Mitigating Banking and Financial Risk Requires Better Leadership Selection

On December 14th, 2017 the Australian government launched the Royal Commission into Misconduct in the Banking, Superannuation, and Financial Services Industry. The Commission was launched on the heels of numerous banking scandals involving the Big Four Australian banks. The Commission provided a preliminary report in August of 2018 and the final report was made public in February of 2019. Ultimately, the Commission found evidence of bribery, forgery, inadequate lending practiceslying to regulators, and even charging fees to people who were dead.

The preliminary Commission report concluded that the primary cause of this misconduct was:

“…greed – the pursuit of short-term profit at the expense of basic standards of honesty…From the executive suite to the front line, staff were measured and rewarded by reference to profit and sales…When misconduct was revealed, it either went unpunished or the consequences did not meet the seriousness of what had been done.”

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Humility: The Cure for a Know-It-All

No one likes a know-it-all.

They’ve annoyed us all by talking down to us about anything and everything, even when it’s obvious they know far less than they believe. But know-it-alls don’t just ruin watercooler gatherings and dinner parties. When they rise to positions of power, they can wear away at productivity and trigger costly mistakes.

Joann S. Lublin wrote an entertaining article on the subject in the Wall Street Journal. She interviewed a number of self-professed former know-it-alls that caused major problems for themselves and their companies, such as losing over $2 million on a home purchase, hiring an unsuitable job candidate, and not asking subordinates for their input.

The know-it-all causes all kinds of professional headaches. They don’t try to learn about an issue or ask for help, which leads to poor decisions. They ignore some people or are condescending to others, which leads to a toxic work environment. They project a false aura of power and knowledgeability, which gets them promoted into jobs they might not actually be able to perform.

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How the Best CEOs Differ from Average Ones

We all know the stereotypes: Great CEOs are extroverted. They’re self-promoting. They’re risk takers. But are these stereotypes true? Which traits actually differentiate CEOs from other executives? And, most important, which attributes separate successful CEOs from other CEOs?

There is a great deal of conjecture and mythology about CEOs and the attributes that define their success.Russell Reynolds Associates, in partnership with Hogan Assessment Systems, has led a research effort to separate myth from reality, identifying key indicators of leadership that have a measurable impact on a company’s growth. The results demonstrate that intensity, an ability to prioritize and focus on substance, and an ability to know what one doesn’t know (and utilize the best in what others do know) are more strongly related to best-in-class CEO leadership than traditional traits like extroversion or self-promotion.

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