrase is “what you reward, gets done”. And this is the problem. Honesty is seen as a ‘given’ in organisations. It is expected and, therefore, largely ignored. And it is not rewarded, other than being punished by exception. What actually gets rewarded is making money. Or delivering results, or achieving targets, or making profits. So why on earth should we be shocked - or even surprised - when employees choose to break rules to increase their chances of reward or success? Surely you get what you ask for?

Of course, I’m not naive. Or at least not so naive to think that we will start rewarding honesty ahead of delivery of results. No. But integrity will never, and I mean never, become a part of an organisation’s culture until it is much more consistently and visibly endorsed, and financially rewarded.

In the world of internet technology, the race is on to make every user’s experience of the web as personal as it can be. Search engines - such as Google - are tracking every search and click that we make, and depending on the choice, will use that information to target advertising at us. Information is passed on, within seconds, from one website to another, and ultimately on to third parties so that advertising can be focused more effectively.

So, what’s the harm in that? On one level, not much. Given the amount of information on the web, personalisation might feel like a good thing. However, personalisation also influences the outcome of search results, for example by changing the order in which results are displayed on the page, and overall the number of ‘hits’ you receive in searches. The developers of search engines know that most people do not go beyond the first page when looking through search results and clicking on a link. It’s in their interests, therefore, to put the results that you are most likely to enjoy at the top of the list. They achieve this by tracking your history and using this to tailor results for you.

And here in lies a problem. A very common bias in human beings is ‘confirmatory bias’ ( a form of unconscious bias) which is when we tend to ignore information that does not support our view and focus too much on information that does support our view. Now think what this means for us when a search engine presents us with personalised search results. In practice, through personalising my search results, the search engine will tend to prioritise items that agree with my point of view over those that might contradict my view because historically that is what I have tended to click on. In my daily search for news, therefore, the chances of me hitting upon analysis that contradicts my own view is reduced. Some might argue that this is the same with choosing printed news. Not so. When I choose printed news from the newsstand, I make a conscious decision of which paper I buy and can consciously choose to read papers with differing political affiliations. On the web, the choice is a less conscious one as I will not always be aware of the political affiliations of the news source. Thus Yahoo, Google, Ask and the like could be narrowing our minds.

Kissing grass, patting heads and wearing lucky boots. It’s striking to see the number of superstitious behaviours amongst footballers - and these are just the visible rituals. Of course, it’s all part of the game. The world watches and laughs at these bizarre and irrational behaviours, yet many people laugh while knowing that they too have their own superstitions.

A superstition is a belief that links an action, object or a ritual to an unrelated outcome. It can be a good luck charm from a first date; a lucky number on a winning lottery ticket; or even lucky pants, one of the more common superstitions apparently. It is often based on an entirely random association and known as false correlation. But it doesn’t matter how irrational the link is, as long as there is a link.

As human beings we constantly try to make sense of what happens to us. When it is difficult to see a direct link between an outcome and an event, we seek alternative explanations. ‘Luck’ is one of the most frequent alternative explanations. Those who turn to luck as an explanation will, naturally, try to maximise and replicate their luck. In doing so, they begin to increase their feelings of reassurance and confidence, which in turn reinforces the belief that whatever they did brought them more luck and success. It is a common self-fulfilling cycle.

According to psychological research, higher anxiety tends to increase the likelihood of making superstitious links, as does having an external locus of control (a view that life is something that happens to us, rather than feeling in control). But the fact is that superstitions, as strange and irrational as they may seem, make sense. They provide an explanation of events, which is preferable to having no explanation at all. They provide a greater feeling of control. And they enable some people to feel that they can cope better with uncertainty.

And, believe it or not, they can influence performance. Psychologists1 have observed, in controlled experiments, significantly improved accuracy in the performance of groups using a ‘lucky’ ball, as well as better problem solving results when allowed to have a ‘lucky charm’ present.

Perhaps that’s why a survey last week suggested that over 50% of Americans have superstitious beliefs. In these testing times I’m just surprised it’s not higher.

1Damisch et al (2010) Keep Your Fingers Crossed! How Superstitions Improve Performance. Psychological Science.

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