The cost of one decision
You know you're having a bad day when an MP describes you as "the most staggering example of a chief executive who seems unwilling to realise the scale of the problem."
That's how Paul Pester, chief executive of TSB, found himself described by Nicky Morgan in the wake of the IT failure that affected huge numbers of customers last month. The decision to migrate IT systems, which led to the chaos, was described by Pester as the number one decision in his life he would change - not least because of the £2m bonus he's personally lost as a result.
The financial services industry is well known for financially rewarding its people far more than the average Brit (the amount Pester just lost is more than most will earn in their entire lives, remember). It therefore feels somewhat refreshing to see someone who's rewarded richly for the performance of their business also bearing the cost of its error.
The complexity of leadership
That said, I have some sympathy for him. If I were in his shoes, I'd be bitterly disappointed and it would be easy for me to pin the blame on someone else. Paul Pester was not the person designing the new system, building it or testing it. He may have made the decision to migrate, but he was making that decision based on the work of many others, and on any other day it could have gone smoothly.
The truth is that TSB - and almost all businesses of any scale for that matter - is unimaginably complex. Ignoring for a moment the bits and pieces picked up from every step of its evolution, Pester has 8,500 people ultimately reporting to him, with a myriad of matrix layers separating him from the detailed activities that are carried out on any given day.
The principles behind something like the financial services senior managers regime are positive in terms of increasing ownership of decisions made within a business by its most senior leaders, but the challenge of how a leader can own decisions made by someone they may never meet is a very real one.
The criticality of culture
Leadership is about influence, which can be worked out as a grand vision for the future of a business and its impact on the world, and as a specific desire to see an important line of code being tested thoroughly to prevent system downtime. In both cases, the purpose of an organisation and how its people's activities contribute to achieving it is of first importance.
In practice, this works itself out in organisational culture - how people feel, think and behave while performing their duties will ultimately make the difference.
TSB will not be the last organisation to experience a big issue, and Paul Pester will not be the last chief executive to have to deal with its fallout. Only God knows which business will be on the news next, and leaders face the daily challenge of inspiring and equipping people towards a shared future.
I'd love to have a conversation with you about leadership and motivation in today's near-chaotic world. If that would interest you, please do get in touch.
Meddings told MPs that Pester had volunteered to give up a £2m bonus associated with the migration to a new IT system, hinting that other executives could also have their bonuses slashed. But Pester could still receive up to £1.3m in other bonuses for 2018, on top of a further £1.3m in basic pay, benefits and pension contributions. Pester declined to predict when the problems, which have been affecting customers for 10 days, would be fixed. The committee chair, Nicky Morgan, accused Pester of being “extraordinarily complacent” after he said the bank’s move to a new IT system, which triggered the problems, had mostly run smoothly.