Are you kidding me?  Donald Trump one of the icons of American Capitalism was speaking against bonuses and incentives (listen - for the impatient folks go to about the 3:00 minute mark).  Bankers making $40 million plus while not even being very good bankers.  These are sales people manipulating the system for the rewards and incentives and who put these systems in place?  Command and control thinking is responsible for this.  Bad loans to achieve the reward or incentive.  Makes you kind of miss the old “boring” bank.

While doing bank management consulting I worked with a regional bank that was moving from the old “boring” bank to become a “bigger” bank and needed to act like a big bank.  They got rid of the old bankers because they weren’t being aggressive enough in their selling.  They needed rewards, incentives and salespeople not bankers.  Oops! they were caught up in the mortgage crisis with this knew aggressive approach.  They are still trying to dig themselves out, the problem is the management doesn’t see what is wrong with their “new” thinking (which is really old).

Most banks stayed clear of the bad loans that started this crisis and have stayed the course.  I would like to see these banks reap the benefits of “boring” banking.  Give them the TARP funds and let the knuckleheads fail.

Rewards and incentives had no small role in the current crisis.  They always get you less.  The sub-optimize the system and get people focused on defacto purposes not related to the real purpose . . . to serve their customers.  This sub-optimization is costing them in higher costs and worse service. 

The leadership development of banks need to include systems thinking as part of their organizational change management programs.  Only then, can they begin to eliminate waste and improve service.  I have several management articles associated with this and banking worth a gander, see this link.

Tripp Babbitt is a speaker, blogger and consultant to service industry (private and public).  He is focused on exposing the problems of command and control management and the termination of bad service through application of new thinking . . . systems thinking.  Download free Understanding Your Organization as a System and gain knowledge of systems thinking or contact us about our intervention services at info@newsystemsthinking.com.  Reach him on Twitter at www.twitter.com/TriBabbitt.