1. What do you think caused the collapse of Barings? Several elements are at the root of the collapse of Barings. These elements cover four fundamental structures/concepts of organizational behavior: “congruence model,” “alpha male coaching,” “motivation,” and “company culture.” Congruence ModelThe Barings case is a perfect example of the consequences that inconsistency or lack of alignment between strategy and the four building blocks of the organization (critical tasks and work flows, formal organizational arrangements, people and culture) can have on performance of a company. Formal organization and culture. Barings apparently has a risk-averse culture and is perceived as a top-tier financial institution. Despite this culture, Leeson earns incredibly high bonuses even though he is clearly not risk averse. He is not disciplined after a drunken incident. He is appointed head of trading, but at the same time is retained in charge of futures and options management. Leeson is not questioned too much about what he was doing even though his demands for money from the London office are large. The senior manager has established control systems to manage risks when it is too late (“Why interfere with such a profitable trader?”). Critical people and tasks. Peter Norris, although skilled and intelligent, does not have enough experience of the business he has to manage. Senior managers don't seem to understand future markets well. While Leeson is not trade-qualified, he will soon have control of a team. Leeson doesn't even use a simple model to evaluate market volatility. Tasks and formal organization. Managing reporting lines is complex. Leeson is both the head of trading and the head of settlement of futures and options. Organizations usually get what they measure and reward. For this reason the organization's formal reward, measurement and control system must be consistent with its critical tasks. At Barings it is said that avoiding risk is a duty, yet people like Leeson are richly rewarded not only with money but also with public praise. People and culture. Nick Leeson does not fit into the Barings culture despite having technical and commercial skills. Takes more risk than authorized. He's not interested in being part of the company; he only cares about money and being a “star”. Furthermore, he constantly behaves unethically. Training the male Alpha Bearings absolutely fails to "train" Leeson. Leeson displays some of the characteristics of the alpha male. He is impatient and wants his promotion at any cost.