The Bank of England’s recent announcement to introduce further restrictions and regulations over bankers bonuses, to me, is completely missing the point, and raises concerns over this industry not learning the lessons from the last 7 years. A 7 year claw back to protect against misconduct or reckless risk taking, is surely shutting the stable door after the horse, jockey and racecourse, has bolted.
Antony Jenkins, chief executive of Barclays, is supportive of the Bank of England’s plans.
“I would say that in principle, I support the idea that where there is wrongdoing, there should be appropriate punishment”
This is not a new topic so why have banks, and in general, other businesses, not got to the root cause of the problem that too much reward is divisive. Punishing individuals after the bad behaviour has panned out, is not addressing the issue.
Parallels can be made into more traditional incentive and reward programmes. Yes, reward can change peoples behaviour. It can focus them on the task in hand so they hit that goal or KPI, but at what cost? Single minded determination to do anything to achieve the reward means best practice, and even ethical practice, goes out of the window. Has internal and external customer service suffered? Have bottlenecks and issues been created elsewhere? In worst cases (like banking) businesses fail.
A further ramification is the long term motivation of the employee. High reward sets expectations, leading to companies budgets continuously increasing or having to find more creative ways to position the incentive. This becomes a self perpetuating runaway train (which is difficult to get off), in order to keep employees on track and focused. Failure to keep the momentum ends in employee lethargy, disinterest, and in the specific case of the cut throat investment banking industry, fails to keep employees. The runaway train keeps on rolling.
So what is my advice?
Antony in another comment hits the nail on the head
“I believe that banks have to regulate themselves and that’s why culture is so important, so that banks do the right business in the right way,”
Culture and company values are vital. Organisations need to develop, harness and propagate a healthy culture. Being a ‘company values’ based business helps align your objectives with the character traits, and personalities, you want people to express while they go about their job. If more importance is placed on this, then surely it will create more sustainable strategy, will naturally increase employee engagement, and therefore have a longer term effect on motivation.
The perfect way to disseminate your company values is via a well thought out recognition programme. Praising employees for a job well done while showing the company values or behaviours is a no brainer. People love to be recognised, and by aligning it to attitudes and behaviours, it ensures that your culture has the right emphasis.
In short, praise more, recognise more, instil values, encourage positive expression and reward less. The banking industry should be focussing on front end behaviour and culture, not punishing the worst of the worst at the back end.