Jon Ingham is a man for whom I have a lot of respect and his blog is one of my regular reads. This comment on the Walker Review is complete bollocks though:
[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.
Flip Chart Fairy Tales 
At last, someone has accused me of writing bollocks!
I’ve been blogging for two years, but this is the moment I feel that I’ve arrived. Thanks Rick!
I still don’t agree with you though – it was down to HR to ensure these organisations’ cultures DID enable this sort of challenge and debate.
Jon is right Rick – HR underperformed. Simple as that. They could have and should have taken on the bonus policies and metrics. That is, at least in part, the job.
I agree with you that this manifestly did not happen but attribute this less to the internal dynamics within these banks that you mention, and more to the calibre of the vast majority of HR ‘professionals’.
I have blogged about this in detail previously – http://www.jeffersoniaunlimited.com/blog.html
Good quality HR peeople (a scandalously small pool, admittedly) recognise that one of their core responsibilities is to set appropriate, long-term reward and remuneration policies, even if that causes some short-term disappointment in the business. Good quality CEOs understand that. But there’s even fewer of them.
Furthermore, whilst banking bonuses have perhaps unjustifiably become the bogeymen of this recession (let’s face it: we were due one anyway) I disagree fundamentally that the bonus policies and structures have little bearing on what people actually do. One old business adage holds true whatever the latest bit of bullshit theory emanates out if the MBA courses: what you measure is what you get.
The problem now is that, in the absence of a muscular, ethical class of serious HR people, we have effectively handed de facto control of this measurement to an even less able cadre of individuals: politicians.
I agree with Rick on the basis that in some organizations, if HR is adamant about doing the right thing when it goes against upper mangement, it equates to writing your own “pink slip”. To many, HR is expendable “window dressing”.