As compliance professionals, we constantly seek to understand how systemic issues within corporate hierarchies can lead to severe consequences. The recent revelations about Bank of America’s (BoA) persistent workplace culture problems serve as a powerful reminder of the critical role compliance plays in safeguarding both employees and the organization as a whole.
This week I am going to explore the BoA failure around workplace culture from a variety of perspectives articulated by the Everything Compliance gang, which includes Karen Woody, Jonathan Armstrong, Matt Kelly, Karen Moore and Jonathan Marks. This exploration will include the failure of internal controls, failures by the Board and senior management, culture failures around highly driven, self-selecting employees and the cultural miasma that is BoA from a perspective from across the pond. In this Part 2 we take a journey through some of the key lessons learned for compliance professionals.
In the high-stakes world of investment banking, where deals are won or lost in the span of hours, the pressure to perform can push individuals to the brink. Unfortunately, for some, that brink has meant a premature end to their lives. The recent tragedy at BoA, where a junior banker named Leo Lukenas died after working over 100 hours a week for weeks on end, has cast a harsh light on a decade-long problem. This is not the 2013 scandal revisited; it’s an ongoing crisis, a corporate culture problem that has festered for years. For compliance professionals, the lessons from this ongoing debacle are both critical and chilling.
Lukenas was not the first casualty of this toxic culture. In 2013, an intern in Bank of America’s London office, Moritz Erhardt, met a similar fate after enduring a grueling workload. Following that incident, the bank promised to implement policies to prevent such tragedies from recurring. Yet, a decade later, Lucas’s death is a stark reminder that those policies have either failed or were never truly enforced.
The investment banking division at Bank of America has been likened to a “white-collar sweatshop,” a description that, sadly, fits too many high-pressure work environments. While the term “sweatshop” might conjure images of factories in developing countries, the reality is that overwork and exploitation can happen in plush office towers just as easily. The death of Lucas has brought into sharp relief the human cost of such environments, where the relentless pursuit of profit eclipses the well-being of employees.
What is particularly concerning is that this issue is not isolated to a single office or even a single country. The WSJ’s reporting has revealed that overwork at Bank of America is a pervasive issue, affecting employees in New York, London, Tokyo, and Latin America. Former employees have cited overwork as a primary reason for leaving the bank, underscoring the fact that this is not a localized problem, but an enterprise-wide failure of corporate culture.
This brings us to a crucial question: where was compliance? Why are there not the policies and controls put in place to prevent overwork been effective? The answer lies in a deep-seated cultural issue that transcends mere policy implementation. It’s a culture that has been tolerated, if not outright encouraged, by middle management, and one that senior management has failed to address with the necessary urgency.
Middle management is often described as the “meat grinder” of corporate culture, where good intentions from the top can get mangled into toxic behaviors at the bottom. In the case of Bank of America, middle managers were reportedly telling their subordinates not to report excessive working hours to HR, effectively bypassing the controls that were supposed to prevent overwork.
This is a classic example of what can go wrong when senior management fails to engage effectively with middle management. Senior executives may have genuinely wanted to prevent overwork, but their message was diluted or ignored by those in the middle who are tasked with enforcing it. This disconnect is where corporate culture often fails. Compliance professionals understand that policies are only as good as their enforcement, and enforcement is only as good as the people who are responsible for it. For the compliance professional, this mean you must directly connect what senior management has laid out as policy and not simply put procedures in place to implement the policy but then monitor the implementation to make sure the policy is being followed. Sadly that was not the case at BoA.
Another critical factor in this crisis is the role of incentive structures. It is no secret that investment banking is driven by high-stakes deals, where the pressure to deliver results is immense. But when bonuses and career advancement are tied to closing deals, even at the cost of employee health, the stage is set for disaster.
This misalignment of incentives is a fundamental issue that any compliance officer must address. If the financial rewards for middle managers are tied to delivering results, irrespective of the human cost, then it should come as no surprise that overwork becomes a pervasive problem. Incentive structures need to be reexamined and realigned with the ethical and operational goals of the organization.
As compliance professionals, it is imperative to not just address the symptoms of such crises but to dig deeper and identify the root causes. In this case, it’s clear that the root cause is a toxic corporate culture that prioritizes results over people. But beyond that, it is about the failure of senior management to enforce a healthy work culture and the misalignment of incentives that drive middle managers to push employees to the brink.
To prevent such tragedies in the future, organizations need to take a hard look at their culture, their management practices, and their incentive structures. This is not just a problem for Bank of America; it’s an industry-wide issue that requires a collective response. Compliance officers have a crucial role to play in this, by advocating for stronger controls, better communication, and a culture that truly values employee well-being.
The ongoing crisis at BoA is a sobering reminder of the human cost of a toxic work culture. For compliance professionals, it serves as a call to action. It’s not enough to have policies on paper; those policies must be enforced, and they must be supported by a culture that values employees as human beings, not just cogs in a machine.
As we move forward, the lessons from this tragedy should guide our efforts to create healthier, more sustainable work environments. Compliance is not just about ticking boxes; it’s about ensuring that the values we espouse are reflected in the day-to-day operations of our organizations. In the end, it’s about protecting not just the organization, but the people who make it what it is.
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