Executives in Science, Business and Society 3

PAST HEROES,
leadership and boards IN SCIENCE,
BUSINESS
AND SOCIETY
PAGE
24
FUTURE LOSERS:
CRITICAL LEADER
BEHAVIOURS AND
TRANSFORMATION
IN THE BANKING
INDUSTRY
EDSON HATO
VRIJE UNIVERSITEIT AMSTERDAM
Leaders affect the environments in which they
operate. Wells Fargo’s drive for cross-selling led
to the creation of millions of fraudulent savings
and checking accounts on behalf of their clients.
Their purpose was to charge fees and provide
unrequested credits. The manipulation of Libor
and Euribor interest rates at Rabobank culminated
in a €774 million fine and the departure of its
CEO, Piet Moerland. The Dutch banking giant
ING was fined €775 million for failing to spot
money laundering activities; compounded by the
embarrassing discourse around its CEO’s proposed
salary increase, vehemently opposed by the Dutch
political establishment and society. These and
other examples from the banking industry illustrate
the individual and collective inability of leaders to
adapt quickly to changing business and societal
contexts. These ‘malpractices’ are symptoms of a
bigger ‘disease,’ begging the question:
‘How can banking-industry-leader behaviours
change to drive real transformation?’
For the past 20 years, leader-behaviour research
in financial institutions has been focused on a
narrative with the leader as the heroic ‘star’ in the
movie called ‘leadership’, an attribution based on
hierarchy, status, years of tenure and the leader’s
ability to socialise, manage politics and network.
Leaders were fashioned as ‘stars’ because of
their ability to achieve economic efficiency and
maximise shareholder value. A contrasting
perspective to this view of leadership is the view
that leader behaviours part of the context and the
intended, needed results to be achieved (Osborn
et al., 2002). The elements of this contrasting
perspective, namely the context and the intended
results, are complicated by the somewhat
diverging and competing technological, legislative,
institutional and community demands placed on
the banking industry. Thus, we need to move the
focus of leadership and leader behaviours from
the individual—the hero—to a focus on leadership
and leader behaviours that is distributed across a
system that has influence both inside and outside
organisational boundaries. We must integrate the
idea that this system is in a state of constant flux,
demanding the critical leader behaviours needed
for transformation.
Unsurprisingly, leader behaviour research has
mainly focused on causal mechanisms of leader
behaviours: the leader as a hero, the perception of
their leadership, and leadership effectiveness in
a stable context. The results of a literature review
of 99 articles on leader behaviours in financial
institutions from 2000 until 2020 shows that:
82 articles are focused on ‘heroic’ leader
behaviours in financial institutions;
72 articles implicitly or explicitly assume a stable
organisational context for research;
64 articles are focused on leader behaviour
research through the lens of bureaucracy; and
64 articles are based on the Leader-Member-
Exchange theory;
Moreover, research has proven that measuring
what it is to have a successful career vs having
an effective team are totally unrelated. (Luthans
et al., 1988). Currently, this reality is persistent
in the banking sector and directly linked to
the behavioural ability of the leader and a
cohort of leaders to incorporate contemporary