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Why he had to go

In a crowded field of high-profile 'Man vs COVID rules' news stories, there was one that I was sent multiple times by people who thought it might be of interest. They were absolutely right.


What my correspondents wanted to share with me was the tale of a high-profile individual falling from grace due to breaches of COVID rules. It wasn’t the story about tennis world number one Novak Djokovic being banished from Australia. Nor was it one of the many stories about UK Prime Minister Boris Johnson presiding over a culture of non-compliance with the COVID rules imposed by his own government.


Both Djokovic and Johnson — for convenience purposes, I'll refer to them as 'Djohnsovic — are stories I've blogged about before. But the difference between Djohnsovic and the one people wrote to me about is that the protagonist in the story isn't potentially about to be de-throned. He already has been.


On Monday morning — not exactly a 'normal' time for companies to publicise changes to their senior leadership — Swiss bank Credit Suisse (CS) announced that Chairman António Horta-Osório had resigned. More on this in this Guardian article. In simple terms, this, like Djohnsovic, is the story of someone in the public eye falling foul of COVID rules.



When people share human risk stories with me — for which thank you and please continue to do so — they usually send me articles or videos that help me understand the issue. In this case, the content my correspondents sent me mainly approached the Horta—Osório story by taking one of two positions:


1. ‘Isn’t it nice to see someone in the public eye actually taking responsibility for their actions and resigning’ — subtext: this matters and here’s someone who 'gets it'; or


2. ‘This is ridiculous, and he shouldn’t have to resign because of that minor issue’ — subtext: COVID rule-breaking is commonplace, so this is no big deal.


If I had to choose one of the two, I'd go for the first. Not because I think it’s nice to see this type of thing happen, or indeed because I think Horta-Osório has necessarily taken responsibility — it’s not clear to me, for example, that it wasn’t a forced resignation — but because I believe his behaviour really did necessitate his departure. For reasons I'll explain, I refute the implicit presumption of the first narrative that he had a choice, and I think the second overlooks some crucial points.


Let's unpack what happened.


Horta-Osório was brought in as Chairman to help a firm that had experienced very public conduct & governance issues. He would have made commitments to that effect to regulators and other stakeholders when taking on the role.


In opting to breach COVID rules — conscious rule-breaking decisions because he’d requested quarantine exemptions from the Swiss government *and* his local Canton, both of which were denied — he made that task significantly more challenging. Not once, but on at least two occasions, for business travel.


How then could he possibly credibly tell CS staff to comply with laws & regulations when he obviously had no respect for them himself?


I don’t think it matters that the rules in question weren’t specific to the industry in which CS operates or that he’d done it for work rather than personal travel. For obvious reasons, Financial Service regulators focus heavily on ‘conduct’ — not just what the firms do, but how they do it. And by firms, I mean the people within them, particularly the senior leaders. If you don’t think COVID laws apply to you, then there’s a risk that you don’t believe other rules do either. By being publicly non-compliant, Horta-Osório was sending a clear signal that rule-breaking was acceptable, as long as you could justify it. As Chairman of the bank, he not only represented what the Firm stood for, but he also served as a role model to those working in it.

The way I look at this is that Horta-Osório's wrongdoing is less about protecting public health, though that does matter. After all, the 'private jet bubbles' inhabited by the privileged elite are less likely to propagate COVID than the more densely populated environments inhabited by the rest of us. Though, it's worth noting that those environments didn’t stop Djohnsovic from catching COVID. But from a behavioural contagion perspective — arguably the far more dangerous virus here — Horta-Osório's behaviour was that of a super spreader.


What fascinates me about this type of situation is that it's easy to find reasons to conclude that Horta-Osório has been unfairly treated. Would we, I was asked, have fired a junior employee for the same reasons? And indeed, shouldn't we also accept that Horta-Osório is human and that this is simply an error of judgement on his part?


No, on both counts.


It's right to conclude that the consequences wouldn't have been as severe if he'd been a junior employee. I don't think a graduate would — or indeed should — have been fired or asked to resign for the same mistake. Not least, because (s)he wouldn’t have had the opportunity to break COVID rules while travelling on business. As Djohnsovic are also discovering, holding power gives you opportunities that the rest of us don’t have. That’s why the standards to which we hold people who have power and influence are rightly higher than the standards we apply to those who don’t.


Equally, I think the 'human error' argument is weak. If you're being paid lots of money to hold a leadership position, it's incumbent on you to act as a role model alongside your other responsibilities. If you want the freedom to do what you want, pick another (less well paid) job.


That's not to say that senior leaders can't make mistakes. Like all of us, they can, and they do. To succeed in business, they will arguably need to. But there are mistakes, and there are mistakes.


I really like the distinction drawn by Netflix in their infamous Culture Powerpoint Deck between 'revocable' and 'irrevocable' mistakes. The former are things you'd rather not have happen but recognise might, and you can, as the name implies, recover from them. What you might call 'learning opportunities'. The latter are things you absolutely don't want to have happen and will do everything to avoid because, as the name implies, you can't recover from them. Netflix risk accepts the former and takes a dim view of the latter, including strict disciplinary procedures.


I see Horta-Osório's errors in this case as being irrevocable. To do his job, he needs to have the respect of employees and other stakeholders. That's not something that's easy to get back, particularly when it's highly relevant to the challenges the firm is facing THAT he was brought in to help fix.


When it comes to basic rules — and remember these were rules from which Horta-Osório requested an exemption, so there's no defence of ignorance here — you're expected to get it right as a senior leader every time.


Also relevant, though to my mind not determinative, is the fact that to use a well-known phrase, this isn't Horta-Osório's first rodeo. In a previous role as CEO of Lloyds Bank, he was subject to an investigation into whether he’d combined private and business expenses in breach of company policy. He was cleared but had to apologise after the negative publicity it generated. This is a man who understands — or should understand — how important the behaviour of the C Suite executive is.


For those reasons and others, I think Horta-Osório had to go. If he hadn’t resigned — and I reiterate my suspicion that ‘resignation’ might not reflect the underlying reality — I believe there would and should have been moves to force that outcome.


A decade ago, I was a financial services regulator, and one of the Firms I was responsible for supervising was Credit Suisse. If I still had that role, I’d have asked the Firm how they squared his behaviour with their own rules and commitment to good conduct. A loaded question to which there clearly isn’t a good answer.


It's never good when senior people are forced to resign for their behaviour. But in this case, I don't think there was any alternative.

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