Skip to main content

Win at all costs? Where should Boards draw the line?

415 HBS BD image

Former UBS trader, Kweku Adoboli, who was jailed in 2012 for the biggest fraud in British history, has stated that the crimes could well be repeated.

Despite having cost his employer $2.3billion from trading beyond his authorised limit, Adoboli was adamant that ‘it could absolutely happen again’, especially as he believes that those working in the banking industry still face the same pressure to make profits ‘no matter what’, and that we may be moving into the next phase of the financial crisis over the next 12-24 months.

In this instance, an employee was clearly responsible for the crime, and he aggravated the deceit by trying to hide his true position from his employer. But in many cases, it is the employer that is responsible, as Professor Andrew Kakabadse of the Henley Business School Board Directors’ programme found from his own research into the low standards of compliance and governance.

According to Professor Kakabadse, ‘In many markets, especially in less developed countries, a combination of inequality and corrupt governments has seen the incidences of bribery reaching epidemic proportions, and it is increasingly difficult for middle management, in particular, to impose their emotional and moral intelligence. They are often stuck in the middle, facing an impossible task of satisfying both senior management and their clients without succumbing to a delegitimised supply chain. Ultimately, such scenarios are unsustainable, as they deliver less value.

‘Top management use governance protocols and tick-box procedures to display that the organisation is morally sound when they know that is not the case. Thus they leave general and middle management to take the blame for corrupt practices, provide no help to navigate round corrupt governments and yet still demand high returns in terms of profit and sales leaving lower management totally vulnerable and themselves looking morally clean.

Senior management – and boards of directors in particular – therefore have to consider whether the short-term commercial gains they might enjoy from ‘playing the game’ outweigh the longer term benefits to the organisation’s reputation and longer-term commercial performance.

‘There is evidence,’ says Professor Kakabadse, ‘that taking an ethical approach reaps financial rewards in the longer term, and that organisations which adopt a more transparent, honest approach, are more sustainable. But we still have a long way to go to convince many boards – with the support of other stakeholders – to forego the perceived short-term gains.’

Find out more about The Board Directors' Programme here

Professor Andrew Kakabadse

Programme Director, The Board Directors' Programme
Published 24 February 2022

You might also like

Alignment in relationships, teams & organisations

25 March 2021
This is a precis of an article written by Simon Lenton, Executive Fellow in Executive Education at Henley Business School

Data doesn’t have to be big to be clever!

14 July 2022
The reality of how business transformation is going is often more complex than people realise. What makes the difference between success or failure often goes unsaid. This is small, qualitative, human-scale data. It is plentiful and freely available.
Article AI and automation

Covid: it’s Time for The Introverts to Shine

25 May 2021
Explore an article from Narendra Laljani, an Executive Fellow at Henley Business School and the Director of The Henley Partnership as he explores the benefits of being an introvert when working remotely