The Saboteur in the System
An extract from chapter six of my new book
Here is the second extract from my new book, the Saboteur at Work. This time I’m writing about how the saboteur part of our unconscious mind operates in organisations. Nick Leeson and the fall of Barings Bank is a good example of what happens when a particular set of circumstances make it possible for the saboteur mindset to take over a leadership team.
The Saboteur in the System
To begin, let us explore how one of Britain’s oldest and most venerable banks was sabotaged. Our story begins in January 1990, when this bank offered one of its junior employees the opportunity to work in Singapore. The bank was Barings Bank and the employee was Nick Leeson.
Barings Bank opened its doors in 1762. In Georgian and then Victorian Europe, Barings was a big name in banking. An example of its power was that in 1803 Barings helped to broker the deal and provided the finance for the purchase of Louisiana by the US government from France. This is still the biggest land deal in history. The Barings family boasted five separate hereditary peerages, and Barings was the banker of royalty. Arguably, it became the most respected bank in the City of London.
Barings had survived over 200 years of ups and downs in Britain’s financial markets and considered itself invulnerable, as much a part of the British establishment as Earl Grey tea, cucumber sandwiches and umbrellas. Unfortunately, however, Barings was invulnerable in the same way that the Titanic was unsinkable. Nick Leeson was the iceberg that sank Barings. And just like the iceberg, the part of Nick Leeson that did the damage was hidden beneath the surface of his affable, hard-working and competent demeanour. It was his unconscious saboteur.
To paraphrase Alexander Solzhenitsyn1, the line between integrity and dishonesty cut right through the middle of Nick Leeson, the senior managers (and owners) of Barings Bank, and the very culture of the financial services industry. The collapse of Barings resulted from a failure in the whole system rather than simply a single rogue trader. Leeson lied and cheated partly for financial gain, but mainly to impress his bosses and fit in. In turn, the Barings senior management were happy to turn a blind eye to his activities, because they liked the profits he generated. And it all happened in the wider political and economic context of the deregulation of the financial markets and the ‘Big Bang’ of the early 1990s. Nick Leeson’s unconscious saboteur drove his dishonesty. The organisational saboteur at Barings made sure that nobody looked too closely at Leeson’s ‘too good to be true’ revenue. Finally, the ‘Loadsamoney’ culture of the 1990s’ financial markets sabotaged oversight and compliance in favour of greed. Nick Leeson’s story is an interesting and enlightening one because it’s the story not only of a flawed individual but also of a flawed institution and flawed society…”
In the chapter I go on to describe the individual factors, team dynamics and organisational and political/economic factors that came together to destroy Barings Bank. Towards the end of the chapter, I write…
Minimising the effects of the saboteur in your organisation
The saboteur operates at three levels in any organisation: the individual, the group and the organisation/system. To minimise the probability of your saboteur – your ‘rogue trader’ emerging to wreak havoc – you need to consider how to minimise the effects of the saboteur at the three levels in your organisation.
Ajit Menon (2019) argues that individual circumstances including background, identity and unconscious needs play a significant part in an employee’s vulnerability to engaging in poor behaviour. Managers need to be aware of these personality characteristics, including high conscientiousness, high extroversion and high agreeableness, and how they might interact with the organisational culture.
Another way of addressing the problem at an individual level is to look at how organisations can recruit a more diverse and inclusive workforce. Demographic diversity often brings with it cognitive diversity, which makes phenomena such as groupthink and confirmation bias less likely to occur. Also, the more diverse an organisation is, the less likely that the inner ring will exert a malevolent influence, because the organisation will have many groups with which employees can identify and find an identity within, rather than just one dominant in a ring group.
One of the most important factors to combat rogue behaviour is an organisation that is characterised by psychological safety (Edmondson, 2019). In a psychologically safe workplace:
People feel they can speak up, express their concerns and be heard.
They are not full of fear and are not trying to cover their tracks to avoid being embarrassed or punished.
People can offer suggestions and take sensible risks without provoking retaliation.
Anxieties, risks and even risky possible solutions can be discussed openly, evaluated and either implemented or not.
This kind of organisational culture can help to prevent the anxieties that led to the collapse of Barings going underground, becoming unconscious saboteurs in the organisation. Psychological safety was conspicuously lacking at Barings Bank.
This chapter has been about Nick Leeson, Barings Bank and the financial services industry. What has it got to do with you if you don’t work in financial services? Well, a lot, because the principles I have described in this chapter apply to all areas of human endeavour, especially work. Leeson and the collapse of Barings is an extreme example of how the saboteur can work to undermine individual people, groups and organisations. But ask yourself:
Have you ever worked with someone who was likeable, who worked hard but would often cut corners?
Have you worked in a team whose members demonstrated more loyalty to other team members than the organisation – even when one of those was doing something wrong?
Have you ever had a manager who just wanted to get something done and wasn’t concerned about how you did it?
All these situations are common in the workplace. They only result in significant organisational problems when all three are extreme and happen at the same time, and the thing that triggers this confluence of extreme behaviour is significant external economic or political pressure. This can occur in any industry, and indeed has: for example, healthcare (South Staffordshire hospital scandal), entertainment (the BBC and Jimmy Saville) and car manufacture (VW emissions scandal). All these involved unconscious sabotage at an individual, group and systemic level. Rules, regulations and boundaries have evolved in organisations for good reason and it is not advisable to turn a blind eye to them without a very good, well-thought-out reason.
If you’d like to read more you can but a copy by clicking on the cover.
I'm off for a break in the sun next week! This means that my usual Thursday article will be taking a holiday too. But don't fret, I'll return relaxed and with a tan and a fresh new article on February 16th.
References and further reading:
Drayton, M. (2022). The Saboteur at Work: How the Unconscious Mind Can Sabotage Ourselves, Our Organisations and Society (1st ed.). Abingdon: Routledge.
Gapper, J. (2011). How to be a Rogue Trader. Penguin UK.
Menon, A. (2019). ‘Beyond the Individual: Reframing Blame and Responsibility for “Rogue” Behaviour in the Financial Services Industry’. In The Unconscious at Work (pp. 229–40). Abingdon: Routledge
Rawnsley, J. H. (1996). Going for broke: Nick Leeson and the collapse of Barings Bank. Harper Collins.
Solzhenit︠s︡yn, A. I. (2003). The Gulag Archipelago, 1918-56: An Experiment in Literary Investigation. Random House.
‘If only there were evil people somewhere insidiously committing evil deeds, and it were necessary only to separate them from the rest of us and destroy them. But the line dividing good and evil cuts through the heart of every human being. And who is willing to destroy a piece of his own heart?’ (Solzhenitsyn, 2003).