Anthony Jenkins is a classic example of the application of the ‘Peter Principle’.
The ‘Peter Principle’ is a concept in management theory formulated by Laurence J Peter in which the selection of a candidate for a position is based on the candidate's performance in their current role, rather than on abilities relevant to the intended role. Thus, employees only stop being promoted once they can no longer perform effectively, and thus it is said that "managers rise to the level of their incompetence."
Jenkins, the outgoing boss of Barclays, began what he believed would be a five-year ‘journey’ in February 2013 to transform Barclays from a bank with a toxic reputation for sleaze, wrong-doing and institutional arrogance, into the "go to" bank, which had finally recovered its once-proud reputation and was attracting good clients. It was intended to sweep away the bank’s reputation for providing the complex tax avoidance products of the past, and to return the bank to an institution with a reputation for good service, from staff who were less motivated just to make profits and were encouraged more to treat customers with respect.
On the first day of his new tenure, Jenkins presented the findings of a review of 75 business lines which led to the closure of the structured capital markets business – dubbed a machine for "industrial scale tax avoidance" by former chancellor Lord Lawson – as well as a withdrawal from a business sector which had made significant profits from speculating on food prices. Gambling on food commodities at a time of severe economic hardship and routine austerity, where many people were forced to resort to food banks to get something to eat was perceived to be an unacceptable capitalist face too far.
In a separate meeting, Jenkins told his staff it was now time to get started on transforming the bank. "It's a call to action," he said.
What is perhaps not wholly understood is why Jenkins was chosen in the first place to replace Diamond after the brash American was forced out from his job after intense pressure from the bank of England and the Financial Services Authority.
On 28 Jun 2012, it was widely reported that shareholders and political figures were among those calling for CEO Bob Diamond to resign from Barclays after investigators from the Financial Services Authority and the US Commodity Futures and Trading Commission said they had found evidence that Barclays had tried to manipulate Libor for several years in the run up to the financial crisis and in its aftermath.
Let us be clear, dishonestly manipulating or rigging a global benchmarking model falls within one of the definitions covered by Section 17 Theft Act 1968, and is an alleged criminal offence. As a result, Barclays came under a great deal of criticism and opprobrium.
Lord Oakeshott, a former Liberal Democrat Treasury spokesman, described the bank as “a casino that was rigging the wheels and loading the dice”.
“If Bob Diamond had a scintilla of shame, he would resign,” he said. "If Barclays' board had an inch of backbone between them they would sack him."
Lord Myners, former City minister, told the BBC's Newsnight that any Barclays staff responsible for manipulating the Libor rate should face the prospect of going to prison.
"This is the most corrosive failure of moral behaviour I have seen in a major UK financial institution in my career," he said.
"I think fines and public criticism will not stop these behaviours. These behaviours will not stop until the people perpetrating it or responsible for overseeing them face the prospect of criminal charges and the prospect of going to jail."
Martin Taylor, the former chief executive of Barclays, told BBC Radio 4's Today programme that the board of Barclays was facing questions about how it restores the reputation of the business. "There's not much to a bank except its licence, computer systems and reputation," he said. If a bank has a "policy of systematic dishonesty" he added, then it has "some rebuilding to do."
"It's hard to believe that a policy which seems so systematic was not known to people at or near the top of the bank", added Mr Taylor. But said that the "question of how high up knowledge goes is something only Barclays can answer".
Barclays, reeling from the outpourings of public disapproval of their hugely dishonest conduct, cast around desperately to find someone wholly untainted by an exposure to the Bob Diamond regime, and who could be a safe pair of hands and steady the ship.
They did what banks always do in these circumstances, look around for someone who can give a good impression and who will help to soothe the troubled waters.
Enter Anthony Jenkins, a career Barclays man, head of Retail Banking and with an untainted reputation (although by his own admission he had overseen the PPI fraud activities routinely carried on in the Retail bank). The point is, he was not an Investment Banking man, and he was quickly identified as a man with little or no understanding of or sympathy with the cultures and free-booting ways of Investment banking.
However, the problem with this kind of thinking is that it is always short-term (like the rest of banking thinking) and is never intended to be a real answer to the problem. It is just a way if buying time until the PR people and the usual City lickspittle apologists, and slimy fellow-travellers can spin their webs, weave their words, and influence opinions.
So, we got the usual hocus-pocus, smoke and mirrors being announced. One of the most outrageous and breathtakingly cynical moves was the setting up of the Judge Business School and Barclays Bank joint venture to create the first executive education academy for regulatory compliance in a bid to change the way the financial industry is run.
Described at the time as a potential world-first academic and industry collaboration, the focus was said to be on a values and judgement-based approach to compliance, leading thinking and creating understanding around the emerging regulatory regimes which are being developed, or so it was said!,
However, the honeymoon didn’t last long and soon the critics started to circle. In March 2014, the writer, Abigail Hoffman of the Economist was focusing in on Jenkins’ lack of Investment Banking skills.
“...The tale seems to be unfolding exactly as I predicted. When Jenkins was appointed, I was sceptical and wrote in my September 2012 column: "Barclays is in desperate need of cultural change. Is Jenkins really the ideal candidate to achieve this...?"
It is also understood that Jenkins’ messages within the bank were not always well received by staff. Some in the investment bank are reported to have jeered during a session on cleaning up the culture. Jenkins insisted he had a "good personal relationship" with Rich Ricci, head of the investment bank and a former lieutenant of Diamond.
One of the ways he intended to change the culture was to alter the way bonuses were handed out. From the middle of the following year staff were to be measured on the basis of a "balanced score card" against his five values of respect, integrity, service, excellence and stewardship. This need not mean smaller pay packets – even by City standards the bank is known for generous pay deals – but ones that are not based entirely on generating profits.
Such values can be found in any management manual, but in Barclays, more used to the laissez-faire management style of Bob Diamond. It sparked cynicism about whether Jenkins could change an organisation where he had worked for six years.
"I understand the cynics and the sceptics," said Jenkins. "I use it as an energy to drive me forward. I also know we are not going to change anything if we are cynical and sceptical."
He was asked how his success should be measured in five years' time. He cited better customer service, high levels of colleague engagement and shareholders happy with the returns they were receiving.
"If we achieve those three things I think that would be a success – it's a long journey," he said.
Well, now we know that the journey would quickly be abandoned, and Jenkins would be sacked.
He was dispensed with, with very little ceremony. His tragedy is that he was a man used to running a retail banking operation and he did not have the breadth of experience needed to successfully run an investment bank, particularly one in such bad odour, and which needed a lot of skill and experience to turn round.
He was promoted to the top job because he was known to be a good man, a good businessman, and most of all, he carried no Bob Diamond baggage. It was not his fault that he was promoted to a level where his business competence would not be sufficient for him to survive, a classic example of the Peter Principle.
I hope he does not feel too badly about his fate.
He has, or so it is reported, been paid a £28 million package to soothe his feelings.
Now, I am having a little trouble reconciling these features.
This man has been sacked from his job because it was said he was not good enough to do the job required of him. Probably not his fault as I say, but we are told that he was not up to the job expected and that he needed to be replaced. We can surmise that the Barclays’ board felt that enough time had elapsed since the last scandal, so they could return to the old ways of making money, but having Mr Nice Guy at the helm wasn’t going to cut the mustard.
Barclays have clearly demonstrated that they do not believe it is possible to make money while operating under the kind of ethical constraints that Jenkins was expecting them to adhere to, so ethics and honourable conduct are out, and business as usual is back in!
Clearly paying Anthony Jenkins £28 million to go away quietly is obviously thought to be worth it.
And this is why I say banks are dysfunctional. We have jall ust been through a new budget, where the rewards for hard-working decent people, and their tax responsibilities have been measured out in a’ few pounds here, a few pounds there’.
Paying a man £28 million to go away when he has been deemed to be a failure is obscene, it is bizarre, it is plain bloody wrong, but try telling Barclays that!