So, following days of mounting pressure after the interest rate-rigging scandal broke, Barclays boss Bob Diamond has resigned.
Aside from what lessons may be learnt about financial best practice, there’s plenty all companies can glean from this City saga about how to handle a crisis:
– Crises can quickly make a business appear reactive, not pro-active. In other words, within minutes the media can begin to dictate the agenda. And the Barclays crisis had all the elements to attract journalists: wrong-doing, controversy and a multi-millionaire boss, to name just three.
– If a crisis is big enough, the media will reflect the public desire to hear from the person ultimately in charge. In the six days since the crisis broke, we’ve not heard from Mr Diamond. But journalists do not stop covering a crisis just because key players will not talk – the reporters simply find others, such as customers and disgruntled employees, to comment and the company will have no control over those (possibly very hostile) remarks.
– If you’re at fault, say sorry. There was no question Barclays had done wrong after regulators in the US and UK fined them £290m for attempting to rig the Libor and one of the reasons this crisis has gained such momentum was because the widespread view among the public seemed to be that if you’re paid millions, it doesn’t matter what you did or did not know, you take responsibility for it.
Interestingly, Bob Diamond’s resignation statement says, “The external pressure placed on Barclays has reached a level that risks damaging the franchise – I cannot let that happen. I am deeply disappointed that the impression created by the events announced last week about what Barclays and its people stand for could not be further from the truth.” Note the reference to outside forces and an “impression”. Does that sounds like “sorry” to you?
– Companies which quickly apologise for their errors can emerge with an enhanced reputation. Everyone makes mistakes and the public is far more forgiving of those who swiftly own up to them. Waiting six days to fall on his bonus has arguably only damaged Bob Diamond’s reputation. He and Barclays may already rue him not saying days ago something like, “I am truly sorry for what has happened on my watch and I feel it is only right and proper I tender my resignation”. Let’s see how history judges him. Today’s TV reports will be a clue…
– Don’t allow the court of public opinion to dictate your next move. On Friday the bank’s message was that neither its chairman, Marcus Agius, nor Diamond would resign. Then yesterday Agius said he would be stepping down after all, only to return today as executive chairman, and Diamond has quit, giving the impression of indecision, of an organisation reacting to events.
Perhaps the bank thought Agius’s resgnation would “test the waters” and see off calls for Diamond to go. If so it clearly failed.
Instead as the crisis began to trend on Twitter, customers lined up to tell radio talk shows they would be moving their accounts. When the Wall Street Journal’s front page headline announced, “Diamond under pressure as UK plans bank probe”, as it did today, the writing was on the stockmarket wall.
– You cannot kill a crisis with a 1000 cuts. If your “strategy” lacks focus and falters, instead of being decisive and pro-active, it will rumble on and on. So stand by for more headlines on Diamond’s pay-off and what he has to say tomorrow before MPs on the Treasury Committee.
In so many ways these six days have been eye-wateringly costly for Barclays. If every company or financial institution stops to learn from this crisis, they might prevent a specific loss – that almost pricesless asset, a strong reputation. Now you can bank on that.