[F]inancial services HR departments are partly if not largely to blame for the banks’ failures and therefore our current economic miseries. And here’s a great opportunity for them to put the situation right.
The idea that City HR functions could have curbed the massive bankers’ bonuses, thereby reining in the risk taking culture and avoiding the financial crisis, is completely fanciful. People within the investment banks who warned that the industry’s practices were unstable and unsustainable were ignored for the same reasons as those politicians who advocated bank regulation at the height of the boom. Lots of people were making lots of money and anyone who suggested caution was looked upon with the same contempt as the swotty teetotaller at a student party.
Any attempt at regulation was met with the riposte that the banks and their massive taxable profits would sod off to Singapore. Likewise, any attempt to curb investment bankers’ pay, or even to base it on longer term factors, was shot down with the argument that to do so would only make the key talent move to other banks.
Even those with financial qualifications who were close to the senior executives were given short shrift for questioning the banks’ methods and suggesting a more cautious approach. For an HR executive in an investment bank to have argued against excessive bonuses would have had about as much effect as holding up a newspaper against a burst from an AK47. Until two years ago, banks were making so much money that no-one, be they executives, regulators or politicians, wanted to spoil the party. Anyone who suggested otherwise was swimming against a tide that was too strong.
Of course, the other potential flaw in Jon’s argument is that, assuming HR directors could have stopped the banking bonus merry-go-round, this would have been enough to avert the financial crisis. Were bankers bonuses that much of a factor in creating the crisis or were they just a relatively minor ingrediant in a soup of malpractice?
Alas, I’m timed out so that one will have to wait until another day.