For a business that makes its living from intermediating disruption, Wall Street is remarkably inept at dealing with its own ebbing fortunes.
Just look at the recent announcements from two big banks.
Wall Street firms have shed thousands of jobs. Their returns on equity are in the single digits. Their latest earnings reports showed a drop in revenue in what is usually one of the best periods of the year.
And the challenges are mounting. New and nimble competitors are harnessing technology to encroach on the banks’ turf in everything from trading and payment processing to research, advice and investing. State Street Corporation estimates that automation could replace twenty percent of its workforce within four years. Regulatory costs, already a growing burden, seem certain to rise further.
Facing all this, how are the banks responding? Consider two recent examples:
J.P. Morgan announced a new dress-code policy, laying out guidelines for wearing casual attire in the workplace. The policy, dubbed “trading pinstripes for pullover sweaters” by the Wall Street Journal, is an effort to compete against Facebook, Google and other firms where hoodies and t-shirts prevail.
But is loosening up the dress code enough to win the war for talent today? In a word, no.
In another head-turning move, Morgan Stanley said it would no longer use numerical rankings when evaluating its people. Instead it will use adjectives. Yes, adjectives.
Staff appraisals always have been subjective and stressful and now they’re certain to be more so. Scoring people using colored beads or emojis seems only a short step away.
Cynical observers will say dropping numerical rankings reduces litigation risk for Morgan Stanley since it will no longer need to explain why it fired someone who scored top marks at their last review.
Perhaps personnel reviews will start to include customer feedback, something commonly used by other industries when assessing their people but seldom found on Wall Street.
Ultimately, at a time when Wall Street’s business model is breaking down, new dress codes and staff reviews based on word-association aren’t the right response. (Nor is aggressive lobbying in Washington, but that’s a topic for another time.)
These bank announcements are a reminder that policies are easy to change. Just write a memo and send the CEO out to speak to the troops. It’s tougher to change the culture or revamp work processes that have hardened in place over the years. And it’s even more difficult to create the revenue growth that offers people opportunities for interesting and remunerative work, whether they are a Millennial, a Baby Boomer or somewhere in between.
Smaller bonuses, uncertain career prospects and the crush of new regulations are discouraging enough for people in banking today. But what really saps their spirits is that Wall Street CEOs and their boards show few signs they’ve figured out how to revitalize their business.