Let’s assume you’re an excellent journalist (yes, I know for most bloggers this would be a bit of a heroic assumption, but never mind). You spend 15 years working your way up through various jobs until you’re editor of a national title. You do the job very well.
Then the chairman of the large media company that owns your title offers you a job as head of finance. You take it on; you fail to spot the risks in the strategy your predecessor was running and so continue with it; the company gets run into the ground; and you’re rightly fired.
In a reasonable and sane world, should you:
a) apply for editor jobs, and be taken seriously as a candidate because you’ve a strong proven track record in editorial, and the fact that you messed up corporate finance isn’t at all relevant
b) never be allowed to work again, save perhaps as a cub reporter or a night sub?
The sane answer is a, right? So why the hell is there such a fuss about Andy Hornby, who was an extremely good manager at Asda and running HBOS’s retail division, but didn’t understand the systemic risk of reduced liquidity or the lack of controls in HBOS’s corporate banking department, being hired to run retailer Alliance Boots…? He’s a good candidate for the job.
(more generally, I don’t get the public’s general anger against bankers, politicians, etc. Yes, they messed up. You messed up. We all mess up. We’re people, it’s what we do. The bankers didn’t kill anyone, they just cost us a bit of money. It’s only money. Nobody in the UK will ever have to starve on the streets, so the money doesn’t really matter, beyond ‘it’d be nice to have a new car this year’. So stop being such pathetic childish bitter twats about it…)
I don't think it is particularly strange to be angry at bankers if you believed their promises of offering a safe home for your money and then they went and lost it all (or at least couldn't pay it back when you wanted it). The more general anger at bankers in general is less coherent.
But surely it's only the Icelanders where 'safe home for your money' was ever even in doubt…? I suppose if you had more than gbp50k in Northern Rock it wasn't obvious for a time that everything would be OK, but that can't be more than a couple of thousand people.
Andy H is banking genius, he managed to stiff the real smart arses at Morgan Stanley and Dresdner Kleinwort.
I was never convinced about Andy Hornby as a choice for HBOS – but he's a very smart man and has done great things in retail & consumer. I would go futher to suggest that the 'rot' in HBOS had already set in before he took over…
Quality Daily Mail commenting, given that in the article it stated that AB is privately owned. As a former AB shareholder though, I did quite enjoy the modest cheque from KKR a few years back…
Why the hell did this get past the Boots shareholders?
– roger, brighton, 10/6/2009 18:24
Shareholders can sell Boots shares before their value evaporates. Customers stop shopping at Boots.
– Tony, Worthing, 10/6/2009 18:18
"Nobody in the UK will ever have to starve on the streets"
Are you taking the piss, John? Because that's not even vaguely funny.
And how do you feel about accountability? I get paid less than the national average because if I screw up I don't destroy the lives of thousands of people. If I was experienced and qualified enough to be a company director I would rightly expect to be paid very well for handling the enormous responsibility competently. If I failed in that role I would be rightly accountable. What is it about pay scales and accountability that you do not get? Are you seriously saying that people can screw up in incredibly demanding jobs that they have been put in with the expectation of success and they can simply be absolved of all accountability when they screw up? How many headlines do you read where a surgeon is pilloried for screwing up on the operating table? I can recall several and the character in question is generally held to be entirely accountable for their errors? Can you tell me why corporate executives shouldn't be held to a similar level of accountability? Do you support corporate killing legislation?
Answers please.
@NB agreed, and I'm sure they'll get him at a bargain rate precisely because no PLC could get away with the PR shitstorm from employing him.
@punkscience
1) I didn't think this post was the time or place to get into a discussion of how we treat mentally ill people, drug and alcohol addicts, and asylum seekers banned from working while they await appeal, all of which I agree are shockingly bad. Nobody in the UK will have to starve on the streets because of any plausible economic downturn – we're not India and we're not Victorian England; if you're sane, sober and a UK permanent resident then you have access to a roof and enough money to survive.
2) I'd say you got paid less than the national average because you've chosen to do something you enjoy and find useful (you're a biology PhD candidate, or possibly postdoc by now, right?), rather than because of the lack of consequences of your actions.
But yeah, there is an extent to which execs are paid well because they have significant responsibility. Hornby's a good example: although he didn't do anything that appeared wrong at the time (indeed, he followed conventional wisdom), he was fired after that proved to be disastrous, whereas a regular employee who followed standard practice that turned out to be wrong wouldn't be.
Similarly, if a surgeon kills a patient by following generally accepted practice at the time (which possibly, had he thought about more, he might have realised wasn't a great idea), he might lose some of his reputation when that practice is revealed to be fatal, but he won't be struck off or sent to jail. That would require him to do something glaringly egregiously stupid, rather than just wrong-in-hindsight.
& yes, I strongly support corporate killing legislation and think it should be tougher – at the moment, you need a 'controlling mind' to sentence individual directors, which is more or less impossible for a large company; better would be to say that if a worker is unlawfully killed *either* a line manager somewhere along the chain must have grossly disobeyed the rules in a way that involved dishonestly bypassing non-trivial checks, in which case an individual prosecution against the line manager would succeed but the company isn't guilty *or* the controls laid down by the board were demonstrably (non-hindsight-ly) flawed or unenforced, in which case the law would allow the board member responsible for H&S (either CEO or COO, depending on how the company worked) to be prosecuted.
A couple of points, John.
… although he didn't do anything that appeared wrong at the time (indeed, he followed conventional wisdom), he was fired after that proved to be disastrous, whereas a regular employee who followed standard practice that turned out to be wrong wouldn’t be.
That doesn't hold water for me. Surely one of the functions of "the guy at the top" is to assess the validity of conventional wisdom with respect to the organisation he is running? A CEO who runs an organisation into the ground because he simply continued the flawed policies of his predecessor isn't the same thing at all as "a regular employee" who has no control over what constitutes standard practice. Hornby was hired to ensure the company was successful, and presumably felt happy that he had the control and tools required to do so. He spectacularly failed at that job though. If a regular employee fails to do their job in so spectacular a manner — no matter what the job is — then they too would be fired.
Your analogy just doesn't work. Or rather, I'd argue it demonstrates the precise opposite of what you intended it to.
As with the surgeon… the individual doctor isn't struck off the register when he follows a standard procedure that is subsequently shown to be flawed. But it's perfectly rational to call into question the competence of those people tasked with developing and monitoring that standard procedure.
Secondly:
Nobody in the UK will have to starve on the streets because of any plausible economic downturn – we're not India and we're not Victorian England; if you're sane, sober and a UK permanent resident then you have access to a roof and enough money to survive.
I'm interested in how far into the future do you believe that prediction will hold good? 2 years? Five? Ten? Fifty? A hundred? I don't believe the systems we've created to produce and distribute food are sustainable in the medium term. More than two, less than fifty would be my guess. What say you?
John, I objected to your comment not because I agree with the Mail or because I believe that people are actually starving on the street- I am aware that that rarely, if ever, happens in this country. However, that doesn't preclude a handful of mildly less awful fates befalling people who, as a result of the recession, have suffered loss of jobs, houses, the breakdown of families, stress, mental illness, dependency and various other sociopathies that shouldn't be disregarded in this context. Hornby may be able to find another well-paid executive role in the corporate fuckyounomic structure but the most of the recently unemployed in this country, who work in less well remunerated fields, have no such luck. That just isn't right. There were undoubtedly other candidates for that job who would have been equally capable but without similar scars on their CVs.
http://www.guardian.co.uk/business/interactive/20…
Plus what Jim said.
@jim, I'd agree with you completely, and that's why he was rightly fired. He was paid more in the first place precisely *because* the nature of the job is different. I just don't think that should preclude him from finding employment elsewhere doing something that he's demonstrably good at, and not the thing that he wasn't. If he'd been hired to run another bank, that'd be a different story.
On 'starving on the streets', I'm referring to the current collapse-of-housing-and-credit-bubble crisis. If we don't make a serious effort over the next 20 years, starting *right now*, to develop alternative energy sources that cover all our current needs before oil runs seriously low, I agree things might change (the difference between us is that I think the development of alternative energy sources and greater energy-efficiency should be able broadly to sustain similar lifestyles to now, whereas you're less optimistic that this will happen).
@punkscience I don't think downturn unemployment and structural unemployment are really comparable. If someone's lost their job in London it's a painful experience, but they'll find another one shortly. The unemployment that kills is the structural, northern-town-in-the-80s type, which isn't really associated with this recession.
also, yes there would've been other suitably qualified candidates, but they would have cost more, precisely because of the HBOS cloud over Hornby. As it is, he's almost certainly getting far less than a typical large company CEO, and will be working damn hard to prove to the shareholders that they were right to give him a chance (and, admittedly, to PLCs that they'd be right to hire him for more money once he's done his penance…)
>> Nobody in the UK will ever have to starve on the streets
Herbert Hoover in 1930: "Nobody is actually starving. The hobos, for example, are better fed than they have ever been."
Our standards for good government ought to be a bit higher these days.