Inside the Minds of the Money Minders – Deciphering Reflections on Money, Behaviour and Leadership in the Financial Crisis of 2008.

Associated with a project of independent Board evaluation for banks and other financial institutions is a research project led by Alison Gill of Crelos Ltd and Mannie Sher of the Tavistock Institute of Human Relations titled: ‘Inside the Minds of the Money Minders – Deciphering Reflections on Money, Behaviour and Leadership in the Financial Crisis of 2008’. The research involves in-depth interviews with selected senior officials of banks, regulatory bodies and other financial institutions based on our hypothesis that money, finance and capital serve as ‘containers’, in Bion’s use of the term, for profound individual and social meaning that are often hidden, and that revealing that meaning should enable the finance industry to develop more effective ways of avoiding financial crises in the future.

The interviews with senior representatives of Banks and other financial institutions are at an advanced stage and they are providing profound insights about the financial services sector. Our respondents have said that the financial crisis has been a shattering experience that has rocked the foundations of financial institutions and the public’s confidence in them. People in financial institutions are now better able to take a candid look at themselves and acknowledge where they have been found wanting. Very senior people are acknowledging that they knew that their behaviour was excessive, collusive and based on denied avarice, but they persuaded themselves otherwise. Their behaviour was described as delusional and had the characteristics of herding. Collective group mentality had developed and was embraced enthusiastically by almost everyone in the system; throwing caution to the winds and believing ‘this time is different’. The regulators themselves have wondered about their own sense of powerlessness in the face of the whole financial system’s ‘unlimited capacity to delude itself’. They have said it was like working in a ‘world of illusion built on illusion’ in which they too got caught up.

It is emerging that most finance directors do not understand (i) that economic systems have become more complex as they have evolved across national boundaries to the global, and (ii) that there was an over-reliance on numbers and mathematical models over good person-to-person judgment. Thirdly, even the most senior people of the largest world financial institutions who understood that they had to work together collaboratively, could not do so because of their own internal, intra-institutional and inter-national competitive and rivalrous dynamics. There is a strongly held belief that the pressure to act that is felt by politicians to assuage public outrage and need for justice to be seen to be done and culprits punished, is once more forcing short-termism onto financial systems with potentially disastrous consequences. The requirement for global solutions to national and inter-national problems has far-reaching consequences. It is the hope of the authors that the research and evaluation work will provide new ways of thinking and decision-making that will bring the many disparate parts of the financial world and political world into greater harmony with a better ability to see the criticality of thinking from open systems perspectives.

The role of board behaviour in effecting good corporate governance has come under scrutiny following the financial crisis. In particular, achieving good corporate governance reflects balancing among an array of influences which is probably at its widest in the case of banks. A critical balance has to be established between; on the one hand, policies and constraints necessarily required by financial regulation and, on the other, the ability of Boards to take decisions on business strategy that are in the best interests of shareholders and the long term sustainability of financial institutions and their stakeholders.We are confident that our research will contribute to greater leadership effectiveness in the sector.

Alison Gill and Mannie Sher

For further information, please contact Mannie Sher at m.sher@tavinstitute.org or telephone +44 (0) 207 417 0407.