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Want a bigger bonus? You’d better be a team player, especially in Asia

Stuart Steele

“Teamworking”: you write it on your resume to please recruiters and then cite dubious examples of it during job interviews, but you never really think about it when you’re actually in the office – right?

Well, in the banking sector at least, teamworking is undergoing a transformation from a hackneyed HR catch-word to a concept you should care about.

According to Stuart Steele, a human capital partner at EY, the ability to work well with your peers is increasingly important to how your own performance is assessed and even, to some extent, how big your bonus is.

Steele talks to us about why banks are looking for team players and why bankers in Asia are already embracing a teamworking cultural at work.

In a competitive environment like investment banking, won’t there always be a clash between teamworking and individual performance?

Yes, however, this is a tension that exists in many industries, not just financial services. Historically, individual performance has been one of the primary drivers underpinning individual recognition, be that improved opportunities, promotion or financial compensation. But the increased focus from governments, regulators and shareholders on culture and behaviours within financial services — and the increasing emphasis on the establishment of more tangible links between individual behaviours, performance assessment and recognition — are driving many financial organisations to review their approaches in this area. At a high level, organisations are looking to measure not just what contribution an individual has made but also how the contribution was achieved, including a focus on ‘risk behaviour’.

Can you give some practical examples of measuring the “how” factor?

Some organisations are already starting to look at implementing changes to role descriptions, performance objectives and the links to performance assessment, recognition and ultimately variable compensation. In addition to including measures that endeavour to assess ‘how’ an individual’s contribution was achieved, they are shifting the balance of value from individual achievement to that of the team e.g. the performance of the trading desk outweighs that of the individual trader.

As the team becomes more important to performance assessment, what challenges is this creating for bankers?

This may fundamentally change how targets are set from what has historically been the norm, informed by data and driven by a set of defined criteria rather than gut feel. It also amplifies potential challenges where an individual team member’s performance is seen as reasonably positive on an individual-contributor level, but as having a materially negative impact on the group’s performance and therefore, on their resulting compensation.

And how has the increased emphasis on team-working changed the way banks structure bonuses?

Incentive funding for global banks continues to be focused on financial accruals based on net (of interest and provision for credit losses) revenue, and in recent years excluding debt valuation accounting (DVA). Post the financial crisis, profitability metrics such as pre-tax pre-compensation profitability and capital-adjusted profitability have become more prevalent and used in tandem to evaluate the appropriateness of the firm-wide or group incentive pool. And in the past several years, the discussions of non-financial performance have become more common place (in particularly in EU-headquartered banks) to support a better connection with the health of the organisation, a focus on stewardship and employee values/behaviours such as customer centricity. However, these factors have resulted in adjustments to the incentive pool based on the initial funding and not part of an overall scorecard translating to a more direct evaluation and result.

At the individual level, team behaviours are part of the performance evaluation and are considered in the individual incentive allocation. Nevertheless, financial metrics appear to overwhelmingly remain the primary factor in incentive determination. Additionally, with the continued focus on enhanced differentiation due to more limited availability of incentive funds, firms have continued to differentiate more based on individual performance. As a result, teamworking focus has not resulted in a more even distribution of pay, but has become one of the differentiating factors in performance management.

Compared with their counterparts in the West, have banking professionals in Asia traditionally put more emphasis on team performance?

Generalisations always come with a health warning, however, it is probably fair to say that traditionally, team-working in Western cultures have been defined by each member fulfilling their individual role. Asian cultures have been more focused on consensus building and less focused upon differentiated roles and individuals contribution. This difference can also be seen from a reward perspective, where incentive allocation in Asia has also been less differentiated on the performance and contribution of the individual and more heavily influenced by collective performance. It should be noted this is also often impacted by smaller team size in Asia teams relative to US, UK teams. Separately, Eastern economies have typically had higher inflation and growth rates than more developed Western markets. As a result, Asia markets have typically resulted in higher salary budget increases to keep pace with inflation. As part of this dimension, even weaker performers on the team might have received meaningful nominal increases, whereas in the developed Western markets weaker performers would expect no increase in base pay.

What are the key behavioural traits that will help bankers become good team players?

There is a truism that applies equally to both work and personal contexts “you will be more successful if you help those people around you”. This may not be the accepted wisdom, or at least the external perspective of investment banking, but individuals who understand it nearly always find it easier to achieve their objectives with the support of others. And those who apply this in the context of their team are more likely to achieve sustained success. A combination of self-awareness and emotional intelligence are also key – an understanding of your own drivers and preferences and an ability (and desire) to understand these in others will lead to improved team working on a day to day basis.

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