Having been an HR Director in the City I was mildly amused by the headlines today that Bankers who are guilty of misconduct would have to pay back bonuses from the last 10 years under a Labour government.
Under previous rules, bankers’ bonuses were often deferred for a period of three to five years, during which time the bonus could be clawed back if necessary. But I bet the reality was that few were penalized like this unless it got in the headlines. More likely they were bollocked behind a closed door, no record being made of it and their bonus was paid out in the normal way.
Insider dealing is not acceptable
Of course I absolutely think that those who deliberately do something forbidden like rigging the interest rates or insider dealing or trading over ones limit should face severe consequences. As should the person managing them. And a financial penalty is appropriate but more so the fear that they will be dismissed for gross misconduct which would result in the Financial Conduct Authority deeming them not fit and proper to work in a regulated activity and career over.
But the reality is that such events are rare. And the people that work in the City do so because they wish to take informed considered calculated risks and that sort of behavior is positively encouraged. The ones that make big profits for their firms, can pretty much call the shots. Which is just commerciality. Imagine if entrepreneurs were regulated. A crazy thought but there are some synergies.
HR are the ones that truly know what is going on
Thing is that the politicians just don’t understand the City. No-one truly does until you have worked in-house for a number of years. If you were in a senior HR role. You really really will. Often even more so than the CEO.
Lack of consequences means the behavior won’t change
For all the City has an image of being cut throat it is actually much less likely to actively define and manage poor behavior for its high flying front office staff. Mainly because reputation is everything and even acknowledging it almost feels a bit grubby to some firms.
Even when an individual (most likely Back Office) has committed a criminal offence such as fraud, whilst they would be likely to be dismissed their file would not be handed over to the police. I actually think all companies (across the country) should have a legal duty to do that. Otherwise that person will pop up somewhere else. And do it again.
Different People Practices can have a big impact
If you have ever looked at appraisal forms, where they exist and compared it to all the other intelligence in the business – what the senior folk are saying – what the clients are demanding – what the PA’s think the priorities are – together with all the metrics – you will see that they really are apples and pears. Which does beg the question – Why do appraisals at all accepting they are currently a measure of a ‘well managed’ firm.
The thing is that everyone I have ever worked with past or present in the City absolutely wants to do the right thing. Professionalism is hugely valued. Especially as they know that being on top of the people agenda will help them grow and win further business.
But often they doesn’t get much of a fresh steer on the changing possibilities,
What are needed are systems and different practices to facilitate the growth of a culture that clearly has consequences for people that are doing what is expected of them, or not.
Doing that will have much more impact on behavior that the 10 year bonus claw back. It would also be a rather useful approach in the Civil Service but that is another blog post.