The dark side of banking
Imagine a world where financial institutions are celebrated for fairness, collegiality and professionalism amongst employees. My guess is that even a HR leader can’t! But it’s difficult to cast the banking sector as anything other than the villain when this stereotype has been affirmed by popular culture over the past 30 years. Some of the most successful films about the financial industry depict traders performing shady and often illegal deals that are motivated by a ‘greed is good’ philosophy to perpetuate individual wealth and bigger bonuses.
Stereotypes can be misleading
The modern-day banker is the epitome of a twenty-first century anti-hero; a rule-breaker of organisational polices and a headache for any business leader who strives for teamwork and collaboration, yet my experiences suggest this character valuation is not always accurate. As a research project I studied the operations of a New York bank, and what I observed on the trading floor was not sheer individualism, but even in a world which society has accepted to be shaped by selfishness and one’s unwavering belief of their own exceptionalism, it is trust, communication and relationships that are key to the success of the organisation. Adjusting to this type of thinking provides an opportunity for you as a HR leader to open up a whole new way of working within the financial sector.
The rise of HR policies
The success of the trading floor I studied can be credited to the manager’s ability to recognise the value of HR policies and his approach to overhauling organisational culture This manager was acutely aware that there are situations in the workplace that require the collaboration of people, which extends beyond the confines of the same organisational unit.. This cannot be achieved through attractive remuneration packages;policies that foster collaboration are very different from ones addressing materialistic interests and instead compliment informal and formal organisational structures to connect different sets of knowledge.
It was under this manager’s leadership that awarding pay by a compensation committee was scrapped in favour of a policy that paid traders a fixed percentage of the profits of their desk. It was also his decision to cut the trading room to 150 employees. Not only did these new policies quash any uprisings about the injustices of the pay packet, but the reduction in headcount provided a closely-knit environment which enabled traders to build a social network based on trust. After six months of getting to know the person at the adjacent desk, the manager would tear-up the seating plan and move every trader to a new desk to be assigned a different neighbour. Then six months later he would do it again. What started off as a simple question of ‘you want to grab a coffee?’ over time evolved into other interactions, with the expectation that the conversation would eventually turn to trade.
Tides of change
At the time, the manager’s approach to human resources was perceived to be atypical, despite activities targeted at complimenting organisational structures and hierarchy to be commonplace in large firms. Part of the reason why HR approaches have not been adopted by banks can be attributed to size: a large trading room generates large profits, but building social interaction across 200 plus desks becomes problematic. There is also the temptation among trading floor managers to ignore the mistakes of an individual trader until they inherit so much loss they are forced to cut the position. Whereas these approaches are not good people management, they have for so long been unchallenged by professionals in the financial sector. But since the 2008 financial crash, attitudes in the financial industry are starting to change, which signals detachment from risk management models that allowed banks to develop a hands-off attitude towards traders and speaks to a new system that provides a platform to build a more regulated, equal and collaborative working environment, achieved through the implementation of sound HR polices..
A new vision for HR leaders
HR leaders therefore need to be primed to question the status-quo of management strategies that have dominated the financial sector for the past 30 years and be prepared to propose a new model of organisational culture that promotes justice, identity, trust and pride among employees. Large banks need to eradicate the arrogance and prejudices associated with bankers’ bonuses, both within the trading room and across the organisation as a whole, by cultivating a culture in which internal social networks and communication flows are utilised to influence the behaviour of employees. These shifts in values cannot be achieved through remuneration or rewards, but rely on engagement and self-identification with the organisation and its practices. Once one accepts that the motivations of workers on Wall Street are not purely materialistic, the HR leader will have a significant role to play in reforming the financial sector, watch this space.