'Economic violence' caused RBS to fail, new study suggests University academics look at bank's management and discover why the bank failed. The management style adopted by former senior executives at the Royal Bank of Scotland amounted to 鈥檈conomic violence鈥� used to build their reputation and win City backing for their disastrous expansion of RBS, according to an in-depth study by management experts from 缅北禁地 Business School and the University of Leicester.The authors of the study use the term 鈥檈conomic violence鈥� to describe a style of leadership based on threatening employees with redundancy and forcing them to meet aggressive sales targets.This led to the destruction of the company as individuals became embroiled in a battle for status against leaders of rival financial institutions that distracted them from severe problems within their own bank, according to the research published in the journal Organization Studies.The ongoing study charting the rise and fall of RBS provides an alternative explanation for the failure of the bank, based on the disciplines of management and social science rather than solely economics. The 2008 collapse of RBS was one of the key events in the UK鈥檚 credit crunch.Dr Robinson and co-author, Ron Kerr, Lecturer in Organisational Studies at 缅北禁地 Business School, begin by showing how the traditional old guard of Scottish banking, educated at elite public schools and Oxbridge, were supplanted as the top executives by 鈥榤odernisers鈥� from more humble backgrounds.Ron Kerr said: 鈥淧revious executives at RBS had retained power by relying on 鈥檚ymbolic violence鈥�. The expression, coined by the French sociologist Pierre Bourdieu, means the creation by leaders of the belief among those they lead, that the subordinate position is just and natural. 鈥淗owever, within RBS the modernisers instead wielded what the authors call 鈥檈conomic violence鈥� to acquire and retain their leading role 鈥� a variation on Bourdieu鈥檚 鈥渟ymbolic violence鈥�. This meant a form of leadership that operated through the threat of destroying people鈥檚 economic power by laying them off or forcing them to meet aggressive sales targets.鈥� 鈥淎 management culture of overt economic violence within RBS鈥� Scottish headquarters translated into the cultural capital that management would use in their battles for power in the City of London鈥�, suggests Sarah Robinson, Senior Lecturer in Management and Organisation Studies at the University of Leicester School of Management. 鈥淐ompetition among banking leaders for legitimacy within the field triggered irrational behaviour, which contributed to the financial crisis.鈥�Dr Robinson said: 鈥淩BS executives鈥� reputation for economic violence counted as 鈥榗apital鈥� in the City of London鈥�.She suggests this reputation helped RBS secure City backing for the takeover of ABN Amro, the Dutch bank. This acquisition completed RBS鈥� transformation from a Scottish into a national UK financial institution, and finally an international banking behemoth.However, during this expansion RBS executives 鈥渕issed problems of 鈥榯oxic assets鈥� and bad debt in RBS鈥� because they were distracted by attempts 鈥渢o legitimate themselves by competing successfully against the English elite banking leaders鈥�. NOTES TO EDITORSRobinson and Kerr鈥檚 analysis of the rise and fall of RBS is found in:From Symbolic Violence to Economic Violence: The Globalizing of the Scottish Banking Elite, Organization Studies, February 2012, 33(2) 247-266Leadership as an elite field: Scottish banking leaders and the crisis of 2007-2009, Leadership, May 2011, Volume 7, No 2, pp151-173Designing and contesting material and ideological spaces for corporate elite reproduction: the case of the RBS executive business school, to be presented at European Group for Organization Studies (EGOS) Colloquium, Helsinki, July 2012.Organizing social and material spaces: fields and flows of transnational elites and counter-elites, to be presented at Standing Conference on Organizational Symbolism (SCOS) annual conference, Barcelona, July 2012.The study is based on extensive research of various sources, including contemporary media reports and academic papers on the Scottish banking crisis published on: 22 June 2012
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