Goldman, Deutsche Bank and Barclays are striking back

The Goldman Sachs Tower. New Jersey

The Goldman Sachs Tower. New Jersey (Photo credit: luismontanez)

Banks Looking to Strengthen Values Via Training

 

In the current financial climate, the banker isn’t being seen in such a great light. Things like market volatility, irresponsible management choices, disturbing behavior at some financial institutions and the financial crisis have left a bad taste in the public’s mouth.

The industry has taken that to heart. With scandals and the financial crisis causing some serious damage to their reputation, many institutions are striking back with education. At Deutsche Bank, their entire staff of almost 100,000 employees is being sent to school for training. They are not the only ones. Some 13,000 senior executives at Goldman Sachs and Barclays’ 140,000 employees will all be taking programs. They will be trained and retrained in values, behavior and codes in order to promote a positive corporate culture.

High ranking bankers are optimistic. They see this as an effort to improve practices and illuminate the understanding that they are committed to change. Detractors have referred to the plan as a dog and pony show. Others say the industry could do more.

Goldman Sachs is certainly trying. After its 2007 scandal where the firm was accused of marketing doomed mortgage products, Goldman has improved procedures to avoid and handle conflicts of interest. Supporters agree these efforts are more promising than anything done in the early 2000s when companies’ moral compass was truly in question and nothing was really done to initiate change.

The new programs that bankers have already begun to take begin at the board level and involve global continued engagement and intensive training. Deutsche Bank is relying on mandatory computer modules to promote compliance and control systems. The company also has sessions and training in risk awareness and culture.

Still, is all this enough to discourage irresponsibility? To ensure bankers maintain a morale code companies must send stronger messages. There may always be incentives for bankers to structure deal of net positive value for the bank with unpredictable long term negative effect. In the end, all the measures to monitor good conduct can be in place, but when they fail the repercussions should be immediate. Not merely legal action per say, but impact on bonuses and such, definitely sending a message that the banks take their values seriously.

All three aforementioned banks claim to have restructured promotion and appraisal protocols to assess employee strengths alongside the company’s business values. Goldman has stressed every employee needs to take some responsible for the actions of their colleagues as well. Barclays measures progress by polling staff, customers and external “opinion formers.” Barclays will use the survey results as a balanced scorecard. They don’t expect instant results though. Ultimately, the new procedures could take five to ten years before there’s an overall change to corporate culture.

Gerald Corrigan is the former U.S. Federal Reserve regulator and a veteran Goldman Sachs executive. He played a major role in reviewing the bank’s practices and the resultant changes. This included an internal committee superstructure that bankers consult with potentially problematic deals. Sachs says that understanding a potentially lucrative transaction can be rejected has become easier to accept to ambitious bankers looking to build their rep and bonuses. Still, even Corrigan knows none of this is a fail sale solution.

The industry is determined to never see another Diversified Financial debacle. But with the training and the industry’s overall positive outlook, it is obvious the major banks are doing what they can to avoid the unfortunate pitfalls so many have fallen into over the years.

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