One might reasonably conclude that the senior management of a bank cannot possibly know what is going on at the level of the individual traders; banks are just too complex. Fair enough. But one cannot have it both ways. If bank executives cannot be held responsible for all the shenanigans that go on underneath them, nor can they be responsible for all the profits that result. A lot goes on at a bank that is entirely out of the CEO's control. So when Barclays makes a bumper profit, why should the CEO get an outsized bonus? The profits may be down to luck, or to rising markets, or to trades that the CEO cannot possibly be aware of.To steal from Betrtand Russell, we have conflicts between Accountability and Organization.
Saturday, June 30, 2012
I DON'T KNOW WHAT THE ANSWER IS
but I think one problem developed countries face is the mind-boggling complexity of most large organizations. I was reminded of this by a blog post in The Economist:
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