Morning Coffee: The bankers making 3,000 calls a day. Sharing salary data is good for employees
As the saying goes, it’s not the hours you put in, it’s what you put into the hours. When investment banks started using modern Customer Relationship Management software, there was a short period during which senior management were overjoyed to discover that they could keep track of which employees were the most “productive” in terms of client contacts.
Pretty soon, however, they found out that this is a fairly useless or even counterproductive measure – it encouraged bankers to proliferate low-value added “colour of the market” phone calls, which had the consequence that clients stopped listening to their voicemail. Judging the output of a sales and trading or capital markets team by the number of phone calls they make is like judging programmers by the number of lines of code they have written.
So when Bank of America vice-chair Paul Donofrio says in an interview that his bankers are making “3,000 calls a day” to engage companies on carbon emission reduction financing, the use of this measure raises as many questions as it answers. For one thing, 3,000 is a big number, but is it big compared to the size of Bank of America? What does it mean in terms of calls per banker per day?
Bank of America is very big; it has over 200,000 employees in total. Most of those work in the retail network, or in other jobs where they have no opportunity to make calls to corporate clients, but there are still thousands and thousands of BoA bankers who might be hooked up to the kind of CRM system that generates numbers of this sort for the vice-chair to drop into interviews. If the three thousand calls were all being made by senior bankers, talking to CFO and corporate treasury clients then this would be a genuinely impressive effort, but if the figure refers to the entire BoA network, including business banking, then it could be as few as one call per banker per week.
And of course, it matters what goes into the calls. A single client call aimed at pitching a specific transaction, with a full backing analysis sent on ahead of time, might be worth ten thousand passing mentions of carbon emissions during a conversation about something else. There is, unfortunately for tidy-minded investment banking executives, no SI unit of client contact, and if there was it wouldn’t be “a call”.
There is some real content of Paul Donofrio’s remark, though; three thousand is a meaningless number, but the fact he was able to give a number is anything but meaningless. What it tells us is that BoA have decided to push the theme of carbon emissions reduction as a potential source of competitive advantage in their advisory and capital markets business, and that they have taken this push seriously enough to start capturing the data in their CRM system. Every day, that system records three thousand events in which someone ticked a box claiming credit for having done so. Since management is measurement, the fact that something is measured can be important even when the actual number is not.
Elsewhere and in a different context, the Swiss banking system appears to have got into some trouble by measuring something, and thereby creating a suspicion that they were planning to measure it. The national competition regulator has launched a preliminary investigation into whether the Swiss banks’ policy of sharing data on employee compensation might have been part of a cartel to keep salaries low, particularly at the junior level. No bank has been named, but apparently the 34 firms under investigation include both “big banks and private banks”.
In the investment banking world, of course, you would have to say that if anyone has been operating a shadowy agreement to keep prices down in “the market for young talent”, they haven’t been doing a very good job. And the reason for that also has to do with the sharing of information. In recent memory, junior bankers were sworn to secrecy about pay; the founders of Emolument accused the industry of running exactly the kind of cartel that’s being investigated in Switzerland. Today, everyone with a WallStreetOasis account can find out who’s the best and worst payers and update the league in real time. Although things might change with the market cycle, the balance has fundamentally shifted in favour of employees; knowledge is power.
If you want to celebrate your bonus, but you’re aware that it wasn’t actually very good, the Journal has just the thing – a guide to the best champagnes costing less than $40. (WSJ)
It is never a great moment in any banking relationship when the happy, friendly coverage banker starts being accompanied to meetings by someone from a different team who is curt, sarcastic and keeps talking about covenants and security. Spare a thought for the Morgan Stanley team, who are apparently “pitching” the idea to Elon Musk that he might like to refinance some of the Twitter acquisition debt and give it a personal guarantee collateralised against Tesla stock. (Bloomberg)
In a somewhat desperate-sounding article about turnover in the industry, it is suggested that banks will need to tap alternative sources of recruitment, like inner-city students and refugees, if they are going to fill roles in cybersecurity. (American Banker)
Two news stories that say a lot about the commodities trading business; Trafigura has had an “exceptionally strong year” with record profits …(Bloomberg)
…but the industry as a whole is facing a significant liquidity squeeze. Incredibly rich trading environments come along regularly in commodities; the difficult thing is making sure you’re able to take advantage of them. (IFRE)
“A secret remains a secret until you make someone promise never to reveal it”. A survey of the ways in which merger rumours find their way through layers of banker secrecy and into the press. (Finews)
One of the ways in which activist investing isn’t like “The Wire” is that you can come at the king repeatedly, and often enhance your reputation by doing so. Bluebell Partners now have Larry Fink of BlackRock in their sights. (Business Insider)
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