King and Lawley: Organizational Behaviour, 3e

Seminar Activity – Case study 1: Sexism in the city

This case study is about the financial sector, in particular the city of London.

In October 2008, some of the globe’s biggest financial institutions such as Lehman
Brothers and the Royal Bank of Scotland faced financial collapse. Questions began to be
raised about how they got into this situation, and why they did not see the crisis coming.
These questions have persisted with the recent Libor rate scandal at Barclays Bank (Clark
and Treanor, 2012), rogue traders at companies such as UBS (Walker, 2012), and alleged
money laundering at HSBC (Treanor, 2012). For many commentators the central problem
is what they have labelled the culture of greed (see web link 1 below)

The culture of the financial sector, particularly traders on the stock market, has thus come
under the spotlight in recent years. The high stakes and risk, when going well, produce
high profits and big bonuses, but went it goes wrong, as we have seen, it can lead to the
virtual collapse of the banking industry (Rajan, 2010). This has resulted in calls for the end
of the bonus culture (see web link 2). Greg Smith (2012), a former senior executive at
Goldman Sachs, described the culture as ‘toxic’ and also full of intimidation and bullying
(see web link 3).

A powerful example of the daily practices that go on is provided by Paul Moore, the former
head of Group Regulatory Risk at HBOS (one of the world’s largest financial institutions).
He claimed HBOS had a huge focus on hitting targets, producing a culture of fear for
those that missed them. Talking about city traders, he said he was told of a manager who
created a competition in which every Saturday morning successful traders would get cash
on their desk, whereas unsuccessful traders received a cabbage as a symbol of failure.
This to him symbolized the culture of excess at the bank. One of the most worrying
aspects of his story is that when he raised his concerns to the HBOS board he was
ignored, encouraged to downplay the issue, and eventually lost his job. Even at very
senior levels the culture of risk taking was encouraged (BBC, 2009).

A number of insider accounts have been written detailing this culture and how it is
experienced by the traders themselves. Geraint Anderson’s Cityboy (2008), Michael
Lewis’ Liar’s Poker (this time about Wall Street, 1989) and Barbara Stcherbatcheff’s
Confessions of a City Girl (2010) claim to expose the city and its practices. These texts
describe life in ‘the city’ from a brokers’ viewpoint. Dealing with millions of pounds of trade
in stocks and shares, bonds and other complex financial products, life in the city is highly
stressful, with hundreds of thousands and even millions potentially lost in a single day.
The sheer scale of such trades produces an adrenaline-filled atmosphere as even a
simple mistake such as calling out the wrong number (e.g. the price for a bond) can cost a
firm millions of pounds. This creates a highly competitive environment where each trader
is seeking to find the extra piece of information or build a better relationship with their
clients in order to gain a competitive advantage.

The lifestyle of the traders heavily features in these accounts. In order to build good
relationships with clients they try to wine and dine them on a regular basis. Meals out at
London’s finest restaurants, spending hundreds of pounds on a bottle of wine, over £50 on
a glass of whiskey, and thousands on taking a group out to meal is presented as a fairly
commonplace experience (Anderson, 2008 and Thompson, 2010). Corporate hospitality

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 King and Lawley: Organizational Behaviour, 3e

trips to top sporting events – boxes at Premiership football, Royal Ascot, Wimbledon, etc.
– are used to entice clients. Early mornings – being at your desk by 7am otherwise you
have to buy everyone lunch – are a key feature, as are late nights. Not only are these late
nights presented as fuelled by alcohol but also involved drugs or trips to lap dancing clubs.

Thompson (2010) describes the culture on the trading floor of the city of London as one in
which swearing is expected. She argues that it is aggressive and male dominated, where
brokers only get heard by shouting above everyone else. Even if a broker smashed a
telephone Thompson claims nobody would really notice.

Nicknames, she also states, are a core part of the culture. Everybody she worked with had
a nickname meaning that she didn’t even know half the people’s real names. Some were
based on surnames, but most came from physical characteristics, race, or from rhyming
slang. She says getting a nickname was a ‘rite of passage’ which everyone was expected
to go through to be accepted (Thompson, 2010). One trader was nicknamed Dory (a fish
from the film Finding Nemo) and had to pretend to swim about a glass office because
another trader thought he looked like a fish.

Many of these authors describe the importance of building relationships with clients
through meals out, trips to sporting events, and even holidays (Anderson 2008). This is
not as easy as it sounds, as top clients tended to get inundated with requests, had already
eaten in the best restaurants and been to the top sporting events. Getting clients to go on
these trips was a competition as they often seemed jaded with all the requests. Thompson
claims that it was easier to get younger men to go as they aimed to impress girls. Days
out at places like Ascot with unlimited champagne certainly enticed them (Thompson,
2010: 58).

Drinking, and sexist language and behaviour was also something that Geraint Anderson
experienced (Anderson, 2008: 51-54). Going out and spending over £450 on a night out
was a normal experience for many traders. Anderson also describes ‘city boys’ as ‘money-
obsessed cynics whose job it is to put a price on assets without ever confusing the
process with silly things like emotions, morals, or artistic concerns’ (2008: 97).

Since the financial crash of October 2008 there have been many calls for transformation
of the city culture. A notable champion for cultural change is Lord Turner, the chairman of
the Financial Services Authority. He has called for a change in the practices and culture of
the top institutions (see web link 4).

The question remains, however – will the culture will be changed in the coming years?

Reference list

Anderson (2008) Cityboy: Beer and Loathing in the Square Mile, Headline Publishing
Group, London.

BBC. 2009. The choice. BBC Radio 4, 3 November 2009 [radio programme].

© Oxford University Press, 2019. All rights reserved.

 King and Lawley: Organizational Behaviour, 3e

Clark, T and Treanor, J. (2012) Barclays' reputation takes a battering after Libor scandal,
Guardian, available at http://www.guardian.co.uk/business/2012/sep/10/barclays-
reputation-battering-libor-scandal.

Lewis (1989) Liar's Poker, Hodder, London.

Rajan, R. (2010) A better way to reduce financial sector risk, Financial Times, Available at
http://www.ft.com/cms/s/0/63a3bb52-09f1-11df-8b23-
00144feabdc0.html#axzz2OGpH8qSp.

Smith (2012, forthcoming) Why I left Goldman Sachs, Business Plus.

Stcherbatcheff (Published as Suzana S.) (2010) Confessions of a city girl, Virgin Books,
London.

Treanor, L. (2012) Bleak day for British banking as Libor arrests follow record fine for
HSBC, Guardian, http://www.guardian.co.uk/business/2012/dec/11/banking-libor-fine-hsbc

Thompson, V. (2010) Gross Misconduct : My Year of Excess in the City, Pocket Books,
London.

Walker, P. (2012) UBS 'rogue' trader Kweku Adoboli jailed for seven years, Guardian,
Available at http://www.guardian.co.uk/business/2012/nov/20/ubs-rogue-trader-guilty-
fraud.

Web links

Web link 1: http://www.channel4.com/news/standards-committee-to-tear-apart-banking-

culture-of-greed.

Web link 2: http://www.dailymail.co.uk/news/article-2178049/Scrap-cash-bonuses-curb-

greed-City-Government-told.html.

Web link 3: http://www.independent.co.uk/news/world/americas/a-culture-of-bullying-and-

greed-wanted--interns-for-goldman-sachs-8214070.html.

Web link 4: http://www.guardian.co.uk/business/2012/jul/24/financial-watchdog-criticises-

free-banking.

© Oxford University Press, 2019. All rights reserved.