Barclays findings an endorsement of ‘Roads to Ruin’ Last month’s Salz

Failings at Barclays sign-posted by ‘Roads to Ruin’ Research

The Salz review into practices and culture at Barclays provided a resounding confirmation of the findings in ‘Roads to Ruin’, the research into the causes of corporate failure published by Airmic in 2011. Six of the seven most common corporate failings highlighted in ‘Roads to Ruin’ found their way into the report on the bank.

The Airmic research identified a repeated tendency for “glass ceilings” to develop so that important risk information does not reach senior management. Salz recognised the same trait at Barclays: “a sense that senior management did not want to hear bad news and that employees should be capable of solving problems … This all combined to create an environment in which leaders were rarely effectively tested or challenged.”

Another decisive shortcoming highlighted in Roads to Ruin was “inadequate leadership on ethos and culture”. Salz found that Barclays “needed to establish a set of shared values across its various business lines”.

Airmic’s report warned of inadequate board skills and the inability of non-executive directors to exercise control; so did Salz. Both reports identified blindness to risk to reputation in decisions taken by management and inappropriate incentives and remuneration as key contributing factors.

However, Airmic chief executive John Hurrell stressed that it would be wrong to single out one organisation. “The point about Roads to Ruin is that these failings are common to many companies. Barclays have identified the problems, owned up to them and are doing something,” he said. “Nonetheless, it is yet more evidence of the value of ‘Roads to Ruin’, which has been proved right time and time again since its publication.”

The research was carried out for Airmic by City Business School. A follow-up report, ‘Roads to Resilience’, is currently being finalised for the association by Cranfield Business School.