Banks and Bankers. Talent and remuneration

Ever since the economic crisis began banks and bankers have frequently been the topic of discussion. One thing which irritates me always is people saying "... but we need banks" as the reason why we are tolerating over-payed and under-performing bankers. For some reason we cannot seem to be able to distinguish between banks and bankers. We need the banks as institutions, not as a collection of bankers. One of the the requirement to keep any institution running is to get rid of poor performers before they cause too much damage. Bank boards claim that they need to keep paying exorbitant bonuses to keep attracting good talent to work for them. Surely the strategy is not working because if they had really attracted talent, the same talent would have asked them to stop paying bonuses until the banks financial position started to look respectable. So I don't believe you attract real talent by offering loads of money. By offering loads of money you do attract the most greedy and unethical of the managers.

We make the mistake of thinking that the highest paid are the most talented. The highest paid should be very talented but often the best talent in an organization is not the highest paid. These are the guys, not listening to whom, the highly paid ones led us into this hole. Another thing happening here is that because we do not know enough about banking and finance we like to hire talent but we don't know even that which we need to know to assess the talent we are hiring. So what do we do in this situation? Increasing our own knowledge of banking and finance might not be an option. Whether we know something about a trade or not, we can always assess the end result. Anybody can assess the end result. Why don't we assess our bankers by the results they have produced? Is it because we have made them so big that we dare not assess them! They themselves lack the moral uprightness required to assess themselves and admit that they have performed poorly, forego their bonuses, and put their heart and mind into salvaging the situation. Instead they are too busy protecting their own bonuses. Surely this is not the talent we are competing to hire!

So how do you attract real talent to work for you? You attract them by offering them a strong and positive corporate culture where they can build something great. You can even attract them by being very honest and saying that you are in trouble and need help and that you cannot pay a lot for that help. You can attract them by promising support for their visions and endeavours, and recognition for their achievements. You could reward achievement with bonuses but just ensure that it is not unconnected to performance.