Tuesday 27 August 2013

Our empathy versus our ability

An American psychologist almost 70 years ago spent time into understanding the minds of the Nazis and their thinking. He came up with a definition what he thought was the nature of evil.  He described evil as the absence of empathy. It is an interesting analogy because during the war the Nazis had immense ability. They were warriors, builders and creators. They were organised, structured and well disciplined. But it so happens that with their incapacity to feel for their fellow man would have to explain their mistrust for one another and their crimes against humanity which ultimately led to their own self-destruction and downfall.

Today after two generations of peace in Europe we are in a very different era. But are we? Our economic war, failure and success has perpetuated a culture of individualism. Individualism is primarily derived by advocating one’s own self–interest, ahead of the interests of others; advocating one’s own independence versus others. Arguably in many ways many of us are working purely for our own interest where more often than not our human behaviour is governed by profit amongst others and not by conscience where our sole purpose is serving one’s own. This has by and large coincided into an era of liberalism and tolerance which has led to a world of mistrust and genuine apathy. A friend remarked off the cuff whilst describing another person’s misdemeanours. ‘He can do what he likes as long as he does not harm me.’  The three liberalism, tolerance, and individualism, the latter of which Lord Sachs describes, has played part in our society which he decribes is losing the plot.

In our current economic system we have the ability to work hard and show discipline. We are involved in cross cultural takeovers and acquisitions. We know how to cut costs and we can make money. Some of us are real economic warriors, and when it comes to profit, we can achieve this almost by any means often to the detriment of others. But do we really have the ability to show empathy? To show compassion in how we make decisions not for our own benefit but for the benefit of the other person? Are we really able to listen, care and understand the needs of our fellow human being, of our environment, and our world?

To really listen and to understand the other persons frame of mind is a very rare and unique skill to have.  It requires an element of awareness with a combined spiritual and emotional intelligence of its utmost. I myself find this part a perpetual challenge. It so happens that most communication failures occur because of differences in semantics or perceptions. Semantics means the way you define words or terms and perception is how you interpret data. If we were truly able to listen to each other with true empathy these differences would in effect disappear.

In short our combined culture of individualism, tolerance and liberalism truly has a danger of reverting to an absence of empathy. With the absence of empathy, our ego, pride, and self-interest becomes the order of the day which could have a distinct possibility of igniting the nature of evil thus ultimately leading to our very own self-destruction.

Our hope lies therefore in our ability, our ability to fight our ego, selfish tendencies and desires and reverse the tide of individualism, liberalism and tolerance. This may open an environment of empathy and true compassion in our work place and relationships whereby opening countless new boundaries and talent. Our ability to serving human needs together by contributing to the benefit of others, attaining a higher or clear purpose through leadership, thinking we instead of me, seeking first to understand then to be understood and behaving interdependently as opposed to co-dependently. Is this not a way we can bring back an environment of synergy and creativity not to mention trust and integrity into our lives and relationships that has been so battered and bruised in recent times?
Our conscience is our peacemaker

Thursday 22 August 2013

A case of profit by night?

I was recently saddened by the death of a young intern from an investment bank in the City of London. He was working extremely long hours, and very often through the night. The independent newspaper writes that this is common amongst investment banking with some people calling this slavery.

I can recall some years back a lawyer friend of mine working once very long hours and often through the night. She explained how this habit had perpetrated a type of repetitive strain injury where she was unable to use one arm and her fingers. It took many months for her to recover.

Recently a female friend of mine had returned to the office, after maternity leave. Her boss demanded that in order for her to achieve in this environment, she would have to work very long evening hours. She found this hard due to the nurturing she was required to give her little child. There was little incentive to work late what with no extra pay etc. The only thing was the fear of being fired or being asked to leave resulting in the possibility of not having a job in which case she felt she had no alternative. A situation she was certainly not happy with.

Time MCG often writes about exploitation of employees for the sake of profit to the detriment of our health and well-being. I see no sense in people nor anyone for that matter in working through the night unless under exceptional circumstances or perhaps crisis situations. It would certainly not be cool if it was for the fear of losing one’s job instilled by a kind of management by fear or through lack of resources, or by saving costs.  Such cases would have to be unacceptable and beyond reason. There is little sense too in the investment banks allowing their interns to do the same and making them believe in such greater rewards later. They too must realise that remuneration in Investment banking is enduring a time of great intense scrutiny and may change, more so after the scandals and excesses in recent years.

Perhaps I’m different nevertheless I am someone who requires a minimal amount of sleep, in order for me to function well the next day. At least 6 hours, ideally 7 even 8 work’s well. It is proven that sleep is essential for one’s memory to function well, to be at its best and for one’s talents to be used as effectively as possible the next day.  If I was to write some sort of report or synopsis, I can write these things in record time. I find myself having more in my deposit than what I am able to withdraw. Call me a stick in the mud, but even if I was invited out for the evening, I would ensure that I come back in time to get my vital hours of sleep.

In short a human being is precious in his or her own right, endowed with enormous, almost infinite potential and capacity. For this part to function properly it requires its regular down time. Perhaps we are entering an era where wisdom must be able to dictate the wider consequences of our actions. Or is it simply the opposite in that we sacrifice ourselves for the sake of our clients, personal ambition and profit?

Saturday 10 August 2013

Has our business culture lost its sense of purpose?

Karl Marx argued that the Capitalist theory was a dictatorship of the bourgeoisie. Believing it to be run by the wealthy classes for their own benefit and he predicted that like previous systems, capitalism produced internal tensions which would lead to self-destruction and replacement system was socialism.

It is uncanny how this German philosopher had foresight in which in one end he can be so wrong on the other almost perfectly right. The shocked leaders working in immediate solutions behind the scenes of the 2008 financial meltdown facing our stunned nations, may tell you that Karl Marx was probably right, in his above theory. The capitalist system was in meltdown and we almost reverted to a socialist system just like that, over night. Thankfully we avoided this, as fearful memories of the last century were not so distant away. But the consequences of this crisis today are devastating of almost biblical in proportion. We must learn to change our attitudes and our mentality in certain sectors of our economy.

In the business media headlines there is very little reported on change except the usual on how our economic war is progressing, law suits, tax avoidance, business fighting for market, cross cultural and cross country takeovers, and so on. Statements are coming out of financial institutions as ‘business as usual and banks reverting to profits. There is more negative news on the German state banks in crisis. and bankers on trial for fraud and the whale traders scandal. Time MCG is not against wealth per se nor is it against profit but Time MCG is against abuse of wealth, the pursuit of wealth as a be all and end all to the detriment of others, and abuse of the system. Part of the solution is simply a question of transparency in a business or individuals in how the money is made, used or served for the added value or benefit of the other amongst our intermediaries within the economic and financial system.

Banking has brought on the most criticism but in all fairness to them, Time MCG regularly argues that it has opened up a wider endemic cultural problem in business, trade and commerce everywhere that has already existed. A professor of finance made an interesting analogy and informed us that much of the guilt and shame stands mainly in the world of intermediaries where what one has to distinguish between the real economy (goods/services) and the financial economy, which merely intermediates. Any business which merely intermediates doesn't provide real value; they only take a cut of the real value at both ends. Sometimes there's a need for intermediation only if there's a proper market failure where supply and demand don't meet, but that's not always the case.

The reality today is that intermediaries are taking a far too great % cut to make supply and demand meet, and sometimes they deliberately manipulate the market to their advantage, using their influence, power, and the size of their balance sheets or any other means at their disposal (perhaps false rumours, lies and deceit,). Intermediaries are not just in the financial community, they are middle men, agents, wealthy individuals, brokers, football agents, executive search head hunters and so on in the world of finance, commerce and trade. They are so often people or institutions seeking opportunities and after the quick buck in which some only require a phone and a computer.

One can logically deduce therefore that paying oneself more or the same percentage wise by taking a bigger cut out of the real economy, whilst supply and demand is weak in the real economy serves no purpose except ones own.  It puts us quickly into the category of greed, even as potential thieves and impedes our true advancement.

The business secretary Vince Cable in the UK government says that the UK is now 5% poorer after having bailed out the banks. Belgium, Holland, Spain and France are a lot poorer too.

One thing we have learned from the economic crisis is that we must try to correct things in order for this not to happen again and if it requires changing the system then so be it but this must be done in a peaceful and intelligent manner. To change a mind-set is the most challenging thing that can ever be done because arguably people do not change over-night; it can instil greater fear and insecurity even revolutions. We know throughout history that once you create wealth, it is very hard to let go. It is only when we do silly things or easily become blind for the sake of profit then things start to go wrong. When businesses which operate in money then unprepared if the music stops, sentiment of the general public can sway. Here we must not underestimate the general public who do not take themselves as fools. History has taught us plenty of stories where greed can get to be eradicated through force or even through violence particularly when people's livelihoods are affected. We hope it will not come to this.

The biggest sadness in our current societies is the result of a breakdown in trust as a consequence of this abuse. Sadly now even an MBA graduate in business from Harvard or Oxford, has proven to not necessarily have the developed intelligence in business inciting weak judgement and poor conduct. Henk Poulson, the former White House economic advisor had an MBA from Harvard and is widely criticised for this crisis. Fred Goodwin ex RBS was a Chartered Accountant. Dick Fuld of Lehman brothers has taught us, that a ruthless commercial individual, or a ‘shark’ (as we used to commonly describe these types) who has grown from the bottom to the top of the food chain through poor methods. They cannot be trusted. We have also learnt that wealth does not necessarily make us more intelligent nor possess sound judgement in our choices or decision making.

There are firms who hire PR and lobby firms creating smokescreens and mirrors on how the firms do business. Can they be trusted?  We also know too that the biggest is not necessarily the best. Then there are those leaders in business flying too close to the sun deemed to have lost their sense of reality. Are they to be trusted?

Economists and monetarist have gone quiet as if they have lost the argument of reason. Not to mention the other end of the spectrum, of high level white collar and experienced professionals that have been made redundant who have shown loyalty to a firm but the firm has not retuned that loyalty. There are those who are trapped in the system, who feel insecure with their jobs, or unhappy and feel enslaved, victimised, stressed or exploited.

Then we have the higher authorities who are at a cross roads and lacking the courage to make the real decisions in case of civil unrest often at the mercy of those business institutions with power and money. They appear to be forced to give in to the short term solutions, as we live in a short term world, too fast for our own good easily swayed that high incomes and therefore consumption is the only solution. In all honesty the Capitalist system has had the stuffing kicked out of us in Europe and the entire West.

How has it possible that it has all fallen down to this level? Is it due to our liberal, ‘laisser faire’ and tolerant attitudes resulting in unending conflicting individual self-interests, lack of leadership and authority? Is it our lack of vision and identity? Or is it simply a lack of education and guidance?  Are we too spoilt and therefore uncaring? Is it our misconception of freedom in that we are allowed to make whatever choice we want and without thinking? Or is it simply a case of a moral breakdown in family values, conduct, and behaviour?  My mother pointed out on the phone the other day. ‘What is happening in this world, there seems to be such a lack of quality in people everywhere!’

We must listen to the common sense of our mothers sometimes and we must act. I know as an interviewer, business consultant and coach there are plenty of responsible, sincere, fun loving quality, honest and people with integrity out there and even plenty of honourable bankers and plenty of great businesses offering real solutions in needs for the real economy. Plenty of people who strive for a better world or for the common good. Perhaps it is just a case of these types simply waking up their careers, finding their courage and rallying. You just know and feel it through instinct when you meet someone of quality. He or she tends to be true to his or her own self, with a strong sense of right and wrong, a high level of logic and reason, perfectly in tune with his or her own identity. If they have a passion and conviction in their work for all the right reasons that is great. If they have a vision well that is even a greater attribute. This is called education and good upbringing. It is these people I believe that have a duty to be all conquering for the sake of humanity, our children and our children’s children to get us all out of this mess. It is these people that must help the others even in the upper chains to think coherently.

How do we do it? Well, first of all we have to change the money culture which is simply not healthy for anybody’s identity. A culture I had experienced myself. As right now it is some tyrannical obsession, to rule over others, object of power, success, often corrupt, secretive, status, individualistic and all conquering. This serves no benefit for anybody except ones own and worse we seem to forget who we are and why we are here and what we are here to do. These people need to be sifted out, reasoned with, challenged or coached. The media play a great part in not helping us over this who takes the assumption that if some individual is wealthy or a firm has strong profits, they must be amazing. This is not helped by many of us who have a kind of short sighted view in business, a kind of what is in it for me mentality regardless of conscience. Or a takers mentality in that I am going to go out there and take as much as I can so that there is enough for me and for my life. Even an attitude of high margins for as little work as possible or as quickly as possible so that I can do something useful with it later on. This mentality is fruitless; it is an attitude of fear and serves no long term higher purpose. Neither does one take, nor does one take to give.

It is also this Wild West culture amongst our intermediaries with its relentless pursuit of revenue that requires gentle reform, and if necessary with an iron fist.  This is a culture I have lived, experienced and witnessed myself. I remember too once in the mid-90’s in my 20’s in London, a banker friend of mine came to me making very good money and asked with his full conscience speaking ‘how is it they entrusted me with so much money to trade with when I lead such a debauched life in my spare time?’ Many of my generation including myself were all like this, often hedonistic with loose morals. I feel ashamed of this and I had to change. Is there a link? I dare say this conduct was contrary to my upbringing or family values. It was just the way society was (or still is...) 
Today more and more honest or guilty people have come out to speak about the misconduct inside our firms and corporate culture for the outside world to hear. This is a good thing and an opportunity for change so that this culture is dealt with once and for all. But the change also requires ingenuity, quality people and courage and not an opportunity for the lynch mob to make their mark. We are living a time of historical proportion with debts equivalent to the last days of the Weimer Republic.

The European banks are in such difficulty themselves brought on by serious internal problems such as their vastness, conflicts of interest all over the place. Acting in their own interest, shareholder interest, at the mercy of hedge fund managers, investors, their customers, debts with governments, regulation, mistrust with other banks and the list goes on. Not to mention remuneration, fees and cultural issues, people leaving etc. and god knows what else. Bank of America is now being sued by their very own US government. Is this what we want? Would it not be better for simply the culprits to come forward so that we learn? Bearing in mind that history has also taught us that in time the truth will always bear fruit.

At personal level we must ultimately learn to give or offer our expertise if there is a real need, based on our true unique talent, values, knowledge, training and experience. The product or service that you work in would need to serve a purpose that identifies with you. This is how you anchor your identity and how businesses are built. In an ideal world when the receiver or counterpart feels it has been benefited, he/she will recognise you for it and pay you for your services and hard work. The result is you feel your value added is rewarded. This is how you treat money. This is how you measure success. The rest takes its course. This is how it works at individual, corporate and society level. To some people this part is not rocket science and it never was. Although sadly I know from my own experience that this part is hard to figure out. For those of you who have read the fairy tales, or the brothers Grimm to their children. These writers were geniuses and I believe we need to revert to this kind of belief. My grandmother once told me that there is only room for the few that reach the top of the mountain. One wonders where does that mountain end?
In brief what we must learn not to take, or become opportunists for our own benefit beyond our expertise creating conflicting interests and in the end working for our own interest which not only results in a loss of pride and integrity in our work but it can so easily create resentment and mistrust from the counterpart or from the outside. It is uncanny when you think of Roman methodology; there was the God of Mercury, or Mercurius. He is the patron god of trade and commerce. Today it could be considered as financial gain, commerce and trade, eloquence, messages/communication (including divination), travelers and boundaries, luck and the internet.  He is also the God of trickery, thieves and the guide of souls to the underworld...

Soul searching is clearly required within our economic and financial system amongst our differing societies in Europe and the West. Who are we, why we are here and what we are here to do which may explain our lack of advancement. As the banks and the other intermediaries are the main cause of this crisis to the detriment of the other due to their self-service culture, it implies they may have lost their sense of service and identity. What made them stand out were the drastic negative repercussions on the wider part of our society in Europe that we see today reflecting their greater sense of responsibility which was in part something that slipped by them nor fully grasped. It must have shocked a number of them to the core.

Now if they employ the best people and brains in our societies and carry great responsibility in our communities and our world, it would be nice to see them putting their ingenuity back into our real economy, our communities and our societies on our very own door steps here in Europe. Let’s all come back down to earth in Europe and understand the needs of this continent and change. Believe me there are plenty of needs out there. The banks ultimate challenge is to discover the real need in an ethical and the right way and then it is for them to serve in the interest of this need, and this way they may be able re-create trust to help us all into a new era. We need you and you need us. What is no good is serving the interests of each other, running away, globetrotting and seeking opportunities elsewhere with the same practices as before together with that quick buck risk taking mentality that we have all learnt will create the opposite effect causing more problems than actually necessary .

Of course their initial challenge is getting their own houses in order and redefining their vision, sense of purpose, principles and business models as I am sure they will. The finance community and the real economy (goods and services) have to meet. Right now they are worlds apart as seen in the stock market. Stocks are at their highest levels and the real economy has hardly budged one bit. This has a danger of creating an ‘us versus them’ mentality. If they took a cut of 5% out of the UK real economy well they could for example put 5% back plus interest. This part is going to require brains of the best calibre and I would say great courage, wisdom, leadership, humility and sacrifice. Right now there are few signs of people coming forward and time for us in this respect is not exactly our most valuable commodity…..
With mistrust the solution stares

Friday 2 August 2013

Has the Capitalist system become its own worst enemy?

I was intrigued by the civil trial of Fabrice Tourre the ex–Goldman’s Sachs trader nicknamed ‘Fabulous Fab’ whom has just been found guilty of fraud. He has been described as ‘Feeding Wall Street Greed.’  centred on the Abacus deal back in 2007 and its continued conflicts of interest (= value breakdown) . GS have also paid Mr. Tourre's legal fees. This has also brought on perhaps one of the most fascinating debates I have ever encountered on linkedin started by John Taft from Royal Bank of Canada on business ethics. Everyday somehow this financial crisis seems to be exposing more and more of our frail human nature in our business conduct, the entitlement culture, our selfish desires, misdemeanours, the exposed hidden truths and the wider damage this crisis has occurred largely due to the weakness of the system, breakdown in values and lack of moral leadership.

These examples affirm more and more in what Time MCG stands for. That we must change with renewed purpose and vigour in our corporate identity. We must learn to carry our responsibility, try to think of the wider consequences of our actions before we make a decision and be accountable for our failures in this desperate world. Finally we must urgently revert to a service above self orientated culture rather than the opposite and in particular the financial sector. This change must be led from the TOP and the upper levels of management and must be put into action.

GS on Wikipedia seems to have an ever increasing list of scandals. They all appear to be under the watch of their CEO Lloyd Blankfeid. Nothing we notice is written on their efforts and changes they are making in their culture or the transparent measures they say they are making.  Another ex-employee Greg Smith only last year described the corrosive atmosphere working in the London office similar as that of the Wild West. This latest scandal will no doubt have calls on further potential management resignations. All this has prompted as an outsider to look up the business principles and values of Goldman’s’ and to study those more closely in what might be causing all their scandals and perhaps offer a little help. The first few at the top of the list make economic sense notably customers’ needs and interest followed by profitability and shareholder returns.

However the great capitalist conflict and sentiment can so easily flare up and in this fast world of ours as so often the case powerful shareholders are thinking instantaneously or speculatively ironically led by many banks. ROI yesterday and profits tomorrow etc. Their own employee stock owner ship interest is mentioned as a business principle. All this brings in many extra and unnecessary burdens on a company which can often result in putting profit before needs of their customers whereby inciting poor conduct and greed. Or is it simply a matter of their well known unashamedly excessive high reward and fee system that puts employee interest before customer interest?

Time MCG believes that for the capitalist system to regain its credibility shareholders must revert back to focusing on the long term value of a company and reform is clearly needed in fees and remuneration. These are two areas where investment banks have an innate danger of becoming victims of their own success.

There are some very good things written such as pride in our professional work as well as creativity and imagination. It briefly mentions ethical principles that govern us. I would like to challenge Goldman’s what they mean by ethical principles and how they actually govern you? Further down two more are stated.  ‘We are a service business, without the best people we cannot be the best firm.’  ‘We offer our people the opportunity to move ahead more quickly than in other places.’ The former is vague other than thankfully they recognise that they work in a service business. The latter emphasises personal ambition and self above service which contradicts their leading principle. Needless to say that people can quickly be let down by having false expectations raised too quickly.

Another one that springs to light is ‘We aggressively seek to expand our client relationship.’ In our experience this one is unpleasant, again self above service which often breaks down our inner core value system resulting easily to mistrust and loss of integrity. Why don’t the customers come to you as a reflection of a proper service and trust instead of the other way round after all you are the best? Not to mention that this is hardly the climate to be at the receiving end of a so called aggressive banker.

Right at the bottom of their business principle, is honesty and integrity. These are probably the most important and challenging values and principles any business would like to have in their people and their culture particularly if you are a bank and you are involved in money.  We all know that within the financial sector such values as integrity and trust has had the stuffing kicked out of them in recent years. Some banks such as Barclays have got the message and are already working hard in real tangible efforts in re-creating trust and honesty. Unfortunately Goldman’s makes little effort in defining these values. Perhaps what with Greg Smiths assumption of the Wild West is it of no wonder these principles are at the bottom of their list and considered less important?

I have to say these principles are not coherent and do not bode well as a model of wisdom and developed intelligence that is expected of leading MBA graduates. I would have to challenge Goldman’s to enlighten the outside world with some serious reflections.  With such vast profits surely you carry a weight of responsibility in our economy therefore our society. As a highly secretive bank it is very hard to know exactly how you make your revenue. What is your actual purpose? Is it tangible? Do you have a vision? Are you really contributing or serving for the needs or benefit of others or vice versa?  How do you define success and what transparent efforts are you making in re-creating trust? Well informed sources have informed me of shocking examples of how traders have held on to vast quantities of commodities to the detriment of others in developing countries that are already suffering and in real need just to increase prices, demand and their own profits. Is this how you make your money or what you call in hiring the best people?

As for Fabrice Tourre, I don’t blame him. Instead I feel sorry for him as clearly he is a scapegoat of a wider cultural problem that is still endemic.  It is evident that he came into an environment that made him like this taken in by the trappings. This made him self-serving and seeing his superiors and elders do the same. In their eyes he was perhaps not cleverer enough in that he got himself caught. The sad thing is that in order for him to change for the better it will be a long hard road and he will suffer for it. The good news, he is still young and therefore he has time to re-invent himself for perhaps a greater and brighter future. Just find a better nick name! As for the old guard within GS management, their time could be running out or in all likelyhood we'll have Boris Johnson, the mayor of London,  come charging up on a horse, whipping their London office wearing a 10 gallon hat!

Lastly, on a wider serious note a question for the monetarists and economists out there, how come most western stock markets are at record highs when most of the countries they represent have been in recession? Who else out there is in their own imaginary bubble?