On Monday, Barclays CEO Bob Diamond sent a letter to employees that he hoped would draw a line under the widening scandal over the bank’s manipulation of a key lending rate. But rather than relieve the pressure, the letter only increased it, and by Tuesday Diamond had resigned. His letter offers several lessons for scandal-scarred CEOs.
Diamond’s letter was an attempt to distance himself from events in which he played a major role. It failed. The letter stoked further outrage among UK politicians, regulators and th
e public, and it apparently stirred the beginnings of a coup by Barclays bankers in New York.
The letter was doomed from its opening line, in which Diamond misplaces the source of employees’ anger:
“It has been an incredibly tough period for all of you given the nature and volume of negative comment that has come against Barclays in the past few days.”
It wasn’t the “negative comment” that sparked outrage; it was the conduct of Barclays’ own executives. The email and other documents emerging from the investigation make clear that Barclays traders manipulated LIBOR submissions and that their supervisors condoned the practice. At the top of that supervisory chain was Diamond himself.
Diamond’s missteps offer a few lessons that should be useful to other chief executives when they set pen to paper during a crisis:
- Have a clear message. The point of Diamond’s letter seems to have been lost along the way. Was it meant to reassure staff? Apologize to clients? Assuage regulators? Show decisive action? It hints at all of these things but never quite achieves them. Instead, the letter is a mix of defensiveness (“…this behaviour stopped nearly three years ago”), blame-throwing (“…a small minority have let us down”) and vague promises (“we must evolve our culture…”). The overriding message is clear but unspoken: I intend to keep my job as CEO.
- Keep it short. At nearly 1900 words, Diamond’s letter is simply too long. It lacked focus and its impact was diffused. Its very length was a sign of disarray.
- Resist easy cliches. Diamond’s letter reads like a checklist of the right things to say in the midst of a crisis: (“We can and will restore Barclays reputation…”). But actions are more important than words in such situations, and Diamond’s letter was light on specifics.
- Avoid empty sentiment. Saying “I love Barclays” was out of place and irrelevant to the issues at hand. Like the singer Tina Turner said: “What’s love got to do with it?” The issues are performance, responsibility and leadership. There are times when love is an appropriate emotion to express (see my earlier post on Tom Coughlin), but this wasn’t one of them. Diamond would have done better to sound contrite for his own failings, but, tellingly, his letter contained not a drop of remorse for his conduct.
A better letter probably would not have saved Diamond, but it could have purchased a little more time – not just for him but for the bank, which is reeling from the resignation of top executives and its chairman, Marcus Agius. More revelations are likely to come, and the crisis for Barclays is far from over.