Empowerment

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When that inter-affiliate ISDA negotiation has been going so long there are sizeable parts of your risk management team who were still at university when it began, and others, then in the primes of their careers, have since retired, we wonder whether the crux of the problem really is the scope of the requested sovereign immunity waiver, or whether it hasn’t got more to do with how the organisation is organised, and in particular how it fails to empower — or trust — those it puts in the front line of the negotiation. “Send people authorised to make a decision” is a management truism that seems well out of fashion.

We are talking about empowerment not in the sense of touchy-feely yogababble about how we should all be actualised to be the best versions of ourselves — HR will be all over that, and they can have it, frankly — but in the sense of having the autonomy and authority to make pragmatic decisions to move an your own part of your own organisation on.

Our working theory is the immutable trajectory of modern management orthodoxy, flavouring policy over expert judgment, process over insight, evidence over intuition, fundamentally substance over form— pushes each enterprise towards ultimate stasis which will only collapse when the firm does, as a result of some tail-risk non-linear chain reaction your risk taxonomy somehow didn't contemplate.

In any commercial collective, there is an enduring tussle between the (sadly) resistible force of subject matter expertise — wielded limply by those who know what they are doing, understand the proximate ramifications of their actions and derive professional pride and no small amount of job satisfaction from the very act of exercising small nuggets of authority — and the hardly moveable object of policy, process, precedent and sclerotic infrastructure that trusts no such executive agent further than she can be thrown, and is stout in the resistance of any kind of risk, however theoretical or academic.

Those two forces — of substance and of form — wrestle in any organisation; the bigger and older the firm is the more likely the thrusting young executive is to lose. She may want little more than the opportunity to stand on the deck, in the sun, blowing wistfully into the sail, an action that, by itself, will vouchsafe ineffable meaning in her grim working life even if it doesn’t noticeably propel the vessel, but even that will be denied her.

She will be institutionalised, worn down and broken. Her fresh blue eyes will cloud, her shoulders will sag, she will mutter distractedly, using the world “leverage” when she means “use” — all these deteriorations in the service of descent towards the same fate we all share: a lifetime nosing boulders back up that very same slope.

We all know the feeling: the credit department policy that requires cross default in a spot contract; the clearing house which demands an unlimited indemnity for losses it might suffer — but that it cannot articulate even in the hypothetical — whilst carrying out a trade-matching service; the absurd contractual disclaimer of liability for losses arising from ones’ notwithstanding normal or even gross negligence.

In each case, we know these terms to be preposterous, but we know just as thoroughly that the prescribed process for winning a derogation from them is so monstrous as to be unthinkable, so we externalise our suffering and pass it to our clients. This really doesn’t seem an especially commercial way to go about business.

And spare a thought for your client’s negotiation team. Will they be any more empowered than you? They will not. These poor souls have their own policy crosses to bear, many just as palm-faced as yours, only different. Presented with your enstilted nonsense, they will have no choice but to object to it and perhaps even counter it with theirs.

It is the legal eagles’ sacred covenant to make sure their firm does not endanger itself by reckless contract. Their domain being of law and not fact, it is theoretical reckless ness and juristic endangerment they must identify: that no merchant would be so misguided to take such protections to their logical legal conclusion can form no part of the calculus.

And so it is we find bald men fighting over combs no-one wants in micro-soap operas across the city, because other bald men, with barely any more interest in them, have made a policy that men must have combs.

See also

• The Inter-affiliate ISDA negotiation
• The Victory of Form over Substance
• Drive: The Surprising Truth About What Motivates Us