But, as the authors of a new book point out, there has also been a darker side. Market conditions have been created, they say, "under which some firms and individuals have escaped the bounds of control and appropriate conduct traditionally set by government officials and regulators, as well as by the well-intentioned efforts of their own senior management".
Street Smarts (published by Harvard Business School Press at $27.50), by Roy Smith and Ingo Walter of New York University's Stern School of Business, is about Wall Street, but the questions it asks about behaviour in the financial services industry and measures designed to improve it are just as applicable to London.
After all, this side of the Atlantic is hearing echoes of their remark that many observers are wondering if the industry has become too tough, too competitive. "They look at the insider-trading scandals of the Eighties, when a few dozen individuals ignored the rules and got themselves into serious trouble. This period was bad enough, but, observers wonder, has it got worse in the Nineties?"
Pointing to the string of scandals since the start of this decade - such as those at Baring Brothers, Deutsche Morgan Grenfell and Salomon Brothers - they explain how appearing to squeeze or manipulate their own clients just to complete trades or failing to supervise overly aggressive employees offered disproportionate incentives to perform. And they stress that while the earlier episodes produced setbacks for individuals, the later ones seem to have a greater effect on the firms themselves - in Barings' case, of course, leading to collapse and eventual takeover.
So, given that the stakes have become higher, what is to be done? Smith and Walter's subtitle - "Linking professional conduct with shareholder value in the securities industry" - provides a clue. It is their belief that no amount of surveillance and compliance activity is going to solve the problems; the only solution is (as the professional service firms guru David Maister has pointed out in another recent book) to create a culture whereby the firms develop their leaders and individual managers to take responsibility for shaping and upholding the standards through creative and supportive employee development and retention programmes.
That sounds fine, but - as Smith and Walter acknowledge - managing the often difficult individuals in an organisation like an investment bank is not easy. Likening the stars to their equivalents in sports, they write: "Highly talented bankers move around the industry like free agents in sports, and often jump at huge offers from new teams being fielded by aggressive newcomers. Few employees, if any, believe they will spend their entire careers with the firm that initially hired them."
Such an environment of constant change brings out "all of the animal spirits of those involved, making the directing of securities firms more like zookeeping than managing a more conventional business."
Nevertheless, the determined organisation can create a culture and spread it around within itself, providing it remembers the importance of "consistency, homogeneity and exclusiveness". "All you have to do," Smith and Walter add, "is get a bunch of talented people together when they're young; train them well; discipline and reward them the same way for years; and inculcate these ways to the new people coming along." This can be strengthened by not hiring people from other places - where they have picked up "bad" habits.
Relax any of these constraints to any significant degree and you risk diluting the culture, they say. Ignore them and the culture, rather than supporting a set of values, turns to mush and soon washes away.
The key, the book concludes, is that the business is not so much plagued by rogue employees as it is endangered by management failures at various levels.
"These failures are threatening to affect many more firms, as the industry becomes increasingly global in scope and as the number of employees increases. What our work suggests is that for real (that is, monetary) value to result from the efforts of firms and individuals in the securities business, more attention must be paid to the principles of zookeeping that we have discussed. Weaknesses need to be fixed while they are fixable. The rewards are there, so many firms will see the value in getting on with the fixing. Others, alas, will not, being unwilling or unable to change the way they do things"
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