"Uncomfortable reading": 7 key extracts from the Salz report into Barclays' culture

"A few investment bankers seemed to lose a sense of proportion and humility".

The Salz Review-  a report into Barclays' cultural shortcomings post libor scandal - makes for "uncomfortable reading", according to the bank's current CEO. He's not wrong. Here are some key extracts (emphasis mine throughout):

The report suggests that if there were company values at Barclays, no-one knew about them:

We believe that the business practices for which Barclays has rightly been criticised were shaped predominantly by its cultures, which rested on uncertain foundations. There was no sense of common purpose in a group that had grown and diversified significantly in less than two decades. And across the whole bank, there were no clearly articulated and understood shared valuesso there could hardly be much consensus among employees as to what the values were and what should guide everyday behaviours. And as a result there was no consistency to the development of a desired culture.

HR wasn't given enough power:

At Barclays, HR at times appears to have been seen more as an administrative function required to satisfy business needs. Although Bob Diamond, on becoming President, also took on responsibility for Group Talent, the heads of HR were typically on neither the Group nor divisional Executive Committees. HR appears accordingly to have found it difficult to exercise an appropriate level of challenge to the businesses on some people-related issues. Heads of HR were not given the authority to push sufficiently for the heads of business units to reflect desired behaviours in a variety of matters, such as promotion decisions, performance reviews, or remuneration. Given the decentralised model, it was especially difficult for the Group Head of HR to have appropriate influence within the investment bank.

The law wasn't given enough power:

The institutional cleverness ... stretched relationships with regulators and resulted in them and the market questioning some of Barclays’ financial information. Barclays was sometimes perceived as being within the letter of the law but not within its spirit.

Cash > people:

At Barclays, pay was emphasised above any other aspect of people management (see Section 11). In addition, rather than being seen as a means of driving culture, people management was considered predominantly as a tool to increase business performance. Moreover, the people management processes seemed to us to be loosely linked, resulting in different, and sometimes conflicting, messages.

And maybe paying investment bankers too much had turned them all into bastards:

Most but not all of the pay issues concern the investment bank. To some extent, they reflect the inevitable consequences of determinedly building that business – by hiring the best talent in a highly competitive international market (and during a bubble period) – into one of the leading investment banks in the world. The levels of pay (except at the most senior levels) were generally a response to the market. Nevertheless, based on our interviews, we could not avoid concluding that pay contributed significantly to a sense among a few that they were somehow unaffected by the ordinary rules. A few investment bankers seemed to lose a sense of proportion and humility.

..or was it that paying investment bankers too much had merely attracted bastards?

Elevated pay levels inevitably distort culture, tending to attract people who measure their personal success principally on compensation. Our review indicates that this was the case in the investment bank, with many interviewees reporting a sense of an entitlement culture.

Well whichever it was, this doesn't reflect well on the bank’s top 70 executives, who were paid, according to the report  “consistently and significantly above the median compared to peer banks”.

The report concludes:

If Barclays is to achieve a material improvement in its reputation, it will need to continue to make changes to its top levels of pay so as to reflect talent and contribution more realistically, and in ways that mean something to the general public.

Photograph: Getty Images

Martha Gill writes the weekly Irrational Animals column. You can follow her on Twitter here: @Martha_Gill.

How Jim Murphy's mistake cost Labour - and helped make Ruth Davidson

Scottish Labour's former leader's great mistake was to run away from Labour's Scottish referendum, not on it.

The strange revival of Conservative Scotland? Another poll from north of the border, this time from the Times and YouGov, shows the Tories experiencing a revival in Scotland, up to 28 per cent of the vote, enough to net seven extra seats from the SNP.

Adding to the Nationalists’ misery, according to the same poll, they would lose East Dunbartonshire to the Liberal Democrats, reducing their strength in the Commons to a still-formidable 47 seats.

It could be worse than the polls suggest, however. In the elections to the Scottish Parliament last year, parties which backed a No vote in the referendum did better in the first-past-the-post seats than the polls would have suggested – thanks to tactical voting by No voters, who backed whichever party had the best chance of beating the SNP.

The strategic insight of Ruth Davidson, the Conservative leader in Scotland, was to to recast her party as the loudest defender of the Union between Scotland and the rest of the United Kingdom. She has absorbed large chunks of that vote from the Liberal Democrats and Labour, but, paradoxically, at the Holyrood elections at least, the “Unionist coalition” she assembled helped those parties even though it cost the vote share.

The big thing to watch is not just where the parties of the Union make gains, but where they successfully form strong second-places against whoever the strongest pro-Union party is.

Davidson’s popularity and eye for a good photo opportunity – which came first is an interesting question – mean that the natural benefactor in most places will likely be the Tories.

But it could have been very different. The first politician to hit successfully upon the “last defender of the Union” routine was Ian Murray, the last Labour MP in Scotland, who squeezed both the  Liberal Democrat and Conservative vote in his seat of Edinburgh South.

His then-leader in Scotland, Jim Murphy, had a different idea. He fought the election in 2015 to the SNP’s left, with the slogan of “Whether you’re Yes, or No, the Tories have got to go”.  There were a couple of problems with that approach, as one  former staffer put it: “Firstly, the SNP weren’t going to put the Tories in, and everyone knew it. Secondly, no-one but us wanted to move on [from the referendum]”.

Then again under different leadership, this time under Kezia Dugdale, Scottish Labour once again fought a campaign explicitly to the left of the SNP, promising to increase taxation to blunt cuts devolved from Westminster, and an agnostic position on the referendum. Dugdale said she’d be open to voting to leave the United Kingdom if Britain left the European Union. Senior Scottish Labour figures flirted with the idea that the party might be neutral in a forthcoming election. Once again, the party tried to move on – but no-one else wanted to move on.

How different things might be if instead of running away from their referendum campaign, Jim Murphy had run towards it in 2015. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.

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