Nine months

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Cash bonuses for this year have been paid.
This cycle of deferred awards have vested.
Bankers are on the move.

One in, one out - until?

We hear talk of Long Term Incentive Plans and multi-year deferral/option schemes to align senior executives with the long term vision of their organisation.

But throughout many firms, people have recently completed one annual cycle, have checked out (mentally, if not physically) and are on to the next – but at an entirely different organisation.

If they are held to 3 months notice, they won’t start at their new firm until June/July.  Then comes the summer, when things are traditionally slow.  Momentum picks up again in September when people return to the office.  Just three months later, things start winding down again for the holidays.  And then the process restarts/resets for another period.

The cycle of annual reward handicaps an institution’s true development progress.

I mention on my LinkedIn profile how, when I left ABN AMRO, “I wasn’t finished”.
With at least one major internal reorganisation to implement each year, I never had a full 12 months with a stable organisation to see how it might operate in ‘stable’ conditions.
The positive outcome from this (perhaps the only one) was that the velocity of our decision making (and implementation) had to be extremely high in order to avoid organisational paralysis.

Rolling 12 month planning cycles (effectively 9 months at most) in large, public institutions mean that managing projects, budgets and – worst perhaps of all – people is often reduced to paper shuffling, rather than true business management.

Incumbent businesses no longer compete only with other incumbent institutions which look and feel like them – and operate on broadly the same annual cycle. New challengers – with strong founder-led cultures – are appearing and introducing disruptive technologies so quickly, that an annual planning cycle can simply not keep up.

The compensation paradigm and the planning and reporting that drives it (or is driven by it) will need to genuinely transform for real sustainable change to take place.

Organisations that scale and manage change well know that it’s important to “move 1,000 people 1 foot; rather than move 1 person 1,000 feet”.

To effect sustainable growth and adapt to the new competitive environment, it is not nearly enough to merely shackle a thin executive layer to the organisation for a long period.

Until firms find a way for their teams to adopt a true ‘ownership’ culture, loyalty and engagement will trend lower whilst turnover and instability continues to prevail.

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