Ambica Tarakad recently shared with me an article by Nassim Nicholas Taleb – the author of the risk management book The Black Swan – in which he cites the ancient Roman practice of randomly inflicting corporal punishment on 10% of a regiment after a battle had been lost due to cowardice on behalf of any of the soldiers. The purpose of the practice was to encourage the regiment to think as a unit, rather than the individuals made up of it, putting soldiers’ lives literally on the line for thinking about themselves rather than their unit.
It got me thinking how in Financial Services Operations, much like on the battlefield, the ultimate quality of the work produced depends on the input of many contributors who are often adding value to the product in a chain, one after the other. Even in an environment where team mebers work in parallel, workflow and capacity management depend on the team’s ability to work together. And yet the common practice is to measure and reward individual behavior, rather than team behavior, thereby fomenting individualistic thinking in an environment where collective thinking is a necessary factor for success.
To that end, we have documented a number of member case studies detailing the use of team-level performance measurements and incentives that align the interests of the individual with the success of the team. This particular case study from an institution we have pseudonymed Corbridge Financial focuses on two key themes that often resonate with members:
1) Standardize processes to eliminate process variation as a potential source of individual performance issues; and
2) Incent success at the team level but identify performance issues at the individual level.