Barclaysneeds a “new culture”, Sir Mervyn King, Bank of England governor, told members of parliament this week. They also heard the Financial Services Authority’s top prudential regulator, Andrew Bailey, accuse the bank of “a culture of gaming – and gaming us”. This broadening of the fallout after Barclays admitted to misreporting key interest rates, from specific misdemeanours to corporate culture, is a well-timed warning.
There are those who fear that criticism of the culture of private business could turn into a creeping denunciation of capitalism and its ethos of competition and economic freedom. They are wrong. Healthy corporate cultures are not an impediment to capitalism, but a precondition for its success.
Culture is not a fluffy chimera of business how-to books or self-congratulatory corporate reports. Culture, real and unnoticed as the air we breathe, is the web of unspoken mutual understandings that frame what people expect from others and think is expected of them. This web shapes the fortunes of any organisation or social group. Bob Diamond, Barclays’ disgraced ex-chief executive, knew this; he once declared “the evidence of culture is how people behave when no one is watching”. He was right, but did not act accordingly.