Morning Coffee: Leaked chats show a disastrous bonus meeting. The most stylish banker in London
It’s something of a rookie mistake. If you’re having an online event to announce some plans that are going to be controversial, don’t enable the chat function. Someone is bound to lose their temper and use it to make angry comments, and those comments are bound to leak. It’s particularly surprising that this has happened to one of the regulators who have been warning us all about the dangers of online chats for the last two years.
The UK Financial Conduct Authority (FCA) has had fairly serious staff morale problems for quite a while. During the pandemic, as people worked from home rather than in the allegedly “squalid” office conditions, things seemed to improve according to employee surveys. But this seems to have been the calm before the storm.
Things kicked off because of another change to the bonus system. Previously it had been quite easy to get a bonus at the British supervisor, but this year they decided to introduce quite rigorous performance criteria; force-ranking the staff into five performance categories and giving doughnuts to all but the top two. This was unpopular enough, but the live event at the start of this month was meant to introduce an even more radical change – no bonuses at all, but the prospect of promotion to a higher salary if you jumped through the right hoops.
It turns out that regulators are no more likely to be convinced by being told “actually, you could earn more under the new system” than bankers are. The chat function lit up with comments like “In 40 years, I have never worked in such an unhappy place” and “Other than pointless ‘motivation’ sessions, what is being done to address this?”. Normally, it would be inadvisable as a career move to publicly criticize your executives like this, but the FCA staff don’t seem to care – a comment saying “When in the office… you can overhear colleagues arranging external interviews” had 60 “likes” by the time it was leaked.
This might be considered to be good news for the short-staffed investment banking industry, as it seems that London has a big source of people with detailed compliance knowledge and low expectations of working conditions. But the level of cluelessness that seems to have been demonstrated at the top ranks of the FCA ought to be considered more than a bit worrying.
After all, these are the people who are meant to be regulating bonuses for the whole industry. Some bankers in London have been faintly hoping that, post-Brexit, the UK might get rid of the EU’s regulations capping compensation for material risk-takers. But it seems that not only do those in charge have no real idea how to design a performance related pay scheme, they’ve got hardly any understanding of what motivates people to work or how to retain staff. And a situation in which the majority of investment banking regulation is carried out by angry, demoralized junior staff who are trying to angle for a new job doesn’t feel like it’s good for anybody.
Elsewhere, along with Litquidity and WallStreetConfessions, one of the essential financial Instagram accounts over the last couple of years has been that of Helena Morrissey, where the former CEO of Newton Investment Management and founder of the 30% Club has essentially spent the pandemic compiling a look book of her extensive and glamorous wardrobe.
Now she’s published a book – “Style and Substance”, combining her top fashion tips with advice for women in finance. Among other points, she notes that there’s a “beauty premium” which can account for a pay gap as much as 20% for people who are judged to be attractive by their peers. There’s also apparently some more practical and less potentially controversial advice on how to handle social media and some discussion of the impact on women of having to disproportionately deal with childcare while working at home. Going by the reviews, this is the sort of fine line between plain speaking and controversy that not many people could get away with. But then that’s also true of a lot of her outfits.
Now it’s the Two Musketeers at Centerview Partners in Paris. Matthieu Pigasse and Nicholas Constant are still there, but Grégoire Heuzé has departed to “a new entrepreneurial project”. Presumably he isn’t joining Centerview alumnus Mark Moran on the Big Swinging Decks podcast for Litquidity, but you never can tell. (Reuters)
A well-made point arising from the US bulge bracket reporting season – with most of the big Wall Street banks having reported gains in banking fees and equities trading, that market share must have come from somewhere, so we might be looking at quite considerably weaker numbers from the Europeans when they report, particularly those banks that have been through personnel volatility. (Bloomberg)
One not-so-well-known piece of internet culture is that the state of Florida makes all of its sheriffs’ department mugshots available online. This makes their court system a good source for quirky crime stories fuelling the “Florida Man” stereotype. As more hedge funds depart for Wall Street South, we might be favored with more stories like that of Gregory J Blotnick, who took $6.8m of fraudulent Payroll Protection loans, and proceeded to lose half of them in bad trades. (Essex Daily Voice)
Many people have been using the pandemic to take stock of their lives and whether they’re really finding meaning in their job. That can be kind of a dangerous thing to do if you don’t have a well-thought-out safety net. (FT)
Congratulations to the August cohort of CFA® Level I candidates, who managed to drag the pass rate up by four percentage points from the historic low of 22%. The Institute claims that as the challenges of trying to study while working from home during the pandemic pass through, the rate will continue to rise. (Bloomberg)
Directors and Vice-Presidents who have been faced with the ignominy of correcting pitch books themselves can feel some sympathy for the management and administrative staff at Deere, the agricultural equipment manufacturer. Due to a strike in the firm’s plant, salaried staff have been made to go onto the assembly line and have a go at repairing tractors. (WSJ)
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