Compliance professionals 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 are a powerful reminder of compliance’s critical role in safeguarding employees and the organization.
This week, I will explore the BoA failure around workplace culture from various perspectives articulated by the Everything Compliance gang, including 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. The full Everything Compliance episode will be posted on Thursday, August 29.
In Part 1, we set the stage and then delve into the factors contributing to BoA’s toxic culture, the implications for compliance officers, and the lessons we can draw to prevent similar issues in your organizations.
Bank of America has faced intense scrutiny following a series of harrowing articles, in a story broken by the Wall Street Journal (WSJ), outlining a toxic workplace culture within its investment banking division. This culture of overwork has had tragic consequences, including the death of junior banker Leo Lukenas, who had been working over 100 hours a week leading up to his untimely death. Disturbingly, this is not an isolated incident. A similar event occurred in 2013 when an intern, Moritz Erhardt, who worked in BoA’s London office, also died after working excessive hours. Despite promises for reform, these practices have persisted, indicating deep-seated issues within the company’s corporate culture.
One of the key issues is the disconnect between senior management’s intentions and the actions of middle management. While senior executives at BoA have voiced their concern for the well-being of their junior bankers and have set policies to limit overwork, middle managers have often circumvented these rules. Instead of enforcing the 80-hour workweek cap, they instructed employees to underreport their hours, ignoring internal controls and perpetuating a sweatshop-like environment.
This phenomenon is not simply a BoA problem; it’s a stark example of how middle managers can sabotage well-intentioned corporate policies. It underscores the importance of effective communication and alignment between all levels of management.
A glaring issue in this case is the failure of internal controls. In today’s technologically advanced age, middle management should have responded more to BoA’s manual control system for logging hours. Automated systems for tracking work hours could have prevented such blatant disregard for policies. Moreover, there was a lack of adequate internal audits and HR oversight. This highlights the necessity of robust, automated internal controls and regular audits for compliance professionals to ensure adherence to corporate policies.
Another critical aspect discussed is the culture of retaliation against employees who try to report overwork or seek help. In some instances, employees have been punished for following the rules, such as by having to work on holidays or receiving criticism from their managers. This toxic environment discourages whistleblowers and perpetuates the cycle of abuse.
For compliance officers, tackling this issue involves fostering a culture where employees feel safe to speak up without fear of retaliation. Senior management must impose real consequences for middle managers who violate policies and ensure consistent disciplinary actions to reinforce the importance of compliance.
The long-term implications of such a dysfunctional culture are profound. Junior employees trained in an environment where rules are routinely ignored may carry these attitudes into future roles, potentially spreading unethical practices across the industry. For compliance professionals, it’s essential to address immediate issues and cultivate an ethical corporate culture that will yield trustworthy leaders in the future.
The situation at Bank of America serves as a sobering case study of the importance of comprehensive compliance programs and the need for alignment across all management levels. By understanding and addressing the root causes of such corporate culture failures, we can better safeguard our organizations and foster environments prioritizing ethical behavior and employee well-being. As compliance professionals, we must ensure that the lessons learned from BoA’s crisis are not ignored and that we remain vigilant in building and maintaining robust compliance frameworks.
Let’s hope that in another decade, we are not revisiting this same issue at BoA or elsewhere. Instead, all compliance professionals should strive for systemic improvements that prevent such tragedies and promote a healthier, more ethical corporate culture.
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