HSBC has generally been a very conservative bank that strictly follows a management style that is regulated and controlled by insiders, i.e the Board. It may be noted at the outset that all the people who were in contest for the posts of Chairman and CEO, including Mr. Geoghagen were all long time employees of HSBC, London, who had ascended from the bottom ranks and moved into managerial positions. When Mr. Geoghagen stepped down, it has brought to the surface and to the attention of the public, an issue that would generally have been decided within the organization, without any outsiders being involved in it at all. The final decision by the HSBC board to appoint two long time HSBC employees rather than seeking to employ someone from outside the organization has been criticized as being an insular process that could have been improved upon considerably.
The problem with the HSBC decision was that it was all regulated within the organization. In general, following such an insular policy may not benefit the organization in the long run. In today’s global economy, it is vital for an organization to be constantly changing and adapting in order to adapt to the changing global business environment. The nature of leadership which is provided is vital in promoting the growth and continuing progress of the organization. Leadership has traditionally been associated with management, but this may not necessarily represent an accurate view because managers think incrementally while leaders think radically. Moreover, leadership involves a transformation in individuals, according to Spencer, ““transformational leadership is a process that changes and transforms individuals”. (Spencer 1).
It must be noted that transformational leadership is best likely to be achieved when fresh new ideas are brought into the organization by using individuals from