Salvage ethnography in the financial sector: The path to economic crisis in Scotland

By Jonathan Hearn

This book is based on ethnographic research from 2001-2, during Bank of Scotland's first year of merger with Halifax to form HBOS. The research is revisited from the present perspective in the wake of the global banking and financial crisis that undermined HBOS in 2008. This historical perspective on the ethnographic data is used to explore: people's responses to the pressures of heightened competition and organisational change; mutual and sometimes antagonistic perceptions of Scottish and English identities across the two merged banks; conflicting evaluations of national and organisational cultures; and the challenges of integrating ethnographic and historical perspectives in a single study. As an historical ethnography it 'salvages' a disappearing culture of Scottish and UK banking, disintegrated by neoliberal processes.

• Language: English
• Publisher: Manchester University Press
• Release date: Jul 21, 2017
• ISBN: 9781526108357

Book preview

1

Introduction: ethnography, history and the vagaries of research

This book takes a body of ethnographic data collected in 2001–2, during a year’s fieldwork at the Bank of Scotland and HBOS, and revisits it from the perspective of the present, that is, the time of writing this book (c.2014–16). That present is one in which the global banking and financial crisis that emerged around 2008 has had devastating effects on several banks, including this one. My original research had been planned to take place in the Bank of Scotland (BoS) but earlier in 2001, before the research began, BoS had merged with the Halifax to form HBOS. In September 2008, massively overexposed by the crisis, HBOS was acquired by Lloyds TSB, in a deal orchestrated by the British Labour government to prevent a second bank failure after the collapse of Northern Rock a few months earlier. The time between my fieldwork (and the merger) and the acquisition of HBOS was a mere seven years – of rapid growth followed by spectacular failure.

My overarching aim is to explore the tension between the ‘ethnographic present’ of the original research and the unavoidable alteration of perspective on that data that the economic crisis has created. I am interested in how many aspects of the research findings anticipated and prefigured what was to come, and yet can be understood in these terms only from the later vantage point. Larger structural and historical explanations of what went wrong in the financial sector will be drawn on to frame the study, but these are ultimately beyond the immediate scope of this ethnography. Instead, I have tried to make a virtue of the necessarily micro-level body of data generated by ethnography focused on a relatively narrow slice of staff, in a single organisation, over one year, by treating it as something that gains meaning, and depth, precisely by distance, the passage of time and changed historical perspective. In this way I attempt to contribute to our understanding of how to do the ethnography of organisations and institutions in a way that achieves depth of analysis. I have tried to produce a book that brings together ethnographic detail and longitudinal perspective, and that provides through its examples a different way to think about how nationalism and national identities operate in everyday life. And I have sought to use this particular case to gain insight into how the economic crisis triggered in 2008 came about, and was implicated in a more general process of social transformation.

In particular, I will be examining how that first year after the merger of BoS and Halifax framed and shaped comparative talk about organisational cultures and national identities, which took on a specific salience for the people I studied during this period. In an environment of accelerating organisational growth and heightened competitiveness, staff negotiated and wrestled with notions of the ideal bank employee. These notions were often dissonant with established conceptions of BoS culture, and Scottish ‘character’, in ways that were especially invidious for BoS staff. Thus a larger structural and organisational context triggered anxieties and uncertainties about personal issues, questions of identity, selfhood, value and even virtue (cf. Mills 1959).

Time changes everything

Let me flesh this out by recounting something that happened shortly before I began writing this book. After work on a Friday in October 2012, I went out to join several old friends for some drinks and conversation, friends I have known since I first met several of them at BoS, when I was doing the ethnographic fieldwork behind this study. They call themselves ‘The Walkers’. The original nucleus of this group had formed well before I met them, as a group of friends from work who would meet every so often for a drink, in the early days going for a short ‘walk’ to the pub after lunch on some Fridays. By the time I knew them this had become an after-hours activity, meeting up at a different pub about once every couple of months. As I write, there are about seven regular members, not counting myself. I am an erratic participant on these nights, but have tried to catch up from time to time. Only two of the group still work for the Bank, the rest all having retired or left for other reasons in the years since I did my research.

We met at Leslie’s Bar on Ratcliffe Terrace in Edinburgh. Those present were Thomas, Paul, Donald, Ben, Angus and Duncan.¹ I brought out a copy of Ray Perman’s recent book Hubris: How HBOS Wrecked the Best Bank in Britain (2012). It turned out Angus had already read it, and thought it offered a reasonable account of what had happened to the Bank they had all known. We passed it around. Paul was adamant that it was misnamed, that the subtitle should be How Halifax Wrecked the Best Bank in Britain (not HBOS). Or, alternatively, how certain former leaders of the Bank had ruined it. There was clearly a lot of cynicism in the group, which Paul articulated, although I sensed that most of them had made some sort of peace with events. We spoke about the fall in HBOS shares as the crisis worsened, and how staff, who regularly took annual bonuses in shares, held on to them, convinced they would recover. They just could not believe how far they would fall. Ben said his regular cashing-in of shares, to fund holidays and such, meant that he had not lost as much as some. But others had built up retirement nest eggs that had disappeared. This very much echoed what Perman said in his book and what I had heard these fellows say before.

I was struck by two themes that emerged spontaneously in the conversation, without any prompting from me, because they harked back to things I had heard during my original research, and that appear in this book. One was a discussion of how Lloyds plc was in a ‘centralisation’ phase, trying to draw control into the centre of the organisation during a period when profits were difficult and costs needed to be controlled. It was wryly observed that this was part of an endless organic cycle of large organisations as they grow, responding to internal power dynamics and to their economic environments. We commented on how, when I was doing the research in 2001–2, BoS and then HBOS had been in a decentralisation phase, in particular distributing control of much of the staff training out to the divisions, diminishing the central training part of the Bank, where many of these guys had met, and where I was based for much of my research. I remembered how then the same detached assessment of this process was expressed in interviews, that the pendulum inexorably swings between centralisation and decentralisation, and that the arguments made for each need to be taken with a pinch of salt.

The other theme that struck me was comparative talk about how up to date or backward various organisational systems are, and how this compares with competitors. This is a group of people with considerable experience across various kinds of organisation, in banking and elsewhere. One was talking about the systems in Lloyds being behind those in HBOS, another about the backward systems in a unit in the University of Edinburgh that he had done some systems analysis work for. Among them there was a strong underlying tendency to view organisations as things more or less adapted to the present environment, whether ahead, keeping pace or falling behind. This is a very basic part of how they view the world of business organisations, as a ‘natural’ terrain of competition between the better and the worse adapted.

I chatted with Thomas about the present book. He seemed to like the proposed title Salvage Ethnography (explained further below), grasping the idea that it was about the ethnography of an organisational culture that had slipped away into history. The evening as a whole confirmed for me a strong sense of a group that shared something in the past, that was now gone, not just faded with time, but collapsed, wiped off the map. Survivors, in a lifeboat, sharing a drink.

Research: original aims, access, design, methods and reframing

The original research had purposes that were not exactly the same as the ones I am putting it to now. The study was one of several conducted by a large team of social scientists under the auspices of the Nations and Regions Research Programme (1999–2005) funded by the Leverhulme Trust. That programme was inspired by questions about the effects of recent political devolution in the UK, including the establishment of a parliament in Scotland and an assembly in Wales, on notions of national identity. It involved a variety of studies and methods, ranging from large-scale opinion surveys to localised ethnographies, conducted by sociologists, political scientists, social psychologists and anthropologists (see Bechhofer and McCrone 2009). The objective of my study was to gain a better understanding of the subtle ways in which national identity comes into play in daily life, and in particular how large organisations frame and shape the ways that national identity is construed. As an ethnography, it aimed to systematically observe and interact with people bound together by a specific social context (the Bank) on a daily basis over an extended period of time. This enabled in-depth observation, reflection and analysis of behaviour in that context, to help build up a holistic picture of people’s understanding of themselves and their circumstances. Thus while it was ‘in’ the banking sector, the research was ‘on’ national identity. The purpose was not to make generalisations about large populations (whether British, Scottish or even the staff of the Bank), but rather to offer more nuanced interpretations of how people actually ‘do’ national identity in daily life. Thus this small-scale qualitative study was seen as complementing and offering a methodological counterpoint to the various other studies run under the same programme, to support a composite understanding of national identity. The larger issues of national identity and social and political change have remained alive in the intervening years, with the increasing electoral success of the Scottish National Party (SNP), a referendum on Scottish independence in 2014, and a UK referendum on leaving the European Union in 2016. These events fall somewhat outside the purview of this study, but I will address this wider context in the Epilogue.

As I have noted, between the initial research design and negotiation of access, BoS entered into a merger with Halifax, to form HBOS. Negotiation of access had been facilitated by social ties between a senior member of the research team and the then Governor of BoS. In fact, after this had been done, the merger with Halifax was entered into, and just before the fieldwork was to start I was notified that the Bank intended to cancel its agreement to allow the research, given the new context. This led to a renegotiation with Bank, in which I and the director of the research programme, David McCrone, made the case for the continuing value of the research despite the merger, and the considerable disruption to the research programme a cancellation would cause. In the end we were successful. I raise this episode partly to note the vagaries of research, but also to highlight that, at this point in time, BoS was still sufficiently embedded within the organisational matrix of Scottish civil society that it mattered to maintain cordial relations between key organisations such as the Bank and the University of Edinburgh, relations that were still underpinned by Scottish social networks. It is also worth noting that BoS had long been the University’s bank, but that this relationship was severed post-2008.

So while still based primarily in BoS, the research plan was reoriented to take account of the new HBOS context. The original expectation was that the ethnography would allow us to get at everyday, ‘banal’ (Billig 1995) expressions of national identity that are often less noticeable because they are not triggered by explicit, nationally framed confrontations. The merger obviously changed this. It perforce reoriented the research, as it involved a union of a Scottish and an English bank, thus highlighting issues of national identity within that context. While less charged than national confrontations between political parties or football teams, there was nonetheless now a clear dimension of national encounter within the organisation, which raised new issues.

‘Participant observation’ – taking on roles that allow ethnographers to participate in the daily life of those they are studying – is much mythologised and romanticised. There were obvious limitations to doing this, in that I was not a trained banker, nor an employee of the bank. Many parts of the bank involved technical skills and matters of information sensitivity that would have made participant observation impracticable and inappropriate. So I sought to approximate the role of a fellow employee as best I could, and found that before long I was frequently identified as someone on ‘secondment’ to the Bank from the University. Thus my role as ethnographer was assimilated to a role category familiar to bank staff, as the long-term ‘loaning’ of staff from one organisation to another for specific projects is fairly common.

I was primarily based in what was called Group Learning and Development (GL&D), which managed and delivered various aspects of general and executive staff training, as well as educational resources for the bank as a whole. While I was there, GL&D also ran projects to standardise staff competency frameworks, manage bank relations with government training schemes, and investigate the potential for e-learning within the Bank. From there I worked in and around various teams involved in human resources (HR) within BoS and HBOS more widely. This made sense because the HR areas, covering such things as public relations, employee relations, community relations and staff training, were centrally concerned with the generation and managing of a corporate culture and identity. Given the core research questions, this was a logical place from which to work.

I should note that about two years prior to the merger, there had been a decision by the board of directors to shift the organisational structure of the Bank from one based on geographical regions to one divided according to major core functions. Following this there was a more specific decision to ‘devolve’ much of the staff training functions to the new divisions: Corporate Banking, Business Banking, Retail/Personal Banking, Insurance and Investment, Treasury and Group (core functions) (see Figure 1.1). Furthermore, GL&D had been physically relocated to more modest premises and was undergoing downsizing, as it was redesigned to concentrate exclusively on the training of executives and those identified as having executive potential. The merger tended to accelerate this restructuring process and was clearly demoralising for some of its staff.

I went to a central office in GL&D almost daily, where I was assigned a desk and a computer. I normally wore a suit and tie. Participant observation extended to more informal socialising over lunch, at office parties and after hours. Much of what I did in GL&D drew on my academic and research skills, applying those to Bank needs. Sometimes (especially at first) participant observation involved menial tasks, and in some contexts I was more an observer than a participant. My activities developed as people became more familiar with me and new opportunities opened up within the Bank. To summarise:

•  I began in October 2001 by working in the BoS ‘Learning Centre’, a library of educational/training materials, primarily books and videos. I worked on a project of inventorying the video holdings and repackaging them, as well as various other odd jobs, chatting with staff as they came and went. This provided an initial foothold from which to develop participant observation.

•  During the early months I also spent time following the public activities of Social Investment Scotland, a consortium of Scottish banks designed for lending to the ‘social/voluntary’ sector, which was then under the directorship of someone seconded from BoS. This ended up fairly peripheral to the research.

•  A major research activity from early December 2001 through February 2002 was attending ‘menu’ training courses. These were ‘off the shelf’ staff training courses that any staff could elect to go on, although they were often advised to do so by their managers. Rather than area-specific skills, they focused on developing general skills, with titles such as: ‘Assertiveness’, ‘Leading the Team’, ‘Creativity and Innovation’, ‘Presentation Skills’ and ‘Dealing with Difference’. Here I met staff from across the Bank, regionally, divisionally and in terms of employment grades, participating as if I were another staff member, although my research role was always disclosed to the course leader and participants. This ended up being a particularly rich source of ethnographic data.

•  From early 2002, a major focus of participant observation became my work with a new team, the Diversity Team, which was set up to integrate diversity and equality policies across HBOS, and to formulate and advocate new policies in this area. The team members came from both BoS and Halifax. I worked on a variety of projects with this team, which involved both working with the team and making contacts and seeking information from other areas within the Bank (as well as outside). The main ones were: (1) designing and analysing the results of a questionnaire designed to assess awareness of diversity issues among staff in HBOS Card Services (based in Cardiff and Dunfermline); (2) researching data and corporate policies on elder care and helping inform an integrated policy on carers for HBOS staff; (3) collecting information on gender pay audits and data sets on gender and pay among staff in various parts of HBOS. These projects allowed me some insights into the ‘nuts and bolts’ of the Bank’s relations with its staff, and an opportunity to provide some reciprocation in exchange for the research access I had been granted. It also facilitated more contact with Halifax-based staff of HBOS, to offset the ‘BoS perspective’ of my fieldwork.

Participant observation was supplemented by other methods:

•  An open-ended questionnaire was administered via an email list originally based on BoS staff identified for managerial training by GL&D. But by this stage in the merger, the list had begun to incorporate staff from a Halifax background. This list was the best available basis for the distribution of this questionnaire and was a means to get ‘buy-in’ from the respondents. Of the 203 respondents: 18 were from Halifax and 185 from BoS; 149 were men and 54 were women. The respondents’ service with the banks ranged from 6 months to about 35 years, with most clustered in the 10- to 25-year range. Responses were fairly widely though not proportionately spread across the major divisions of the Bank, and a few respondents were in training on the graduate scheme and not yet placed in a specific business unit. There is no presumption that the questionnaire responses were statistically representative. Like the rest of the ethnography, the questionnaire study contains the bias of the BoS point of view, as well as being directed at managerial-track staff. A representative sample would have had many more staff at lower grades, working in retail banking and female. It is used as a further source of focused qualitative data, not as a statistical representation of the HBOS staff at the time.

•  Thirty-nine semi-structured interviews were undertaken, 38 of which were tape-recorded. Most interviewees were chosen on the basis of their responses to the questionnaire described above. I tried to do interviews with respondents who seemed particularly interesting and engaged, and tried to get a relatively balanced sample from across the major divisions of the Bank, which included staff based in London and other UK cities. Of these 23 were with men and 16 with women. I also did a further five interviews (not tape-recorded but written up as notes) with key informants from the HR section of the Bank where the participant observation was based, and one with an Edinburgh-based banking expert outside of HBOS (four men and one woman).

•  Various documents and in-house publications were collected and selected materials at the Bank’s archives were surveyed.

Figure 1.1.  The basic organisational structure of HBOS, 2001–2

Participant observation went on throughout the research period (October 2001 to September 2002), although the location/focus shifted over time, as planned. The email survey was designed, piloted and conducted during the middle of the research period (February–May). The interviews were conducted in the summer months (June–August). Documents were collected throughout the research period. There was a final period of collecting documents and taking notes at the BoS archives in September.

There is a logic to the sequence of methods and how they were phased in. Participant observation was subjected to ongoing analysis through writing and reflecting on field notes. An initial analysis of themes in the field notes informed the design of the email questionnaire, which was developed in dialogue with other members of the Leverhulme research team, and piloted with a small group of BoS staff. The interview questions were also developed partly out of issues raised in the responses to the questionnaire. The combining and ‘overlapping’ of participant observation, survey and interviews aimed to achieve a certain depth in the discursive/qualitative data (see Figure 1.2).

I worked with this data, and wrote and published on it for several years after the fieldwork (see Hearn 2006, 2007, 2009), but inevitably my interests moved on to other things. However, after the events of 2008 I found myself periodically returning again to reflect on the research, and eventually devised the plan for this book. This has involved new reading around the topic, some new informational interviews with some well informed observers of the Scottish economic scene to help bring my knowledge up to date, as well as discussions with some of my old contacts at the Bank, as described above.

I want the research process to be evident in the presentation of the ethnographic data in Chapters 4–7. In some passages I have stuck very close to my original field notes, and have indicated this. I indicate where I am using a transcript of a recorded interview and where I am paraphrasing the words of informants from field notes. I have drawn heavily on the responses to the email questionnaire to show the range and complexity of language around certain key themes I explore. These often provide the sharpest verbatim fragments of the general discourse going on in the Bank at the time. When I refer to ‘responses’ or ‘respondents’ I am using this particular body of data. However, I have tried to mix these with ethnographic ‘vignettes’ to achieve a rounder picture of the ethnographic setting. Without following a strict temporal line, these chapters trace the journey from the initial