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The Conforming Board: Royal Bank of Scotland

In: Disaster in the Boardroom

Author

Listed:
  • Gerry Brown
  • Randall S. Peterson

    (London Business School)

Abstract

The demise of the Royal Bank of Scotland (RBS) is an example of groupthink that saw several board dysfunctions coming together as a result of the drive for consensus in the boardroom, such as lack of independence, amplification of culture and missing key voices. Groupthink involves a shared Illusion of unanimity where silence is taken as agreement and an element of self-censorship where every board member avoids rocking the boat. All of this was evident at RBS and resulted in a lack of rigorous challenge, scrutiny and questioning, especially by the independent directors. The result was a charismatic CEO was given free rein to wield his considerable power, culminating in the acquisition of ABN AMRO. The board seems to have had a lack of prudent and effective risk management, resulting in insufficient due diligence in acquiring a complex business.

Suggested Citation

  • Gerry Brown & Randall S. Peterson, 2022. "The Conforming Board: Royal Bank of Scotland," Springer Books, in: Disaster in the Boardroom, chapter 10, pages 145-157, Springer.
    • Handle: RePEc:spr:sprchp:978-3-030-91658-9_10
    DOI: 10.1007/978-3-030-91658-9_10
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    Cited by:

    1. Kittur, Prathamesh & Agarwal, Shailja, 2024. "Cultural bridges in Business: Critical review and future directions in cross-cultural B2B relationships," Journal of Business Research, Elsevier, vol. 180(C).

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