It’s time to change the City’s personality!

September 30, 2008

 

With the turmoil in the financial markets and everybody blaming the financial institutions themselves (e.g. the banks and their senior managers, the investment bankers, the regulators, governments, etc.), it is interesting that nobody has concentrated on the dealers. Who they are, how they got their jobs and whether they are the right people to assess the viability and fundamentals of global businesses. 

Yes, their greed, their huge bonuses and the fact that they make money whichever way the markets go has been questioned, but we need to ask a more fundamental question: Is one of the reasons for the credit crunch because we have based our economic system on valuing the wrong kind of people and therefore the wrong kinds of behaviours?

Greed and big bonuses has played a big role in accelerating the downfall of banks like Lehman Brothers and HBOS through the practice of short-selling, but it takes a particular type of person with a certain personality and morality to make such questionable decisions – exactly the type of person that fills the trading floors of the world’s stock exchanges!

So maybe, alongside the new raft of regulation that will follow this financial crisis, we also need a new philosophy and morality that guides the behaviours of those working in the money markets. This starts in the Boardrooms of the major financial institutions – it includes the way that traders are rewarded and the way that behaviour is reinforced. Traders are like Pavlov’s dogs in this respect – if you reward ruthless trading for short term gain they will keep doing it, find new ways to do it and try to do more of it. On the other hand, if you remove the reward and start offering (maybe even bigger) rewards for ethical and sustainable wealth creation then their behaviour will change – and probably quite quickly. People who are used to big paychecks quickly notice when they stop rolling in!

The other place to look to drive long-term change are recruitment and selection processes. Lloyds TSB were criticised a year ago for lacking ambition and being populated by an overly conservative crowd – now they are being hailed as the culture most likely to succeed in the new economic climate. So it looks like the personality and ability profile of the major financial institutions’ workforces needs to change – one thing’s for sure,  there’s no place for the Wall Street of Tom Cruise and Michael Douglas any more! Maybe risk-taking will be slightly less important over the next five years and traders need to be more rounded businesspeople who can combine analytical skills, sound judgement and risk management to forge better individual and collective outcomes for their employers……..and if that’s the case, they too, would and should be handsomely rewarded.

 

 

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Posted by Cary Cooper

The Credit Crunch – It’s all in the mind

September 19, 2008

We are hearing a great deal about the credit crunch, recession and the perils of organisations in the Financial Services Sector this week, but the thing that seems to create the most concern in people’s mind is the lack of control they have over these volatile events. The seismic movements, both up and down, in the stock market feel to most of us like the result of some abstract, theoretical game that other, loftier beings are playing in a far-off land. The fact is that, for the most part, we just have to accept the consequences of other people’s decisions and that makes us feel uncomfortable. You could say the same about government decisions to which we are all subject – but, whether we like the consequences or not, we did at least elect those making the decisions.

With the current financial crisis we hear about one disaster after another on a daily basis, without ostensibly seeing anybody in government (our representatives) or from the Regulators doing anything about it – except to remind us that it is a global crisis!  In the last few days, the authorities in the US have taken fairly dramatic steps to take control of what seemed to be a system in free fall, and that has, at least temporarily, steadied the markets. 

In the UK, there has been less dramatic action with the partial ban on ‘selling short’ – the practice accused of causing many of the problems of the last few weeks.  This is in direct contrast with the US, where even at the earliest stages of the crisis they significantly reduced interest rates.  That wasn’t enough at the time, but with the recent infusion of capital into the markets, the decision to send out a tough message to the market by refusing to bail out Lehman Brothers and the decision to harness the bad housing debt under US government stewardship, the markets are now much more likely to stabilise.

But why haven’t we in the UK acted more quickly?  Why didn’t the regulators, the Bank of England, and the Chancellor take some action to help make people feel better ‘psychologically’ – like something was actually being done.   And that is the issue here – the lack of confidence that is now affecting the world of business has some of its roots in this failure to act decisively.

When individuals are in personal difficulties, we psychologists tell them to take control – think of the options to deal with your problems and then take action.  It is a shame that governments don’t think about the psychology of their actions or non-actions, relying too much on economists who are more interested in fiscal / monetary policy and related interventions than the real consequences for UK and world citizens. Governments, like individuals, need to consider the psychology of critical events.  We need not just a Monetary Policy Committee, but also a ‘Psychology Policy Committee’ or ‘Economics Psychology Group’ to help think through the likely impact of economic interventions.

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Posted by Cary Cooper

Dealing with the boss from hell

September 11, 2008

Most of us have, at sometime in our careers, worked for the boss from hell – or at the very least, we all know someone who has!  I’m talking about the boss who is constantly finding fault when things go wrong, while rarely offering praise or encouragement. There are several different kinds of bosses out there – from the bully/autocrat to the bureaucrat and those with more participative styles: The fact is, you could end up with any of these and still find yourself telling your family and friends stories about ‘the boss from hell’. When this happens, it inevitably affects your personal levels of well-being.

But not all bosses who fall into these categories of managerial style are likely to be ‘hellish’ or exhibit bad behaviour, so it’s important to be aware of your boss’ underlying motivations if you are to deal with him/her effectively. 

Take ‘the bully’ for example – this is someone who ‘persistently’ demeans, devalues and harasses subordinates in a way that has negative consequences for individuals and the group alike.  In a study I carried out with a colleague at Manchester University a number of years ago, with over 5000 employees across about 80 different organisations, people who had been persistently bullied reported significantly poorer mental ill health, lower job satisfaction, more days off due to ill health and told us that they were less productive.  So the personal costs are substantial to the employee, but there are also implications for the productivity and morale for the organisation. 

There are basically two different types of bullying boss: In the most extreme and rarest form, the bully feels threatened by others and needs to put subordinates down in order to enhance their own self-esteem. It is very difficult to deal with this type of bully, because of the deep-seated drivers of the behaviour – something that cannot be easily resolved or dealt with by employees themselves. This invariably makes it a matter for the bully’s manager and, in reality, leaves employees with two choices – escalate the matter or get out of there and find another job! 

For most bullies, however, behaviour is driven by the fact that they, themselves, are so overloaded that they can’t handle their work. This frustrates them and, often lacking the skills to cope, they end up taking it out on their subordinates. There can be several underlying causes of this kind of behaviour: The bullying boss may not be able to handle the pressure inherent in their own job; they may be unable (or unwilling) to delegate to others; or they may habitually blame others when things go wrong, rather than thinking about their own behaviour.  Another explanation is that the bully is simply in the wrong job and he/she fundamentally needs to re-evaluate the kind of work that suits him/her best.

However, all is not lost in most cases because, unlike the ‘low self-esteem bully’ the ‘overloaded bully’ can change. It’s perfectly possible for such managers to develop better skills in this area with the right help and support from the organisation and the right motivation to do so. Just as importantly, though, employees can improve the way that they ‘manage upwards’ by being more aware during periods of overload. If employees understand a bit more about the triggers, they can become a source of support rather than contributing further to their boss’ stress and bad behaviour. The fact is that you as an employee can be part of the solution to the problem of the bullying boss!!

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Posted by Cary Cooper

On Being An Emotional Being

September 2, 2008

We are all emotional beings, but workplaces vary enormously in the degree to which emotion is actually shown. Think about the offices you’ve worked in or visited – some may have been fun and full of free expression, some may have been characterised by heated exchanges or management tantrums, while others have probably seemed grey, sterile and almost emotionless.
 
The extent to which employees express their true emotions in the workplace plays a big role in determining what it feels like to work there – and therefore affects things like morale, resilience, social support, employer of choice status and ultimately results. The emotionality of your workplace depends on various factors – the culture of the organisation, the nature of its business, the way that it is led / managed and the kind of people that it recruits.

But what is the right temperature? Should the workplace be quiet with an air of diligence or should it be all about enthusiasm, whooping and high fives when something is achieved…..or somewhere in between? Well, I guess this really depends on the context because working in a high street bank is very different to working in a sales call centre which, in turn, is very different to working in a squad of police officers. But we are all emotional beings and, as such, we all need the freedom to express our emotions appropriately during the working day if we are to perform to our potential.

Now, of course, this needs to be managed and we can’t have employees openly weeping at their desks or whooping their way through the day on the hospital ward, but there is a serious point here – that feeling like you can express your emotions in a way suited to the context is important for us all.

So do you feel free to express your emotions to the extent that you want to during a typical working day? Or do you have to hold back and be another person for most of the day which can actually be pretty stressful itself? Managers and leaders play a key role here in developing and maintaining an environment that strikes the balance between the needs of the organisation and those of its employees. You have probably experienced managers who create a climate or atmosphere in which no one feels like they can express themselves freely – which leads to tension and ultimately affects results. The best managers know how to give their team members enough space so that their individuality adds value to the end product of their labours, but also know when to remind staff of what the company needs them to focus on. When companies get this right they tap the unique talents of their workforce and invariably see the benefits on the bottom-line.

It is equally important to manage negative emotions like anger – at all levels of the business. Anger is seldom expressed constructively at work so finding the right way to channel this kind of emotion for positive outcomes is particularly important. Line managers, of course, have a critical role to play in role modelling how to do this, but that’s not to say that it’s easy. I’ll leave you with a quote from someone I wouldn’t like to argue with that illustrates the difficulty of the challenge:

“Anyone can become angry – that is easy. But to be angry with the right person, to the right degree, at the right time, for the right purpose, and in the right way – this is not easy” Aristotle, The Nicomachean Ethics

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Posted by Cary Cooper

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