Money laundering laws - waste of money and attack on privacy

Anti Money Laundering laws - nearly as useless as the attack on alcohol during the 1920s in the USA. And instigated from the same legislative mob!
Money laundering laws also harm the innocent - Washington Times

How can I make performance reviews less painful for all concerned?

There was a time when people knew each other and box-ticking exercises were not necessary, O tempora o mores! Managing relationships with colleagues and staff should be a year-round task but all-too-often problems are allowed to fester - and the ritual of an annual review will not be enough to defuse the situation, if anything it just creates more tension.
How can I make performance reviews less painful for all concerned?

Employee Evaluation - when Common Sense and Human Touch go AWOL

Numerical rankings were already an idea from hell. Trying to achieve precision - am I number 6 or number 7 on the Goldman Sachs list? - is impossible. Anyone convinced of the opposite please contact me - but provide clear examples, not MBA speak that some cloned professor has published in some obscure magazine no one ever reads.
Is the new scheme - a web-based tool to give and receive performance feedback at any time - going to be a change for the better?
I have (serious) doubts. In an organisation where the motto at the top management level is 'Greed is Good' and the only personnel management tool seems to be the doctrine to weed out the 'weakest' 5 percent of the workforce in any given year the human touch and common sense approach is long gone from the organisation.
Does one have to wonder that performance and return for shareholders have been mediocre since the old partnership was killed off (by those keen to cash out at the expense of those following in their footsteps)?

Credit Suisse CEO without Banking Experience

Can it make any sense to appoint someone to lead a bank when the person has no specific experience in the industry? Recent moves by regulators tended to make it mandatory that senior staff has relevant qualification and experience, so what banking experience does Credit Suisse CEO Thiam have? Sad to see a once-stellar franchise being managed so abysmally! Being well-connected in the higher echelons of politics in Senegal or Ivory Coast should not be a free pass to top management.

Succession planning at Santander - an example to follow

Yesterday's announcement of the death of Emilio Botin, the man behind the immense growth of Banco Santander over the past decades, highlights the need to prepare for the smooth handover of leadership. While Santander may appear to be a special case - the succession is clarified on the next day - every business should be able to replace key personnel without delay. This applies not only to CEO roles but all managerial positions in the organisation. Internal promotions should be the rule as they boost morale and team spirit and usually are cheaper and quicker to realise.

Barclays: how not to manage a business

Announcing that the number of jobs in the investment banking unit will be cut by 25 per cent over the next three years is as bad a decision as can be. Firstly it sends a clear signal to anyone who can get a job elsewhere to do so as soon as feasible. The remaining staff will be spending most of their time second-guessing where and when the next cuts will be made. Even worse, the instinct for survival will make it essential that each and every one tries to protect his employment by trying to put the knife into his or her colleagues' back. Above all it is not even clear why a down-sized and provincial version of Barclays - not dissimilar to a building society or - shock horror! - the Co-op bank, will be more successful in the long run. Is there something JP Morgan or Bankamerica know that Jenkins and the regulatory/political cabal here in the UK don't know? But never mind, Shipping, Car Manufacturing, Textiles, Steel Making etc were successfully destroyed by the Powers-that-be, so it matters little if British Banking is blow-torched as well. Makes it so much easier for other financial centres - in the EU and further away - to eat the City's lunch.

Succession Planning often neglected

A new study released by Stanford Business School highlights the cavalier attitude that many organisations take when planning for the eventual replacement of their executives. While we are happy to assist any client in his search for alternatives we think that the first stop in any well-managed company should be their own pool of seasoned and well-trained managers.

Monitoring Employee behaviour - a tricky problem

Despite the rapidly rising number of compliance officers and the tide of regulatory legislation the age-old problem of supervising employee behaviour keeps posing serious challenges to top management of banks and fund management firms. Surely the solution cannot be to put one compliance officer behind each and every trader or fund manager. And who would oversee these compliance officers? and so on....
Only management and an enterprise culture that are dedicated to maintain high standards of conduct can assure that incidents such as this one at are prevented. All-too often management is too far removed from the front line business, occupied with internal politics or simply not stable enough due to constant re-organisation (aided by clueless and inexperienced 'Consultants').

Superbanks - too large to fail, and too large to manage?

Bank managements often argue that losses in far-away subsidiaries could not easily have been foreseen by top management. Such may be the case when Citigroup tries to explain loan losses that may have occurred in its business in Mexico. But is this really a valid excuse? A loss of $ 400 million is quite substantial, even when measured against the bank's total assets of approximately $1.9 trillion. The loss/exposure admittedly is only 0.2 percent of total assets but seen in a different way this would mean that the bank has about 4500 loans (if they would all be the same size). Any organisation should be able to set up a management structure that can cope with this number of transactions. The management pyramid would only about three layers if each senior loan officer is in charge of about 50 loans. Impossible in this age of instant communication? Not in my opinion, one would not even need (expensive) MBA's or PhD's, just honest hardworking employees with a good pinch of common sense.

UBS: Will Junk Pay motivate the troops?

I doubt it. When regulators don't regulate properly and management runs the ship aground it is not obvious why 6,500 staff should pay the penalty. Top management may be able to be paid in monopoly money as it has (hopefully) made it's pile and could happily retire even if the bonds that are being paid turn out to be worthless. But any aspiring young - or even middle-ranking - banker needs hard cash to pay to the ever-rising cost of housing, education etc. And is there ever going to be a penalty for regulators or politicians that don't do their job properly. The ECB has just announced that it will hire another 2,000 (useless) bank 'supervisors' in the near future....wish we had another Kafka to weave a novel with this subject matter.

Deutsche Bank - Vorwaerts mit Achleitner?

The write-offs published in DB's results show that despite all the market-leading positions the Bank may have in certain business segments the size of the company makes it inevitable that some major air pockets are hit in various parts of the far-flung empire. This is a problem that all banking behemoths face. Add the incentives to make more profits every quarter (and a corresponding bonus) and you have nearly guaranteed that some transactions will lead to losses. So it is problematic when an institution such as Deutsche Bank finds it necessary to put Paul Achleitner into the role of chairman of the supervisory board after he has managed to display less than excellent flair for managing the finances and investments of Allianz AG. Do I need to mention Dresdner Bank to anyone?

Nomura - profits still weak

The 9-month results for Nomura Holdings offer a slightly more positive picture but given the generally favourable market conditions experienced in the 3 quarters to the end of 2012 one would have to say 'could do better'. The after-tax profit margin is just a tiny fraction of total revenues - and the gap between pre- and after-tax net points to somewhat ineffective tax management.

Derivatives: Instruments of Mass Destruction?

Another day, another disclosure of a massive derivative loss. Given the astronomical amount of outstanding (OTC) derivative contracts (and even astronomers that are used to think in big numbers might have trouble relating to the relevant numbers) it is no wonder that these 'accidents' pop up on a regular basis. Low or non-existent capital requirements make these off-balance sheet exposures attractive for treasurers and CFO's. They require little or no cash up-front so give the somewhat false impression that entry to the great casino is free and profits will flow like manna from heaven. Sometimes they are sold as hedging instruments - and they might well be fit for the purpose but the iron discipline needed to stick to that narrow use is not given to all market participants. And many users are easy prey to the salespeople that are highly incentivised to peddle ever-more exotic schemes that resemble a 'heads I win, tails you lose' game. And given the fact that derivatives are ultimately a zero-sum game it is only natural that those offering these products are above all interested in making sure that they are not on the losing side of any derivative deal. Derivatives may well have a place in the arsenal of any financial market participant - but have to be supervised by experienced experts who can give an objective assessment of the risks and rewards involved.

Goldman: plays a simple game better than most

Quarterly figures just released by Goldman Sachs this morning demonstrate (again) that the firm plays - what should be a simple game - better than most competitors. No need for expensive consultants to figure that out, just common sense and experience.

JP Morgan: Review of the 'Whale' Trades

Nothing but a very thorough review of the losses made by the 'Whale' was to be expected but one still has to wonder how much good this report will do. Its recommendations certainly will keep a lot of regulators and JP Morgan staffers very busy in the future. But looking at the quite unstructured text in the 18 pages it contains hints at the main problem any financial institution faces: complexity and human frailty combined with a good mix of fear, risk and greed. Setting up ever more complex procedures and review bodies will only go so far and never be a perfect substitute for common sense and competent, honest and modest people.

HP/Autonomy: Poor Due Diligence, Poor Implementation

This tale of woe again demonstrates that relying on number crunching accountants and fee-hungry deal brokers is the wrong approach to acquisitions. And when a desperate CEO (see story) is at the controls of a business this turns into a toxic cocktail. Looking at targets for acquisitions all-too-often omits the human aspect of the assets to be acquired and - even more deadly - afterwards neglects the fact that a business is the sum of its human capital and not just a number on a balance sheet. Dealing with real people all the time in our recruitment business allows us to bring this crucial aspect into play when advising on strategic transactions.

Hewlett-Packard - one poor Acquisition after another

Hewlett-Packard could easily become Exhibit Number One for any future case studies about the dangers and pitfalls of hastily concocted acquisitions. When common sense takes a leave of absence and megalomania takes charge of a CEO's desires nothing can stand in the way. An army of (sycophantic and conflicted) advisers is nothing but a rubber stamp and the board - full of well sleepy 'worthies' that are appointed by the CEO and for the CEO - are not providing the necessary checks and balances. The same can be said for the (mostly institutional) shareholders who are not given half a chance to properly question the proposed transaction.

BoA manager on wrong track

If it would not be printed in black and white I would believe that this initiative comes from a third-rate bucket shop (Bloomberg). That the equity sales staff at Bank of America Merrill Lynch (BAML) has reportedly been set a quota of 30 client meetings each month smacks of sheer desperation but also of a complete lack of trust between management and staff. This augurs badly for the future of BAML.

UBS to cut 10,000 employees

Not only does one have to ask why a large bank all of a sudden finds that it would be necessary to amputate a huge chunk of its operations it is also a step that will in all likelihood lead to even more management problems later on. Management and the Board must have been asleep at the watch for a very long time that such a drastic measure is required to bring the ship on course. Successful firms adjust staffing levels continuously - this is not only much cheaper and efficient, it is also less destructive for employee morale and customer confidence. The way that these 'restructurings' are conducted are also hugely wasteful. While the cost that is bandied about at UBS may include a lot of things that are not related to redundancy payment a large part certainly is. Given the probably inflated compensation levels one can only assume that the pay-offs will also on the generous side. A new top management and/or consultancy firm will probably suggest in a few years time that too much was cut, or the wrong sector was cut and the hiring/firing merry-go-round will enter a new stage. This will - again - inflate costs and lead to a management non-culture of revolving doors where employees are not familiar with each other due to excessive staff fluctuation. After the Adoboli case we all know where this leads to.

Citigroup: Shock about exit of CEO

That some employees at Citigroup may be in shock (Financial Times) about the sudden departure of the CEO speaks volumes about the fact that the role of the CEO in today's corporation is vastly exaggerated. While no one would deny that the decision of the leader is critical it does not mean that this is necessarily a good thing as many examples in business (and history) show. Relying on the judgement and predelictions of a single person creates risks that would be mitigated in a more collegial system of leadership.