Firing half of all bankers sounds a bit drastic.
But then over half of them say sticking to ethical standards “inhibits their career progression.”
This revelation from a new study by the Economist Intelligence Unit seems to imply a need for drastic action. You just have to know which half to boot out.
While many bankers have indeed been made redundant, the industry has yet to learn how to change its culture. And without a big culture shift there will be yet more unethical and socially damaging behaviour.
It’s not as if the top leaders don’t know this. Early in his days as the new CEO of Barclays, for example, Antony Jenkins, wrote to all 140,000 employees to sign up to a new code of conduct, or leave.
And over the last three years, two thirds (67%) of firms have stressed the importance of ethical conduct. Two out of five have even created financial carrots to stick to ethical standards:
Despite these efforts, and the past history of malpractice, abuse of client interests, and dishonesty, ethical conduct is still not the norm in financial services.
Since the 2008 global crisis many firms have worked hard to change culture.
But as the EIU report argues, it will probably “take years, if not decades” to achieve, and there have been several big scandals in the industry since then.
HSBC’s compliance culture for example, has been described by a senior US senator as “pervasively polluted”; while Barclays has been called a bank too big to manage with a culture making it hard to control risks.
Goldman Sachs has forced its senior managers to attend ethics courses. But it too is finding it hard to get back to focusing on the long term, rather than short-term gains.
Financial services remain the least trusted industry to do the right thing by the general public.
With half those in it believing being ethical gets in the way of making money and doing well in their career, there is clearly a long way to go to regain trust. Since this rises to close to three quarters (71%) of investment bankers, restoring integrity to the industry is an uphill struggle. Can we really wait decades?
Maybe just firing half of them might be better after all.
…the report says:
- Most financial services firms have attempted to improve ethics adherence: 67 percent of firms say they’ve raised awareness of the importance of ethical conduct over the last three years and 63 percent say they’ve strengthened their formal code of conduct.
- Firms recognize the importance of ethics: 91 percent of respondents said that ethical conduct is just as important as financial success to their organizations.
- Executives have confidence in their companies: 71 percent think that their firm’s reputation outperforms the industry’s.
- Following ethics codes may impede career progression: 53 percent of executives surveyed think that career progression would be difficult without being flexible on ethical standards.
- Knowledge gaps pose risks to firms: 59 percent of respondents say that better knowledge of the industry is the top priority for making their firms resilient to risk.