The management style adopted by former senior executives at the Royal Bank of Scotland amounted to ’economic violence’ used to build their reputation and win City backing for their disastrous expansion of RBS, according to an in-depth study by management experts from Newcastle University Business School and the University of Leicester.
The authors of the study use the term ’economic violence‘ to describe a style of leadership based on threatening employees with redundancy and forcing them to meet aggressive sales targets.
This led to the destruction of the company as individuals became embroiled in a battle for status against leaders of rival financial institutions that distracted them from severe problems within their own bank, according to the research published in the journal Organization Studies.
The ongoing study charting the rise and fall of RBS provides an alternative explanation for the failure of the bank, based on the disciplines of management and social science rather than solely economics. The 2008 collapse of RBS was one of the key events in the UK’s credit crunch.
Dr Robinson and co-author, Ron Kerr (pictured), Lecturer in Organisational Studies at Newcastle University Business School, begin by showing how the traditional old guard of Scottish banking, educated at elite public schools and Oxbridge, were supplanted as the top executives by ‘modernisers’ from more humble backgrounds.
Ron Kerr said: "Previous executives at RBS had retained power by relying on ’symbolic violence’. The expression, coined by the French sociologist Pierre Bourdieu, means the creation by leaders of the belief among those they lead, that the subordinate position is just and natural.
"However, within RBS the modernisers instead wielded what the authors call ’economic violence’ to acquire and retain their leading role – a variation on Bourdieu’s “symbolic violence”. This meant a form of leadership that operated through the threat of destroying people’s economic power by laying them off or forcing them to meet aggressive sales targets."
published on: 28th June 2012