From the outside, the life of a Wall Streeter may appear somewhat soulless. Just take the slogans of Occupy Wall Street, throw in a few Bernie Madoffs, mix with a dose of Bruno Iksil, and you have the recipe down. On the inside, however, there are many people leading happy lives in their chosen workplace.
Things can always be improved, however. In a prior piece, we looked at the way to find outlets for the altruistic drive. Here we explore the theories of Martin Seligman and the three types of happiness (For a full reading of these theories see Flourish by M. Seligman published in 2011).
Banks, like many of us, according to Seligman, have too long assumed that happiness will come from the first source of happiness: satisfying their employees' material desires. Fulfilling employees' drives for leading engaged and interconnected lives will yield better results over the longer-term, however.
The bank human resources model has of course been traditionally focused on rewarding traders and lines of businesses for profitable deal making and trading. There are good reasons for tinkering with this model from a risk management perspective related to the encouragement of excessive risk taking that it leads to. However, there are other reasons for changing the emphasis. First, not that those such desires can ever really be satisfied, but the gates have been closing on large bonuses anyway due to combination of shareholder, regulatory pressure, and declining profits. If it’s just about money, then they'll most likely leave.
Second, how are those who are not trading or making deals made to feel good about themselves or are they just chopped liver? Third, based on Seligman’s and others work, there are other ways, in the long-term more effective ways, to motivate your workforce.
So why do people work and engage in these jobs? For many, it is because they are actively engaged in the intellectual effort required to execute their day to day work. The happiest and most fulfilled employees, according to Seligman, will be identifiable by their level of expertise, years of experience and ability to focus on work that engages them intellectually. It is also these employees who are the most valuable because their ease with the work is such that they can focus the bulk of their brain power on those problems that present genuine quandaries and judgment calls, the problems that require real thought.
Confronted with complex risk issues, a less practiced and fluent risk manager will spend too much of his brain coming to terms with understanding the issue and not enough on addressing it.
Understanding this, one would hope that firms would place a premium on experience and expertise in making its decisions about the types of employees to attract and retain. However, it is not always clear that, with the massive waves of lay-offs, firms have been placing a premium on such attributes. With the vanquishing of skilled, experienced and engaged employees, the total residual risk probably goes up. Does this help to explain the increase in cost of operational risk incidents in the past few years? Maybe — though, that would be very had to prove, of course.
It is also true that with the impact of regulation and their requirements, firms have been unable to keep their employees engaged in the work they want to do as opposed to bureaucratic tasks they have to do. When considering the reasons for employees leaving banks to join hedge funds, one can't ignore the draw of lowered bureaucratic demands. But banks can still do as much as they can to ensure job design maximizes employee engagement. A bored employee is a risky employee either because they will take unnecessary risks or, more likely, because they will not be on the lookout for risk.
[Motivating Traders to Think Beyond Themselves]
If employees don't get fulfillment from their work content, there is still a third source of happiness to tap- that of being part of and contributing to a wider community. Again, building a sense of community is not something that investment banks have done too much of over the years but there are signs that this is changing. Morgan Stanley, for instance, with its 75th anniversary campaign "Morgan Stanley and You," made a concerted effort to strengthen the sense of the community and its history in employees. Other things such as community involvement month, pro bono business planning, photo competitions, suggest similar efforts. It is not just banks that struggle with this.
In a different industry, Yahoo's CEO's call to employees to spend more time in the office is also a tacit recognition of the need people have to meet, greet and work face-to-face. Banks have a version of this problem as they have increasingly created physical separation between traders and functions such as financial control and operations. As one hears the complaints of COOs regarding the downgrade in service they receive following such a change, one wonders if the inherent need for inter-connectedness can so easily be compensated for over email and the telephone and if this impacts work quality and relationships.
There are as many Wall Street employees tired and battered by recent events as there are who still go to work each day fired up and ready to meet the new challenges. There are also many who are not, and firms who look to the insights of psychology firms can make positive changes in their employees' motivation at work. To do this, they must de-emphasize the bonus and money culture; design work and jobs to engage the intellect of employees; and place employees within a context of a broad community of like-minded people.
Lastly, in thinking through layoffs, leaders of groups need to consider levels of engagement, and inter-connectedness of employees as factors in determining their decisions. Leaving gaps in knowledge and community is not the best approach in the long-term. This is all of course without forgetting to remind people of the positive impact their work has on that community and the broader society.Andrew Waxman writes on operational risk in capital markets and financial services. Andrew is a consultant in IBM's US financial risk services and compliance group. The views expressed her are those of his own. As an operational risk manager, Andrew has worked at some of the ... View Full Bio