Wednesday, August 5, 2009

(No.43) Me and boors, bullies, dopes & cynics

I spent many years -- too many some would say --  in the life insurance business as well as writing about it in my magazine (the Canadian Journal of Life Insurance) and in other magazines and newspapers. As an insider I have known (and known of) a number of company CEOs and platoons of  senior executives. 

I derive both amusement and some satisfaction from the fact that as a life company employee I was threatened more than once with termination of employment and as a writer/editor with libel action -- in both roles the threats usually came from company CEOs. These threats were prompted by various publicly expressed views on industry issues and companies, views that infringed some corporate ban on unlicensed expression or offended some senior executive's delicate sensibility or merely ran afoul of someone who lacked a sense of humour. 

One of my treasured possessions is a letter addressed to me early on from a life company CEO warning me formally that my job was hanging by a thread. That thread turned out to have quite remarkable tensile strength. 

I have been asked frequently how, with my views on various issues, I managed to survive in the insurance business. My answer is to relate the anecdote about British Prime Minister Winston Churchill, having formed his war cabinet, being approached by a colleague very disappointed by the appointment of a particularly difficult individual. Churchill explained that he would rather have this politician in the tent pissing out than outside the tent pissing in. It is this sort of 'pissing out/in' factor that I think may account at least in part for my having been a most unlikely corporate survivor.

I have not been awed by any consistent brilliance within the industry's CEO and senior management group. The majority have been decent and competent people; a few have been thorough-going boors and bullies who treated their subordinates like crap; several had industry IQs only slightly above room temperature while a number were very bright. These categories were not and are not mutually exclusive.

I am no harsher in this assessment than is New York Times columnist Thomas Friedman who, having considered the financial industry leadership on Wall Street who produced the financial services meltdown, declared that "some of our country's best paid bankers were overrated dopes who had no idea what they were selling, or greedy cynics who did know and turned a blind eye. But it wasn't only the bankers." (NYT, Nov 26,2008)

Indeed it was not, as the insurance industry's own experience attests. The performance as managers of North American life insurance company CEOs has occupied a spectrum, from the very sharp through the merely custodial all the way to the stupidly reckless with the majority scattered along the range. 

Based on my industry experience I think that more numerous and costlier financial services corporate mistakes have been quietly buried over the years than the financial media, the rating agencies, et al [the financial services 'paparazzi' as I think of them -- see (No.39)] have ever come close to realizing. 

The evidence now public involving the risk of financial system meltdown during the past couple of years, the potential disaster the actions of the Bush and Obama administrations now appears to have averted, makes it clear that while some financial executives played beneficial roles there were far too many others who were directly responsible for not just inferior but disastrous corporate results for which, nonetheless, they expected to be paid obscenely large amounts of money -- and were.

Alastair Rickard