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Business Comment

James Moore: If Paul Flowers passed the Co-op's test, we must put the test in the spotlight


Outlook So now we know how the Co-op came to appoint the hopelessly unsuitable Paul Flowers to chair its banking business: apparently his psychometric test scores made him a slam-dunk choice.

Rodney Baker-Bates, a rival for the post who was subsequently made deputy chairman, told MPs on the Treasury Committee that the Co-operative Group chairman Len Wardle assured him Mr Flowers' psychometric scores were “very good” in the aftermath of the process.

If that's really what won the day for Mr Flowers it could do us all a favour by throwing the spotlight on a recruitment tool whose use can be highly questionable.

This all feels rather like the (in)famous incident just over a decade ago when an apparently top-flight B&Q salesman (when judged by the numbers) was taken off the workbench because his bosses didn't like his answer to a psychometric question. Except Mr Flowers was hired rather than fired.

Now David Davies, Mr Baker-Bates' fellow deputy chairman, told the same MPs that he didn't doubt the integrity of those conducting the interviews. Moreover he said that the Co-op had tried to conduct as “transparent” a process as possible. It included the use of the tests because the Walker review into banking governance recommended that companies use “objective” criteria to evaluate candidates.

What we know for a fact is that Mr Flowers had almost no experience of banking or insurance (a big part of the business he was to chair) by contrast to Mr Davies, a former Prudential executive, and to Mr Baker-Bates, a senior banker of many years standing.

So if he's right, and everything was above board, the tests were a key differentiating factor that pushed Mr Flowers ahead of them and two quality external candidates as well.

In that case, one does rather question quite what the tests the Co-op used were evaluating. The picture that has emerged of Mr Flowers is that of a man who was flailing as the bank grappled with a potentially transformative deal together with a lunatic attempt to integrate its business with the other bits of the Co-op (food, pharmacies and funerals), in addition to the financial crisis and its after-effects.

He was quite out of his depth and, if the widespread reports that have emerged about his private life are true, sought solace in drugs and illicit sex.

Of course, it's possible that Mr Flowers may have won the day whatever the tests said. He was the group's man and the group's “transparent” and above-board process got the result the group wanted for its banking business.

He was also clearly a skilful politician who navigated the Co-operative Group's byzantine structure with aplomb. He may not have been capable of running the board of a bank, but he was rather good at pulling the wool over people's eyes. Why not a test as well? All the same, the hearing ought to throw a harsh spotlight on tests generally, and especially on their use by the banking industry.

After all, the hapless Mr Flowers is only one of many catastrophic senior appointments made by banks. He's actually a long way from being the worst. The industry's recruitment methods are clearly in need of further study.

With the Treasury Committee's Co-op investigation winding down, giving way to a bewildering array of other problems now waiting in the wings, perhaps this is something its members could turn their attention to.