Bank of America Culture Failure

Compliance professionals looking for a fresh case-study in corporate culture dysfunction, turn your eyes to Bank of America! This week news broke that BofA  is still plagued by junior bankers literally working themselves into an early grave — 10 years after the bank vowed to change its ways due to rampant overwork. Who knew change could be so hard?

The story comes from the Wall Street Journal, which richly detailed Bank of America’s overwork crisis, spurred by the death of a 35-year-old junior banker in May. The man, Leo Lukenas, had been working more than 100 hours a week for a month to help close a $2 billion acquisition. Several hours after a celebratory dinner for the deal, Lukenas died from a blood clot in his coronary artery. He leaves behind a wife and two young children. 

The WSJ article went on from there, recounting more tales of overwork that span essentially all of Bank of America’s investment banking operations, from New York to London to Tokyo. This isn’t a point-specific problem in one office of the bank; it’s a defect that afflicts the entire enterprise.

Even worse, Bank of America has known it has an overwork problem for years, because the bank had another death attributed to overwork in 2013. At the time, senior BofA executives promised to change the culture. They instituted new policies meant to curb overwork, such as requiring approval from HR before junior employees could work more than 80 hours a week.

Don’t faint from surprise, but those promises of reform didn’t take. Instead, according to this week’s WSJ article, middle managers told junior bankers not to report their overtime hours and then get back to work. 

So, to recap: we have a serious, widespread, and rampant workplace culture problem; management has known about it for years and claims to take the issue seriously; but abuses keep happening. Why? How does that happen? 

It’s a problem any compliance officer in any company might encounter. So how do you solve it?

Dissonance Between Management Levels

Let’s start with one point that some might find controversial, but I believe is true: I believe senior executives at Bank of America and other Wall Street banks actually do give a rat’s ass about the well-being of their junior employees. 

Sure, those same senior executives also want to push those junior bankers to work hard and make gobs of money for the firm, so the senior bankers can enjoy their boats and Park Avenue apartments and secret affairs — but they don’t want people to literally drop dead from the job. Senior bank executives might be inherently greedy, but they’re not inherently bad. They want to make as much money as they can within certain constraints.

Those constraints, delivered in the form of rules, policies, missives from the boss, and so forth, are supposed to become corporate culture. So why didn’t that happen here? 

Even crazier, let’s remember that those overworked junior bankers agreed with that vision of a corporate culture too; they don’t want to work 100 hours a week until they have a seizure either. In other words, senior management and the rank-and-file agree on the culture they want to have. 

The disconnect, of course, comes from middle management. In Bank of America’s case, they were the ones telling junior employees to disregard policy and not log their overtime hours. They were the ones retaliating against employees who complained. They were the ones thwarting the corporate culture everyone else wanted to achieve.

This shouldn’t be news to compliance officers; we talk about the importance of middle managers all the time. Still, why do middle managers decide to subvert corporate culture and engage in misconduct? And what are senior executives supposed to do about that? 

One clue comes from a follow-up article the Wall Street Journal published about management’s response to the first exposé:

Several junior investment bankers were told by their managers Monday to alert superiors or the human-resources department if they are being pressured to misreport hours. They were also told that the mandate to do so comes from the highest levels of the company.

News flash: Middle managers do what senior management tells them to do. That point seems self-evident, but it has implications that might elude senior management.

First, it means that middle management itself isn’t the problem; how senior management engages with middle management is the problem. If senior management only engages by giving middle management performance goals and profit targets, that’s all that middle management will keep fixed in mind. That’s how middle managers end up deciding it’s OK to ignore rules about overwork, to commit accounting fraud, or to pay bribes to corrupt officials.

Indeed, we could even describe Bank of America’s response to the Wall Street Journal as “surge management.” Senior executives were alarmed by a problem, so they told middle management to freak out over the problem, and said freakout ensued. Now everyone is telling junior employees to report their overtime hours.

That’s a flawed approach, obviously. It’s an event-driven commitment to values, the event usually being some example of the company not committing to its values. A company with a strong corporate culture should have a commitment to values that’s constant. 

Don’t Forget Internal Controls

OK, back to Bank of America specifically. A few other details from the story left me wondering.

For example, Bank of America does have rules in place to prevent employees from working excessive hours. Junior bankers are supposed to log their hours, and managers receive a warning once a banker hits 80 hours in a week; the banker can’t work any more hours without permission from HR. The problem: middle managers simply told the junior bankers not to record their hours worked. 

My question: Why is Bank of America using manual controls at all for this risk? Why not track and log employees’ hours automatically? 

After all, in our age of keystroke loggers and cameras to observe employee behavior on the job, a company as sophisticated as Bank of America could certainly do it. Even if you didn’t monitor the junior bankers nonstop, you could certainly monitor them sporadically to see whether they’re still typing away at 1 a.m. That would also generate evidence that internal audit teams could use to see how well managers were or weren’t respecting overtime policies. 

(Maybe Bank of America had some good reason for not doing this. If anyone has any sense of industry practice and wants to let me know, email me at [email protected].) 

Again, however, we’re back to senior management and even the board. (Bank of America’s board has a “compensation and human capital” committee.) They knew that overwork was a problem at least as far back as that first employee death in 2013. Were they pushing for stronger, more automated controls to prevent overwork? Were they getting reports about overwork complaints? 

Were they crafting policies, procedures, compensation plans, and messaging for middle management — that is, were they engaging with middle management — in a way that conveyed to middle management just how seriously senior executives took this problem? 

Maybe they didn’t. Or worse, maybe they did.