Tuesday, August 30, 2011

How do we incorporate bullying in risk management assessment?

by Stephen McPhie, CA

Partner, RSD Solutions Inc.

www.RSDsolutions.com

info@RSDsolutions.com

 

 

Most of us have seen them, either in our own organization or in that of an acquaintance.  Some of them are visionary and some are just plain wrong some or most of the time.  What many of them share is an absolute belief in themselves and an absolute intolerance of being questioned by those below them.  Others are just covering up their own inferiorities.  They are senior management bullies.  And when the bully is the top guy, disaster could lurk.  No normal risk management system can offset or effectively mitigate such a situation. 

 

By all accounts the former CEO of Royal Bank of Scotland ruled his domain by fear until the bank required a huge government bail out and he acquired the dubious distinction of becoming the most hated person in Britain according to some opinion polls.  Accounts by people who worked under him suggest that everyone lived in terror of the guy.  And this was a person who was aggressively trying to make his institution into the largest bank in the world.  He nearly succeeded - on paper – until the whole thing came crashing down in sea of bad assets.  Nobody in the bank dared stand up to him.  And he probably steamrollered the board.  (I’ve seen smart aggressive CEO’s steamroller boards many times before.  Most board members barely understand their company’s business let alone have the knowledge to sustain an effective argument against such a CEO.)

 

I’ve seen his breed of CEO a number of times.  Of course, you want a CEO who believes in himself and his strategy.  However, you don’t want a person to be an absolute power unto himself (or herself) and able to run amok with shareholders’ creditors and other stakeholders’ livelihoods.

 

So if you are analysing a business, do you include the CEO’s personality type in your assessment?  If so, how?  Is your own business in this situation?  If so, what can be done about it, if anything?

 

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