Moral leadership has been a critical focus in shaping a post-Covid world. Fast transforming due to digitalisation, there must be an ethical focus and a powerful social revolution demanding diversity and equality of opportunity.
PWM first tackled the importance of moral leadership during the pandemic at the end of 2020, providing the framework of what makes a great leader: integrity, competence and compassion.
The leaders we spoke to identified the importance of decency, empowerment and taking special care of staff and clients most affected by Covid-19. But there were words of caution against the self-congratulatory tone of ‘how great we are’.
Some leaders warned that stakeholders no longer trust the financial services providers around them. To rebuild trust, the measure of success must change from money, power and fame to collective human energy. Our latest survey of chief and senior executives of private banks, and asset managers from across the globe, conducted against that backdrop in March 2021, focuses on the evolving role of leadership in the post-pandemic world.
Long-term vision
Leaders overwhelmingly believe they must govern with a strong moral compass and lead by example, focused on a clear long-term vision and strategy, according to our survey results (Figure 1). These criteria scored highest, with 94 per cent rating these attributes as ‘very important’ or ‘important’.
This is backed up by their strong belief in the need to scrutinise the environmental, social and governance (ESG) practices of their firm’s investments (85 per cent), upskilling staff in a digital world, and caring for employee wellbeing and sense of belonging (Figure 2).
The importance of empowering staff (87 per cent), followed by the desire to build effective teams is also stressed by our respondents (Figure 3).
With broad agreement around the need for moral leadership and meaningful investment in employees’ skills and engagement, the challenge becomes one of how leaders can hone their own abilities to deliver for their teams.
Su Shan Tan, head of institutional banking at Asian regional player DBS and previously head of its consumer banking and wealth management division, says that successful leaders must “unlearn old habits, learn new ones, experiment and fail fast”. Leaders, she believes, must develop the ability to engage digitally, yet maintain client obsession.
However, our panel of leaders readily admitted that they micromanage, do not listen to suggestions and criticism, and do not want to be challenged, which may hamper execution of their strategy (Figure 4). In selecting a successor, leaders broadly agree on initiating an early search, casting a broader net to encompass new talent (Figure 5).
The industry has salvaged some of its negative reputation by actively helping staff and clients through the Covid-19 crisis. This is in sharp contrast to the global financial crisis of 2008–2009, when big banks were known to be “too big to fail” and their leaders “too big to jail”.
These changing sentiments are reflected by key industry personalities. Jean-Christophe Gerard, chief executive (CEO) of Barclays Private Bank, states that to lead effectively, leaders have to care for their families as well. Charlotte Ransom, CEO of NetWealth, says the best moral leaders have successfully maintained a dual focus on servicing clients and ensuring that employees know they are understood and valued.
Surprise findings
But the question remains how these noble sentiments square with reductions in employee training budgets for career growth, which we know to be occurring from our regular conversations with wealth management firms.
Our leaders (65 per cent) believe their industry is doing just fine compared to other sectors, contrary to the public perception that the financial services industry is more focused on selling products than offering client-centric solutions.
Another surprise was that showing “tough love” to staff was rated of ”low” importance by our respondents and building diverse teams was considered of only “medium” importance.
The reality in this sector is that the gaps in integrity, competence and compassion — characteristics of a strong moral leader — are just refusing to close.
While leaders in financial services and wealth management are very much in a self-congratulatory mindset, the notion of integrity appears to be a challenge for many, with regular scandals continuing to sprout.
Innovative ways of ‘unlocking’ funds, supported by global banks, were highlighted in the Greensill Capital Scandal. These innovators resembled the slicers and dicers of the sub-prime lending days. The blow-up of family office Archegos Capital, linked to leverage offered by sophisticated bankers, is further evidence that the merry-go-round of greed continues to trump morality for revenue-hungry leaders in a low-interest rate environment.
Achilles’ heels
The industry has never been short of competent people. The question is how management measures the viability of a product offering. The first measure must be that it is beneficial to the client. Once that is established, then it must be profitable for the bank as well.
In the above scandals, it seems that generating a new revenue stream was the primary determinant.
Has anything really changed in the behaviour of financial services leaders? Does the ‘say/do gap’ continue to widen or is there a fundamental shift from shareholder capitalism to stakeholder capitalism? This fundamental question continues to be debated.
In addition, moral leaders have a few Achilles’ heels to protect. As they ascend to power, they empower their most loyal lieutenants. When these lieutenants start throwing the leader’s name around to bully others into submission, the leaders tend not to address it as long as they are getting results.
Additionally, they reduce the time interacting with staff, as it is prioritised below their other enhanced responsibilities of running businesses.
Both the above can be addressed by diligently using the simple 360-degree review process on themselves and their direct reports, and treating staff engagement time as sacrosanct.
Role models
Our survey’s final question, asking which global leaders our respondents most admired, provided some interesting insights (Figure 6).
At one end of the spectrum, the likes of Brazil’s Jair Bolsonaro, India’s Narendra Modi and Russia’s Vladimir Putin were at the bottom of the ratings. Whatever their competencies, our respondents acknowledged the divisiveness of these charismatic but controversial leaders.
New Zealand’s Jacinda Ardern and Germany’s Angela Merkel, unsurprisingly, received the highest scores by a wide margin. Both leaders have made a conscious effort to help the marginalised in their spheres of influence. Melinda Gates recently mused that this may be because they are women. I believe this to be the case. Some men are capable of the same, but they are probably exceptions.
Our note of optimism comes from this diversity of experience and origin. While the behaviours of many leaders in wealth and asset management are still invariably driven by the bottom line, which lures them into periodic scandals, the emergence of a broader selection of more diverse talent rising through organisations will eventually bode well for the future.
Malik Sarwar is senior partner, Global Leader Group, USA
