Stuart Gulliver’s extraordinary ‘not me guv’ self-defence in the HSBC tax evasion scandal shines a dazzling light on a lot that’s brazenly wrong with modern management. ‘Can I know what every one of 257,000 people is doing? Clearly I can’t,’ Gulliver protested plaintively about the practices of HSBC’s Swiss private bank, before going on to defend holding his annual bonuses in a Swiss private bank account via a Panamanian company on the bizarre grounds that ‘being in Switzerland protects me from the Hong Kong staff. Being in Panama protects me from the Swiss staff.’

Where to begin? No, of course he can’t know what everyone is doing. But that doesn’t mean he wasn’t responsible for what was done in the bank’s name. As Andrew Bailey, a deputy governor of the Bank of England, put it recently, ‘At the heart of this is a very simple principle. You can delegate tasks and work, but you cannot delegate responsibility for the safety and soundness and conduct of your firm.’ As for the argument that bankers are being held to higher standards than bishops, that’s just laughable. A former merchant seaman who came up the hard way to become HR director of a subsidiary of a US multinational reminded me recently that a ship’s captain is responsible for what happens on his ship, full stop. That’s it.

Or try it another way. No, of course he can’t know what everyone is doing. But too big to manage isn’t and can’t be an excuse. Responsibility for safety and conduct requires that either a company does not expand beyond the size that can be managed, or, if scale really is essential, it must have measures in place that allow managers to be confident that its integrity, and their responsibility, remain intact, despite not knowing what everyone is doing.

One precaution is structural. W L Gore, the exemplary private company that invented Gore-Tex, just keeps on growing, but at the same time keeps its units small. When a Gore unit reaches around 200 people in size, a new one is split off, often as part of a cluster of similar-sized companies close enough to foster knowledge synergies, but formally separate in order to encourage ownership and identity.

But while favourable structure can make proper management easier, it’s not in itself sufficient. The number one guarantor of integrity is purpose and values. These are two notoriously slippery characters, but – and a contrario in the case of HSBC’s tortured secrecy – you know them when you see them. Values, as someone wisely once said, are what you are willing to enforce. Values and culture do scale, but like light or computer memory, they need constant current to keep them operative. They are also subject to contamination, which is yet one more reason why acquisitions of companies with different value systems should be handled as carefully as high explosive – as HSBC, if it thinks about such things, is now discovering to its cost.

‘Management’ in the modern sense has several midwives, but one of the most influential was the railway. Predictable and regular dispatch and arrival of cargoes of people, over distance, required rules and basic standardisations (including time, which previously varied from city to city, and safety and other protocols). It also meant that many rules were simply non-negotiable, in some instances trumping status – in matters of safety a signalman or driver had to be able to overrule everyone else, however senior. Shared values of this kind are how Gore works. Unlike the railways, Gore operates largely without rules or bureaucracy, but governance is ensured by militant adherence by associates, who are co-owners, to the company creed of innovation, peer pressure and shared purpose – a much better way of keeping top management accountable, in the view of CEO Terri Kelly, than box-ticking or relying on outside rules.

The benefits of size are habitually exaggerated, and the incentives to achieve it – higher pay for senior managers, greater market power and weakened competition, greater influence over politicians – mostly perverse, benefiting the same senior managers at the expense of society as a whole. Numbers may count in military encounters, but not inevitably; there are no necessary economies of scale in human terms. That said, I don’t buy the ‘too big to manage’ fatalism. Big doesn’t have to be ugly, just as small isn’t automatically beautiful (from experience, ‘my conclusion was, you need two people to make a bureaucracy,’ Henry Mintzberg remarked recently). Just as it has been said that there are no mature markets, only mature management, so here the real issue is not that the company is too big (although it may be) but that management is too small.