THE BLOG

Only Reconnect!

14/05/2015 16:30 BST | Updated 12/05/2016 10:59 BST

"Only connect." The famous phrase is E.M. Forster's, from his novel Howard's End. It has become commonplace to argue that we live in an increasingly connected world, that globalisation has led to what Thomas Friedman described as a "flat" world where new technologies and attitudes have supposedly brought about the death of distance. Yet, contrary to the claim that we live in an ever more connected age, evidence of disconnection is increasingly apparent. Most notably, the banking crisis bore testimony to the increasing disconnection between global financial elites and the rest of society.

One of the 'victims' of the financial crisis was Stephen Green, the former CEO and Chairman of HSBC who is also an ordained Anglican minister and a former UK government minister. HSBC seemed to have weathered the crisis surprisingly well. It was not drawn into the aftermath of the crisis in 2007 or 2008 and performed relatively strongly. However, since then, it has fallen prey to its own scandals. First of all there was the accusation that its Mexican arm had acted as the agent of drug cartels. In 2012 the bank was fined $1.9bn in the US for allowing nearly a billion dollars of drug cartel money to be laundered through its accounts. Clearly, some HSBC managers saw this as a good business opportunity, presumably on the grounds that the only bottom line in business worth considering is business.

HSBC must have hoped that the US settlement was the end of their troubles. But earlier this year they became embroiled in another scandal when their Swiss banking arm was revealed to have colluded with its customers in tax evasion on an industrial scale. Both of these deplorable events happened on Stephen Green's watch. He thus became the latest senior banker to be accused if not of wrongdoing itself, of complicity in wrongdoing by failing to exercise control over his bank's global activities.

The standard defence of senior bankers in these situations is the one adopted by other HSBC managers when called to account before the Public Accounts Committee of the House of Commons recently. They argue that they did their best, acted with integrity, there were perhaps some failures of control but how could they be held responsible in such a large organisation for each and every action of their staff? So the argument that we live in an increasingly connected world starts to ring rather hollow when even in a single organisation, senior management is arguing that it is inevitably disconnected from, and therefore cannot be held accountable for, the actions of the people they supposedly manage - and get paid very handsomely for doing precisely that.

Stephen Green's case is particularly thought-provoking because, in the aftermath of the financial crisis and before HSBC's own crises broke, he wrote a very interesting book entitled Good Value. Reflections on Money, Morality and an Uncertain World. I enjoyed the book. It is well written, with a wide range of references to business, the arts, philosophy and religion. Green also makes much of the connected, urbanized, globalised nature of the world we live in. He extols the virtues of the market while making a reasoned case for its imperfections, arguing that communication and education and moral behaviour can mitigate the power of money to bring out the worst in people.

As a professor of management and a would-be management educator, I support the argument for education. Indeed before the latest HSBC crisis, I used to recommend Green's book in my strategy courses as part of an argument for stakeholder capitalism and shared and public value beyond a narrow economic bottom line. Stephen Green comes across as a man of great integrity and I have no reason to doubt his sincerity. But now I struggle to reconcile the arguments he makes in the book - the narrative of moral community, of Adam Smith's moral sentiment - with the reality of the business models in Mexico and Switzerland that HSBC pursued on Green's watch.

So I am not sure if I will continue to recommend Green's book and if I do so, it can certainly not be at face value. Because it provides another example of the disconnect between words and actions, evidence of a growing gap between what our business elites say and what the rest us think they mean when we judge them by their actions rather than their words.

E.M. Forster also wrote "Live in fragments no longer". We are clearly suffering from major disconnections. The challenge we face as business leaders and as management educators is to put the pieces back together, to re-connect our disconnected world, business and society, in words as well as in deeds.