Leadership and Ethics: Barclays LIBOR Scandal & Competitive Advantage

This assignment analyzes the Barclays LIBOR scandal, focusing on the challenges to team ethics and competitive advantage. The case study examines the loss of trust among market participants, corruption, and the manipulation of the London Interbank Offered Rate (LIBOR). It explores leadership issues, including destructive leadership and lack of accountability, and references relevant theoretical frameworks like McClelland’s theory and stakeholder approach. The solution proposes recommendations such as transparency, independent regulatory bodies, and improved public image to address the ethical failures. It emphasizes the importance of understanding self and others, rational decision-making, and stakeholder theory to revise flaws in team ethics and regain trust. References from various sources are included to support the analysis and recommendations.

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Team Ethics & Competitive Advantage
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Challenges:
The case study under concern is observed in the LIBOR scandal faced by Barclays Plc and
the review of the case study is intended to draw feasible inferences regarding the challenges
vested in the case as well as possible recommendations to address the challenges. The
recommendations could be based clearly on the comprehensive review of challenges
pertaining to ethical leadership on the basis of different theoretical frameworks. First of all,
the LIBOR scandal created the consequences of loss of trust among the market participants.
Since the estimation of London Interbank Offered Rate (LIBOR) is largely based on the trust
and commitment among the large banks operating in international financial markets, the
scandal presents formidable pitfalls leading to loss of trust in leadership (Rose & Sesia,
2013).
The comprehensive evaluation of the case study also provides viable insights into the
challenge of competing functionally in a systemic market environment alongside addressing
the concerns of widespread corruption (Srivastava, Franklin & Martinette, 2013). Complicit
involvement of regulators in presenting ambiguous implications associated with a corrupt
system could also be accounted as a major challenge that can be identified in context of the
LIBOR case study. Since the exchange rate is established on the grounds of involvement of
the different large banks and in the concerned case study, the conspiracy involved unrequited
reduction in LIBOR by Barclays for dealing with the financial crisis or to offset losses (Rose
& Sesia, 2013). The manipulation of LIBOR was considerably observed in derivative trade
transactions. However, Barclays was not the sole perpetrator of the incident since 20 other
banks were collectively involved in lowering the LIBOR rates thereby leading to profound
reduction in the average LIBOR rates that was responsible for inducing formidable losses for
investors. Therefore, the ethical concerns have to be reviewed from the perspective of
potential reasons that could be observed as profound challenges for Barclays Plc to realise
team ethics (Manroop, 2015).
Barclays is subject to challenges regarding the LIBOR scandal due to the lack of precise
estimation of group norms and avoidance of accountability. The lack of emphasis on the task
at hand for the organization and its employees could be perceived as a major reason for
imposing considerable ethical pitfalls (Matava, 2016). The aspects which must be taken into
consideration in context of the task significance in teams involve the core dimensions
associated with a job, critical psychological issues and the personal as well as professional

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outcomes associated with the task (Petersen, Pavlidis & Semendeferi, 2014). The core job
dimensions are observed profoundly in terms of identity of the task and significance of the
task in the organizational context. The critical psychological issues such as information
regarding the potential outcomes as well as experiencing responsibility for the professional
outcomes are also involved as inherent factors describing the precedents leading to ethical
discrepancies (Rose & Sesia, 2013).
The interpretation of McClelland’s theory of motivation could prove to be a viable
explanation of the challenges encountered by Barclays with respect to the LIBOR scandal.
The necessity for achievement could be observed as a major reason for the promotion of
unethical practices such as lowering of the LIBOR rates (Siedel & Haapio, 2016). Leadership
issues identified in the case study could be reviewed with respect to the scope of destructive
leadership (Strand & Freeman, 2015). The validation for destructive leadership could be
observed in the instability of monitoring frameworks and the existence of a culture that
promotes toxic leadership. Destructive leadership is also characterized by the preferences of
leaders to emphasize on their self (Rose & Sesia, 2013). The CEO of Barclays, Robert
Diamond had to resign from his post due to the action taken by British regulators albeit with
his profound indications towards the reprehensible action taken by different team members
which indicates another challenge regarding team ethics (Srivastava, Franklin & Martinette,
2013).
Recommendations:
The recommendations which could be used to address the team ethics challenges and the
cheating implications presented by Barclays Plc and its associated employees can be derived
from the concerns of addressing team norms and values. The formation of team ethics served
as a major pitfall in context of the case’s observed ethical limitations thereby leading to
considerable losses for investors (Siedel & Haapio, 2016). The organization should consider
the foremost recommendation of involvement with authorities and agencies that consider
penalisation of banks for unethical activities. However, from a critical perspective the issue
poses sustain possibilities of the banks manipulating LIBOR rates according to their interests.
The consideration of another recommendation is observed in favouring transparency in the
activities of the banking sector. The central authorities and banks could work in coordination
to present transparent reports which would be validated on the grounds of individual audits
conducted at each bank in the market environment (Wise, 2014). It is also imperative to

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consider the appointment of an independent regulatory body that could be accounted for
monitoring the operations of the regulatory bodies involved with the banks. The outcomes
which could be derived from such recommendations would be observed in the working of the
regulatory bodies with explicit diligence following the precedents established for the
exchange rates. The LIBOR rates could be associated with profound references to addressing
the concerns of forced manipulation in the banking sector. The central authorities could
consider the appointment of personal executives in large banks where the functions of the
banks can be monitored effectively. The executives should consider reporting the
unwarranted activities of banks noted in changes in financial position of banks comprising of
references to the reduction in trading rates. Another potential recommendation that could help
Barclays to recover from the notable incident of LIBOR case would be to improve its public
image as an ethical organization based on credible values. The positive outcomes that can be
rendered by opting for initiatives such as a public relations campaign which would help the
company to gather back the trust of stakeholders. Stakeholder approach has been a major
theoretical highlight which proved to be successful in resolution of profound ethical scandals.
The stakeholders such as investors could be assured of the company’s validity as an ethical
service provider through communicating the appointment of new executives and employees.
This would enable stakeholders to perceive a contrasting change in organizational structure
thereby contributing to the resolution of the challenges encountered by Barclays in response
to the LIBOR scandal.
Solution:
Barclays has to finalize on a specific solution that would enable them to revise the flaws in
team ethics. The concerns faced by Barclays could be profoundly addressed on the grounds
of an understanding of self as well as others. The stakeholder approach and the
implementation of a rational decision making process could serve as prolific attributes in the
solution for the case study of Barclays. Stakeholder theory implies managers to ensure
addressing the needs of a wide assortment of stakeholders by paying considerable attention to
their requirements. Furthermore, the stakeholder approach would enable Barclays to address
the ethical concerns related to employees, investors, community and other banks. Another
significant highlight of the stakeholder approach is observed in the implications of moral
standards, bribery, fair trade and human rights. The rational decision making model would
enable the bank to ensure decision making through a group approach according to Schein.
The possible methods which could be used to frame the solution of Barclays’ case would

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involve authority rule imposed by central monitoring authorities, consensus and groupthink.
The implications of groupthink would enable the bank to override all inherent motives
through unanimity to prefer alternative courses of action that can benefit the cohesive group
of banks.
References
Rose, C.S. and Sesia, A., 2013. Barclays and the LIBOR Scandal.
Manroop, L., 2015. Human resource systems and competitive advantage: An ethical climate
perspective. Business Ethics: A European Review, 24(2), pp.186-204.
Matava, M.J., 2016. Ethical considerations for analgesic use in sports medicine. Clinics in
sports medicine, 35(2), pp.227-243.
Petersen, A.M., Pavlidis, I. and Semendeferi, I., 2014. A quantitative perspective on ethics in
large team science. Science and engineering ethics, 20(4), pp.923-945.
Strand, R. and Freeman, R.E., 2015. Scandinavian cooperative advantage: The theory and
practice of stakeholder engagement in Scandinavia. Journal of business ethics, 127(1), pp.65-
85.
Srivastava, M., Franklin, A. and Martinette, L., 2013. Building a sustainable competitive
advantage. Journal of technology management & innovation, 8(2), pp.47-60.
Sagas, M. and Wigley, B.J., 2014. Gray area ethical leadership in the NCAA: The ethics of
doing the wrong things right. Journal of Intercollegiate Sport, 7(1), pp.40-57.
Siedel, G. and Haapio, H., 2016. Proactive law for managers: A hidden source of competitive
advantage. CRC Press.
Wagner III, J.A. and Hollenbeck, J.R., 2014. Organizational behavior: Securing competitive
advantage. Routledge.

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Wise, S., 2014. Can a team have too much cohesion? The dark side to network density.
European Management Journal, 32(5), pp.703-711.