The sins of the father

Can you blame a child for its parent’s crimes? Certain faith traditions say you can, common sense on the other hand says this is cruel, nasty and offensive. Just because someone’s Mum or Dad was no good, we don’t punish the kid for that.

What about in business? Can we blame one part of an organisation for crimes committed by another part? Can we blame a local branch for bad things done by Headquarters? Can we blame the organisation in one country for the misconduct of its parent company in another country?

Can we, for instance, hold Barclays Bank in Botswana responsible for bad things their parent company did in London? As you may recall Barclays in the UK was caught manipulating the “Libor” rate, the interest rate that banks use when they lend each other money. Internal emails emerged clearly proving that the guilty employees had done this knowingly, that many senior staff knew about it and that everyone concerned knew that what they were doing was wrong. The scandal was uncovered by the press and the UK banking regulators went in, investigated and fined Barclays a massive £290 million. Barclays’ CEO in London, Bob Diamond, was forced to resign and Barclays’ reputation took a major knocking.

So are we entitled to hold our part of Barclays responsible for the crimes of the British part? Would we be morally entitled to close our accounts or at least not to open new ones with the bank as a result? Would we be entitled to think less of them here?

Let’s think of another example. The UK division of a G4S, the global security services company we all know, is thought by many to have been massively incompetent during it’s preparation for the recent Olympic Games. Rather than offering the 10,400 trained security guards that they had promised the organisers to protect the Games, they eventually could offer no more than 8,000, forcing the British Government to mobilize their already hard-stretched Army to step in and cover the gap left by G4S. The British people, and every one else who visited the Games, was shocked at the uselessness of the security company, particularly when the Chief Executive of the company was dragged, kicking and screaming (metaphorically) to give evidence before the British Parliament and to explain his company’s failure. Luckily the Olympics Games were a remarkable success but that was no thanks to G4S getting things so badly wrong.

The effect of this on G4S in the UK was devastating. According to the Financial Times:

“G4S has been forced to reveal that its UK pipeline fell from £760m to £565m in the three months that the Olympics fiasco dominated headlines”. The FT also reported that the company “was left nursing a 60 per cent fall in half-year pre-tax profits as the trophy contract became a bruising liability.”

But this was all in the UK, surely? What does it have to do with us in Botswana? Anything at all?

The G4S situation in the UK isn’t likely to affect them in Botswana I suspect. Certainly their CEO, Nick Buckles, said that:

“Outside of the UK, we think it will make little difference to underlying performance”

But what about their reputation? Are we entitled to judge either company differently in Botswana based on their conduct elsewhere?

I think it depends. If a problem happens in a far-flung country that has no connection to Botswana I think it would be unreasonable to judge them here. But the thing that links both Barclays and G4S in Botswana is that they both report to London, directly or indirectly. London is in charge.

I’m not suggesting that in either case there’s any link between the conduct of London and their behaviour in Botswana. Of course there isn’t. However I think we ARE entitled to ask questions about the culture and ethos set by Head Office that might affect our local operations. If it’s safe to assume that both the Libor rate fixing and the Olympics security fiasco were just aberrations, that they were caused by “rogue traders” who were acting in defiance or ignorance of managerial control then it’s OK. However, if these problems were caused, or just permitted, by something rotten in the culture of the organisations then I think we’re entitled to draw our own conclusions.

I think it’s also perfectly reasonable to choose a company based on personal preference. If you just don’t like a particular company you’re free to exercise that preference. I have a fondness for Apple, Virgin Atlantic and Swatch and will choose their products over those of the competition, all things being equal. There are also companies who I just don’t like, either because they continued to operate in South Africa during the apartheid years, because they have a history of bigotry or have made dubious business decisions. I’m free to avoid those companies if I want, just as you’re free to exercise your preferences as well, whether they’re positive or negative.

That’s one of the reasons companies have to manage problems really, really well. Barclays and G4S should really be undertaking a major public relations exercise, trying to address the negative perception people around the world now have regarding them. They need to be doing their best to persuade us all that they’ve seen the error of their corporate ways, are now reformed characters and can be trusted in future. Then we can all make a decision based on the perception they create.

But are they doing this? I haven’t seen it yet.