The Volcker Rule Explained

The Volcker Rule, part of the Dodd Frank Wall Street Reform and Consumer Protection Act, was one of a number of measures taken in 2010to build more risk protection into the  financial systems of the US..

After the crash of 2008–2009, people lost faith in the US banking system and the power of the Treasury to ensure that banks do not participate in unnecessary risk-taking.

Origins of the Volcker Rule

Introduced by Federal Reserve Chairman Paul Volcker in 2009, the Volcker Rule is expected to come into effect in Q1 2014. There are various difficulties in finalising all the fine details of the rule. Though the legislation technically became law in July 2010, four years later it has still yet to be implemented

What the Volcker Rule means for banks

The rule essentially affects all US banks, foreign banking organisations and . bank holding companies. Its main aim is to guard against proprietary trading – the process when a bank trades using its own funds  instead of those of a client, in order to turn a profit.

Proprietary trading is generally regarded as high in risk and can lead to significant issues for the banking sector. The most famous example of a proprietary trading disaster is the case of “Rogue Trader” Nick Leeson, who single-handedly brought about the collapse of the UK’s oldest investment bank, Barings in the early 1990s.

The Volcker Rule governs all federally insured depository institutions (IDIs). The architects of the rule hope that by watching these activities, they will reduce the transactions that cause a systemic risk to the financial system. The Rule also applies to equity and hedge funds, including IDIs who sponsor or own hedge funds.

Criticisms of the existing rule

Jacob Lew, the Treasury secretary appointed in 2012, has given the Volcker Rule his full support and has prioritized the completion of the act..
Sources: http://en.wikipedia.org/wiki/Proprietary_trading#Famous_trading_banks_and_traders
http://online.wsj.com/news/articles/SB10001424127887323838204579000623890621830
http://www.lseg.com/markets-products-and-services/post-trade-services/unavista/unavista-and-regulation/volcker-rule

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Are you Born a Leader or do you Slowly Become One?

The question of whether a leader is born or created is often flung around my various parties – usually with conflicts of interest- and arguments are often raised backing both angles.

I mention conflicts of interest – because you often find that people who raise this topic are often leadership tutors, educators etc, who have a vested interest in people thinking that leadership can be taught, and is in no way genetic. This group of debaters have several observations on their side, as I will divulge later in the article.

In the ‘other camp’, you have the political class, who by existence seem to demonstrate that you are often born into leadership rather than working your way there. A look at the current political elite of the UK government cabinet highlights a rich cluster of privately educated, upper middle class men whom we advantaged from the start.

But I suppose this could easily slip into a different argument. Sometimes deduction is a powerful form of research. It goes as follows: observe the world, and form theories about how the world works, which seem to explain what you observe. For example, given that both the Prime Minister of the UK and the Mayor of London came from Eton and Cambridge could tell us that the higher classes are better leaders.

This isn’t the only conclusion one could draw however. One could assert that everyone has equal leadership potential, but simply that the systems the UK has in place for selecting political leaders is biased towards those from higher backgrounds. I mean good leadership – what really is it? This argument runs in opposition to the idea that selection is based purely on merit (a point of view that I’m sure most will agree with).

What are your thoughts? Do you believe that the elite are better leaders, or that they simply find themselves floating towards the top due to the various forces at place in UK politics?

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Do Corporate Leaders Encourage Leadership in Subordinates or Resist It?

A true leader will inspire leadership aspirations in those who work beneath them. A great leader will challenge their board to be ever better, and to succeed in their leadership role.

However there is a process called ‘Cronyism’, whereby a leader is fearful of those beneath him replacing them. If a protégé suddenly performs better than you could have ever imagined, it could only be a few years before they’re after your job. This fear results in leaders selecting poorer qualities candidates to work for them. In effect they surround themselves with incompetence. In an attempt to protect their career, they actually hamper it because they reduce the quality of senior management, and give those senior managers enough responsibility to do some serious damage to the organization.

A ‘Crony’ in charge of public relations could permanently damage the reputation of a 100 year old brand, a ‘Crony’ in charge of accounting could allow for corruption and fraud to leak into the accounting process, and in turn create a poor relationship with shareholders when they find out about the discrepancies. Cronyism is a very negative process, and is associated with leaders who have been at the top for so long that they feel fearful of the end. Much like a dictator in the Middle East who is prepared to kill his own people to stay in power, a poor leader may be willing to sacrifice much shareholder growth in order to keep their job.

Ironically, this behavior to protect ones job could potentially be the deciding factor in them losing their job. On UK Boards, a vote of no confidence could always be effected, removing a leader from their position, and of course shareholders must reappoint directors each year, which increases the job insecurity of those at the top.

However some leaders do reach out and encourage everyone to live to their potential, and I’d like to think that this is the direction that UK plc is heading in terms of their people policies and leadership training programmes.

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10 Qualities a Leader Should Have

Certain qualities belong to everyone but leaders possess certain qualities such as confidence, stability to an exceptional degree. If you wonder ‘What is Good Leadership?’ you could do worse than read the 10 qualities below that any leader should have to be an effective leader.

  1. Vision: This is first and most important quality of a leader. Without a sense of purpose and vision, the leader will not be able to recognize what needs to be done. It also inspires the people working with or under the leader to get the job done effectively.
  2. Ability: Everyone relies on the leader to get the job done properly and effectively. If the leader does not know how to do the job, no one will respect or follow the leader. The leader should have both knowledge and expertise to get the job done and achieve results.
  3. Enthusiasm:  This quality is important when you want to persuade people to follow you and get the work done. The leader needs to be fully committed to the job as this will motivate and invigorate the people.
  4. Stability: The leader cannot be emotionally occupied in him or herself, as this reduces objectivity in getting the job done on time and effectively. So the leader needs to make sure that when he or she is on the job; full attention is given to the job and tasks or duties that need to be done.
  5. Concern for Others:  A leader that is caring and cares about the welfare of its people, is most likely to succeed. When the leader is loyal to its followers, the followers will be loyal to the leader.
  6. Self Confidence: This quality comes within the leader. If a leader is not self confident he will not be able to do job effectively. The leader needs to make sure he or she is confident in all decisions and actions that are taken otherwise followers will ask questions and are most likely to disobey.
  7. Persistence:  The leader needs to be motivated and determined to get the work done, even if it is very difficult.
  8. Vitality:  The leader needs to have both strength and stamina to fulfill all the tasks of leadership.
  9. Charisma:  This is a special quality that not all leaders posses, but once they do they can easily attract many people to follow.
  10. Integrity:  Without integrity, followers will not trust the leader. Therefore the leader needs to make sure he or she is honest, courageous and has a strong sense of character.

Without these 10 leadership qualities, no leader will be able to get the job done effectively as there will be no followers. So if you are a leader of a department, company, school or even a group, make sure you brush up on these skills as they are defiantly needed.

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(Financial) Management Expert?

How closely inter-twined do you think the topics of management and finance are? OK – let’s leave out the management in financial services, whom obviously have a more prominent cross over, but instead let’s focus on the non financial services companies out there.

Do you think that the manager of an industrial company such as Oil, manufacturing or technology requires a decent level of financial knowledge to perform well in their job?

Naturally, job roles and job descriptions will change from position to position, and so will the required management skills and customer relationship management skills. However I believe that underpinning all operational management knowledge should be an underlining financial background.

Now, I come from a financial background myself (accountancy), but I’m not suggesting that evry simply jump on my band wagon just because personal finance is a favourite topic of mine – no, it’s because I believe that everyone should be able to ‘speak the language of business’, (and no, I’m not talking about management bullshit!).

Given that business lives or dies by its financials, I think that every manager in the company should at least be able to read the financials of the company in question! Does anyone think this is an unreasonable question or not?

It is because of this rationale that I have decided to open up a ‘Personal Finance’ category of posts on this website, which I hope you’ll enjoy reading and gain a few useful insights from.

 

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Managing Change

Managing change is one of the most difficult tasks entrusted to those in a leadership position. Whilst no single leadership video will be able to make a serious change project flow like a smooth river – I hope that these resources below will serve as a great reference.

Who Moved My Cheese?

Who Moved My Cheese‘ is a concise, best-selling management change book. It’s website states that 24m books have been sold worldwide – which in management book terms is absolutely phenomenal. With so many satisfied customers, who are we to disagree!

The book is written in a light, entertaining style. The use of humour greatly improves its digestability, and ensures that the ideas contained within, stick. Also available is a new animated video version, which retains the funny style of the book.

For such a low price, I recommend you at least pick up this book as the start of your personal development surrounding managing change. (And no, I’m not being paid to say this!)

Stephen Warrilow

Stephen Warrilow is a change management expert. You can find his useful website here, which beyond offering reasonably priced courses, also has a host of free content.

Government Guidance

No, I’m not talking about regulation – this helpful government website contains a little-known toolkit which may help you effect change in an organisation – particularly a bureaucratic one such as local government. With many councils in the UK coming under pressure to cut costs whilst maintaining services, change management will be a vital skill for middle and senior management in government.

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How to Be A Leader

Are you wondering about how to be a leader? Being a great leader and manager is not something that can be scribed upon a chalk board or indeed blogged about in a ‘definitive’ way. In fact, I would argue that to insist that a specific ideology is needed to become a good leader, is to lose some of your credibility as an advisor. At the end of the day, all management authors appreciate that being a leader isn’t something that will automatically happen after a 1 day leadership course. Neither will one become a leadership and management guru after reading a single book.

Think instead of the pathway to leadership as a long and interesting journey. Shortcuts are taken at the owners risk. Many elements of this metaphor are very accurate, as I’ll now explore.

Keep Your Focus on Personal Development

Much like a ramble across the countryside, you need to have a heading otherwise you’ll end up wandering in circles, or worse – down a rabbit barren! Personal development is a concept you need at front of mind if you want ensure it works well for you. Pro-activity is a corner stone of successful development and managers would do well to remind themselves of their desire to grow into better leaders at least once a day.

Don’t take Shortcuts

An interesting and memorable walk will simply not happen if you keep jumping in the car and driving over to your destination. Life, they say, is all about the journey. The same is true about personal development. People see admirable leadership traits in leaders and assume they were ‘just born with them’, and therefore they aim to quickly emulate those behaviours to achieve a similar level of success. I believe this is destined for failure. Those leaders possess those useful traits because they have memories and experiences that formed and reinforce them each day. If you skip out those experiences, your development is insincere and unsustainable.

A Journey Passes Quicker With Friends

Your personal journey is your own, but your environment is people. Be open with others about your personal journey when the opportunity presents itself. Sharing aspirations with superiors can often kindle a good working relationship with your boss. Likewise, sharing advice and life experiences with those your junior will help others and hopefully provide a little reflection and perspective on what you have achieved so far.

There’s no need to be uptight and secretive like a Victorian regarding your goals and ambitions, as doing so will not help others, and won’t necessarily help you either. Remember – people are generally good, and by sharing your dreams widely, you will create the opportunity for someone to swoop in and help you out. Closing the door to that possibility is absurd!

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Management Traits

Management traits are the leadership qualities evident in the behaviour and personality of a manager. Whilst behaviours can be easily changed, traits aren’t just skin deep. Almost like a personality quirk – a trait can often stay with you throughout your career.

Management traits, or as they’re also known; leadership traits – are a vast array of labels. You may identify closely with 20 or maybe even 40 distinct traits, but it is likely that the top 5 will resonate the most with your team and will manifest themselves most powerfully in the results you achieve.

What Are Your Top 5 Leadership Traits?

If you had to pick your 5 defining qualities, which would they be? Determination? Relaxed Attitude? Patience?

Do you think you may have a few bad eggs in the basket, with leadership traits such as laziness, arrogance, over confidence, or anger?

Spend a few moments in quiet thought sorting out your traits from your non traits. Then, select the 5 that you think manifest themselves most strongly. Take a look at them, can you see why they are what they are? Do you see some of those traits present in your parents, or peers? Did you perhaps develop or establish one during a period of intense change?

Paint a picture of your leadership qualities and use them to help tell a story about your personal development and who you are as a leader.

Do you See Traits of Others more Clearly than your Own?

When it comes to the topic of traits, we may not be the best observers. We are the masters of our own ideas, feelings and desires, but management traits are intrinsically external – and can all be seen by the audience that is our family, friends and colleagues. Do you think their top 5 traits would mirror yours? If you expect theirs would differ – I would urge you to consider the traits they would pick out, as your most prominent in actuality. Remember, this isn’t a goal-setting or positive-mentality exercise, it is an attempt to accurately conceptualise your management style.

 

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Management Bullshit

I just published a light hearted article on the infamous practise known as ‘Management Bullshit‘ over at Leadership-Expert.co.uk. Management bullshit is the affectionate term given to the often generic, over-complicated and fashionable terminology used by the middle management classes. For examples of management bullshit in use, visit the Leadership-Expert article, (I try not to duplicate too much content across both sites, although naturally a broad overlap in topics will still occur).

Does your boss continually sprout phrases and words that seem to achieve nothing other than affirm their status as a manager? Did they only begin using such terminology after rising to a certain rank and peer group?

Management bullshit, while widely used, is largely pointless and hated. Ironically the same people who criticise this way of speaking, will often crank up the lingo when they believe that they need to do so to ‘fit in’. This apparent peer pressure to use these catch phrases such as ‘going forward’, ‘driving synergies’ and ‘out of the box thinking’ is what drives the phenomenon. And like it or not, for that reason, management bullshit is likely to be staying for several more years to come.

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Management Training

Management training really is at the heart of Management Expert website.

Management Skills Training

When selecting a management training provider, you’ll want to select one that will really enrich the management skills of your employees.

Management Training UK

Companies in the UK are looking for great management training at the moment, as the slow economic recovery seems to be offering few morsels of good news to British industry, it seems to be looking within itself, and how it can restructure, re-train and re-energise its leaders to help encourage the next wave of growth in the uk. The management training uk industry had taken a significant knock as HR departments had violently slashed training budgets for new hires and continuing development programmes, however a recovery is currently being witnessed by insiders.

Quality Management Training

Of course, an eternal struggle that HR directors and other senior managers have to contend with is over the quality standard of management training. By its very nature, management training can vary wildly in quality due to the large amount of small providers, including free lancing professionals, in the area. I personally believe that independent training staff are extremely well motivated to deliver effective courses, but at the same time, consistency across the UK is poor as a result of this fragmented environment.

As management training companies have ‘innovated’ and begun to offer retro-active discounts for testmonials, this has made choosing a quality management training programme extra difficult. With affiliate relationships between management companies and online bloggers and websites strengthening, it is also being difficult to trust what you read online.

As a result, businesses are either following the ‘better the devil you know’ approach and staying with mediocre training, or they’re continually switching between providers in the hope of finding a good catch.

Now, I’m not here to single out my favourite management training provider, (that would slightly run foul of the paragraph above), but I can offer advice on how you can better inform your selection of training provider.

1. Speak to your network of contacts in other companies. Building a network of HR/senior manager in other companies is a fantastic way to benefit from trials that other companies are taking risk in. Non-competitive relationships between individuals in similar positions but different industries can be forged through conferences, societies and often, direct communication. Such relationships experience synergy, and I heartily recommend you grow a few.

2. Ask the prospective training provider about their measurement metrics. How do they evaluate the effectiveness of their own training? Do they receive feedback surveys? Have clients reported their own evaluation of the training to the provider? This feedback will help you decide whether the style of training has the desired results.

How do you select your management training provider? Leave a comment below.

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