‘Nowt to do with us guv!’ says RBS HR Director

The HR director of RBS has denied that the bank’s HR strategy contributed to its collapse.  Neil Roden, in an interview with HR Magazine, said that the financial crisis was “not all the fault of bankers’ bonuses or the fault of Fred Goodwin either”.

He continued:

There is a danger of simplifying the analysis. That is not to say bonuses or Fred were not a problem, but banks not lending and liquidity drying up are not HR issues.

He went on to list lack of capital in the business, a ballooning balance sheet, too much exposure in sectors such as property and the acquisition of ABN Amro as major factors which led to the bank’s collapse.

Which is fair enough. Sort of.

But you can’t help feeling that all these problems were caused by the culture of RBS; the attitudes and behaviours that prevailed at the time. Behaviours are, supposedly, influenced by the HR policies and practices in an organisation. That’s why we have them, isn’t it?

People do what they do in organisations because of the way they are led, managed and rewarded. If people play the money markets, invest in dodgy assets and make unwise acquisitions it is because the corporate culture actively encourages them to do so. At the very least RBS’s HR strategy could not have discouraged people from doing such things. In all probability, it reinforced and rewarded these behaviours.

This does not, of course, mean that RBS’s HR department is to blame for the bank’s collapse. It simply says that, like most people in the City who might have had reservations about casino banking, they were powerless to do anything about it. As I have said before, the vast amounts of money being made in banking over the last few years silenced any criticism. An HR director who did not want to implement an HR strategy that facilitated this money-making would have been out of a job.

As Sir George Quigley, former chairman of RBS subsidiary Ulster Bank, told the Irish Times last year, no financial institution could have “remained a wallflower” watching rival lenders “pirouetting around the dancefloor”.  Executives who wanted to be more prudent would simply have been swept aside by shareholders eager for greater profits. The few who expressed doubts were silenced or sent packing.

I had a row with Jon Ingham earlier this year about the extent to which City HR directors could have done anything to prevent the financial crisis. Unlike Jon, I still think that there was very little Neil Roden or any other HR professionals in banking could have done to stop the gambling merry-go-round that resulted in global economic collapse.

Having said all that, it still feels a bit rich for Mr Roden to say that HR was not in any way to blame for the collapse of RBS. OK, HR might not have been able to prevent any of the bank’s catastrophic decisions but they put in place the policies and systems that reinforced and rewarded the behaviours that led to these decisions. That makes HR, at the very least, an accessory after the fact.

This entry was posted in Uncategorized. Bookmark the permalink.

5 Responses to ‘Nowt to do with us guv!’ says RBS HR Director

  1. TGS says:

    Isn’t it a bit deeper than just bonuses? I have a friend who, among many, was fired by Fred (with a very good package from what I gather). The cause was, my friend claims, that Fred would not suffer any questioning of his strategies. All Fred wanted was yes men to implement his own strategies.

    If a lot of talented people (and my friend is ex-McKinsey so hardly a slouch) are being removed for the flimsiest of reasons shouldn’t the HR Directors be discussing this with the Chairman and/or non-execs?

    We used to have a phrase when I was in the Army – a fish rots from he head down. Surely its the job of HR to ensure this doesn’t happen.

  2. mkeeffer says:

    I just checked Webster’s – they list Neil Roden under the word ‘dissembling.’

  3. Jon Ingham says:

    Hi Rick,

    The comments at HR Magazine are quite interesting too. One suggests HR shouldn’t seek credit for business success, the other that HR can’t avoid blame for failure. I don’t think we can play it both ways. If we’re accountable for success (and I think we should be), we’re at least partly at fault if our business fails.

    It’s difficult to tell from the article whether Roden really believes RBS HR is blameless for their fiasco anyway. The article suggests he feels ‘HR was not in any way responsible’ or ‘in any way to blame’, but his comments are rather more nuanced – ‘the financial crisis was not all the fault of bankers’ bonuses or Fred Goodwin’ (so it was partly their fault then?) and ‘that is not to say bonuses or Fred were not a problem’ (so they were a problem then?).

    I really hope, for RBS’ and therefore all of our (in the UK) sakes, that Roden does accept at least some of the blame. Acceptance of mistakes is the first step that’s required in learning from them, and RBS has plenty of learning to do.

    Roden’s other comments don’t suggest much learning however.

    His comments a previous interview with People Management (Heavy Interest, 3 December 2009) were even more revealing:

    ‘As HR is normally eager to claim responsibility for setting workplace culture in good time, shouldn’t it shoulder some of the blame in bad times? Roden points out that few considered the culture inappropriate at the time. Asked if there wasn’t too much of a buccaneering spirit about banking, he protests. He also believes that borrows have to take some responsibility.’

    So that’s all right then, RBS HR’s in the clear. Well, no obviously it’s not.

    I had to laugh when I noticed the People Management interview on the page following an excellent piece by Gillian Hibberd (Higher Consciousness’). Hibberd notes:

    ‘There are some compelling examples of where social conscience has clearly been missing from organisations and, as a consequence, has damaged reputation. For example, massive performance bonus payouts for leaders of failing organisations; enhanced redundancy and severance packages for people leaving organisations under a cloud; luxury corporate parties or training programmes for executives in organisations making cutbacks on the front line… the list goes on. The question I have to ask is, “Where was HR in these organisations, and why did it not speak out about how these practices would be perceived by employees and shareholders alike?” ‘

    Great points that are clearly lost on RBS.

    Please note, I don’t want to attack RBS particularly. But I do think this point about HR taking accountability is an important one. And I am irritated that RBS HR doesn’t seem to be taking any.

  4. TheHRD says:

    Hang on a sec here and let’s rewind. Those of us in the UK will know that the RBS HR department were constantly self publicising and submitting entries for awards claiming how they were adding value to the business, commercially astute, integrated blah blah blah…..

    I’m sorry but you cannot on one side claim success is down to you and on the other hand say that failure is not. Either they hand back all the awards and admit that it was all bullshit and a farce OR they accept their role in the downfall and accept partial responsibility. Quite frankly, this makes my blood boil.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s