In this columnlast month I shared my mystification at the breakdown in processes at so many banks that have led to them losing unfair dismissal claims. I have been meaning to follow up on this because a friend got in touch and made some interesting points – this is my chance to do so.
The basic problem I had was that banks were sometimes dismissing staff for conduct or performance issues that, when the cases come to tribunal, are revealed to have often been overlooked in the appraisal process. How can a bank dismiss a member of staff for participating in a chat room for example, just months after that staffer’s appraisal either made no mention of it, or worse still, actually established more market intelligence as one of their goals?
In the case I was discussing last month, the bank sacked the trader allegedly for his poor timekeeping, and there is no doubt reading the transcript of the judge’s summary that the person concerned was late on a regular basis. The appraisal just months before, however, made no mention of it.
Generally speaking, either there is a problem or there isn’t and clearly too many in management in these cases were either content to sweep it under the carpet or sought to use it when the time suited them, which is just plain wrong.
So to my friend’s observations. They noted that the link between the trading business and the HR function is often weak – the cost associated with HR is too remote for a dealing desk manager to worry about.
So when it comes to the time when the manager wants to offload someone they have the choice of ‘managing them out’ (defined by my friend as taking responsibility and exiting the person over a long period of time) or, taking the short cut and contriving an issue. To this I would add, “dredge up some existing problem or characteristic you don’t like, use that, and hand it off to HR to do the rest”.
I have some sympathy for the argument that HR is paid good money to do this work, but I also believe that a trading desk manager needs to ‘own’ the business and as such that means managing it efficiently and openly. If you don’t like something, say something.
To return to my friend’s point, too often there is a disconnect between business and HR and no one actually owns the crucial process of defining exactly where and how the staff member has fallen short. They then go on to make an interesting observation, “Of course, this wouldn’t happen if there was a P/L hit or actual cost to the business.”
Part of me recoils from the idea that we introduce yet another non-trading process into the business, but clearly there has been a problem – just look at the number of cases going through the tribunals. It should also be expected that one day the pay out by the bank will not be limited to the £80,000 or so and one institution will end up paying a huge amount of money, so this is probably the time to put some sort of framework in place.
Ultimately, however, the best way to get people doing things the right way is to offer the threat of financial sanction, so my friend is right, and to me this is all about the appraisals, which are not taken seriously enough. I accept that many believe there are too many of them, and I have sympathy for that view, especially when it comes to the wonderful 360 degree appraisal. This is a monumental waste of time I am afraid. All it does is provide more unnecessary work for everyone in the business when it should be the role of the manager. A good manager has their ear to ground when it comes to their team, they know if someone is unpopular, they don’t need people to officially comment on it, sometimes every quarter.
So one step could be simplifying the appraisal process once again – make it so the manager does it alone – and if that manager then attempts to get rid of a staff member for a issue that wasn’t mentioned in the latest appraisal, then they either have to show that it is a recent development (which may involve the written warning process) or they are told they can’t get rid of them due to the legal risk and that will be $100k off your bonus pool thanks very much. The number is variable, but all traders are very sensitive to the balance in their P&L account – it will get noticed!
Dismissal is a painful experience to undergo, no matter what the reasons or where the fault lies. There are instances where it is obvious that wrong has been done and they can be dealt with by HR. It is the grey areas that become a problem and that’s where we probably need some sort of formal process.
I happen to think that the rash of unfair dismissals was the result of banks panicking after their fines over the revelations of chat room activity and looking to clear the decks as quickly as possible – something that does not show them in a good light as employers or service providers.
It is equally clear that a culture has been established in the fabric of many institutions where not only the managers get lazy about how they handle their staff (especially around dismissals) but staff are heartened by the number of victories by claimants and choose to go that route themselves. It becomes a self-perpetuating problem in many ways.
I have spoken to a good number of people to go through the employment tribunal process and most have one thing in common – for them it is not about the money, it is about their good name. They want to continue working in the industry and too often they are hamstrung by the taint of an unfair dismissal. By simplifying what should be a fairly routine part of the desk manager’s work and establishing the need for honesty (and proportionality) in the appraisals, there may be a chance that the next generation of people in FX do not suffer the trauma that too many of the current generation have.