Daniel Beunza, assistant professor of management at the London School of Economics, has a good story for anyone who happens to be collecting anecdotes on the unpleasantness of bosses in the banking industry.
“I worked with a trader in the U.S. whose boss was so toxic that he couldn’t even go to the toilet,” says Beunza. “The boss himself was an extremely successful trader and he demanded that everyone on the desk was ready to respond to his requests instantly. The trader told me that he felt like a dog – he had no control over when he ate, or drank, or over his bodily functions. In the end, he tried to cope with the situation by not drinking any water.”
Beunza’s academic specialism is the so-called, ‘sociology of finance’, a topic he’s been immersed in since 2001 when he examined interpersonal relationships in a New York dealing room. Things have improved culturally since the financial crisis, says Beunza – but perversely, some of the changes which were intended to make things better have simply made things worse.
“Compensation is a huge problem in banking,” says Beunza. “The more complex the compensation system is, the more that it encourages people to play politics and obscures any objective sense of where performance comes from.”
For this reason, Beunza is no fan of discretionary bonus systems which incorporate the results of ‘360 degree appraisals’ and the attainment of soft targets like ethics into decisions about bonus payments. In his opinion, this is a recipe for politicking. “It’s much better to have clarity over what the bonus is based on,” says Beunza. “Systems such as those used by hedge funds – where a trader gets a straight 10% of his P&L, work well.”
By comparison, Beunza says bosses who constrain calls of nature are better dealt with using so-called, ‘normative controls.’ These are the broad cultural norms within which behaviours take place.
“The key is normative control,” says Beunza. “You need to create a community which ostracizes people who don’t feed into the value system and the established norms. In this situation, a toxic individual who is negative, non-collaborative and given to harassing colleagues and terrorizing subordinates would not be tolerated,” says Beunza. They will also never be promoted in the first place. “Long term, it doesn’t pay off to have these toxic individuals in leadership positions, no matter how good they are,” he adds.
That’s all well in theory, but what do you do if you already have the misfortune to work with a boss who treats you like a serf? “The way out tends to be informal,” says Beunza. “You need a mentor and you need lateral contacts who can help you move somewhere else in the organisation.” Don’t wait for the toxic boss to see the error of his/he ways. “You need to have limited expectations that this person will change,” Beunza warns.