Morning Coffee: The new worst offices in finance. The bank that’s getting rid of Managing Directors
The Financial Conduct Authority is, among other duties, meant to ensure that London’s investment bankers meet the highest standards of behaviour and conduct. One of its “continuing priorities” is to improve culture and governance. This has been a bit of an embarrassment for the regulatory community over the last couple of years, as the FCA has some problems of its own. As well as a high rate of long term sickness and stress related illness, it had 14 cases of workplace bullying to investigate last year. But it turns out there is more.
Eighteen months ago, the FCA moved into new offices. What are they like now? Well, according to a memo sent round by the COO, the regulators have been (seemingly in roughly ascending order of seriousness) “leaving cutlery and crockery in the kitchen areas, overflowing bins, stealing plants and charging cables from desks, catering and security teams being subject to verbal abuse, colleagues defecating on the floor in toilet cubicles on a particular floor, urinating on the floor in the men’s toilets and leaving alcohol bottles in sanitary bins”
Apologies to anyone who is reading this over breakfast. In truth, this sort of behaviour is by no means unknown in either the civil service or in financial services. When people are under a bit of stress, they stop looking after themselves and their environment so well; that’s how you get dirty crockery and overflowing bins. More stress and they start snapping and lashing out, particularly at people like support and catering staff who can’t fight back. And then there is a point at which in a big enough office (the FCA premises in Stratford has 4,000 employees), you have a decent chance that someone will act out in the style of a disgruntled fixed income researcher in 2008.
It is, of course, an unacceptable state of affairs. The sending round of scolding all-hands emails isn’t likely to make much of a difference; when people behave like this, there are usually organisational problems to be overcome. Hopefully the FCA will now do this. The organization has plenty going for it, including by all accounts far better work life balance than banks themselves, flexible working, a strong commitment to training and development and a good gym. It deserves better than disgusting washrooms.
Speaking of morale, it’s always been a belief in the financial industry that giving someone a fancy title costs nothing. That’s why there are so many “Global heads” of things, and why the industry proliferates “Directors” and even “Managing Directors” who are not on the board of any company. At DWS, however, the German asset manager part-owned by Deutsche Bank is making a break with the past and seemingly scrapping all titles below the C-Suite.
The aim is “to build a collaborative work environment with flat hierarchies based on functional roles”, apparently. This sounds like it might be difficult to fully achieve, given that an asset management firm is one of the areas where the functional roles are very close to constituting a hierarchy; if someone is making the decisions about which shares to buy and sell, they’re generally senior to somebody in the same team who isn’t. Perhaps the idea is that if you’re managing a few billion euro or selling the most popular fund range in Germany, you don’t also need a fancy title to make you feel good about things. But since Deutsche has explicitly said that it needs to find “some form of consolidation” to build DWS into a top ten global player, does it really make sense to be developing a unique structure that is bound to create problems if it has to be integrated with anywhere else?
According to insiders, the race to succeed Sergio Ermotti now has three contenders – Iqbal Khan, Tom Naratil and Sabine Keller-Busse. They also expect that over the next 18 months, some senior managers of about Mr Ermotti’s age are likely to be cleared out to open up slots for the next generation after that. (Finews)
It’s unlikely that anyone’s hopes were particularly high, but a report from Johnson Associates suggests another down year for bonuses, with equity sales & trading worst affected at negative 10-15%, and no more than 5% growth year on year even for successful investment banking advisory bankers. (Bloomberg)
Bridgewater has a specific team with the task of sourcing and retaining diverse talent, as well as a “diversity council” made up of leaders from across the firm. According to co-CEO Ellen Murray “When I first started, approximately 0.5 percent of senior positions in the finance industry were held by women; today it is between 15 and 18 percent, I can cry or do the happy dance depending on how you look at it.” (Institutional Investor)
Meanwhile, a report from Harvard Business School says that “Employers favor men not because they are prejudiced against women, but because they have the perception that men perform better on average”, although it does not seem to explain what the difference is. (Quartz)
The unusual activist battle continues in Italy – Leonardo del Vecchio has taken a stake in Mediobanca, but wants it to do more investment banking, not less (Reuters)
WeWork is in discussions with John Legere, the current CEO of T-Mobile US to fill the role of Adam Neumann, to whom he bears a surprising physical resemblance. (WSJ)
Unwelcome news for anyone who works in financial markets – the more scientists study sleep, the more important they think it is. (WIRED)
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