Why Banks Hire Idiots

Posted Aug 15, 2016 at 11:11. Revised Aug 14, 2019 at 08:17.

Banks and financial institutions don’t always hire idiots because their human resources people occasionally make a mistake and hire someone competent. Indeed, sometimes Human Resources (which normally is neither human nor a resource) lets competent people slip through is the system’s salvation. Once hired, these Human Resources accidents quickly find each other and become the connivers who will run the organization in the future.

Employee Requirements.

There are reasons why idiots are indispensable in a financial environment, but these reasons are not clear to the uninformed average person. Most people think the tellers and loan officers whom they see in a bank branch are the bank. These people are only a tiny part of an organization having thousands of people working behind the scene in operations centers. Such a complex organization requires rigidly structured interdepartmental communication, which in turn creates an impressive Complexity Trap. Idiots who never think and never ask intelligent questions are best suited to blindly ignoring complexities that might overpower more perceptive people.

A paramount need in banking is to reduce the chance that employees will steal money from the bank. Hiring idiots is the first line of defense since idiots are usually not astute enough to defraud a bank. The next defense is requiring that two people constantly watch each other and check each other’s work when doing tasks involving large amounts of money. In these cases, people must communicate only with their supervisors and not get friendly with their co-workers. Friendship among peers can lead to cooperation, which is the foundation of collusion and fraud.

The Job Requirements.

At the customer contact level, crazy things happen because most customers are irrational and paranoid on the topic of money. The organization’s public contact people must be capable of thinking only in reactive ways since the craziness of what the next customer might ask for is unpredictable and cannot be prepared for in advance. Their job requirements are not unlike those for the job of orderly in a mental hospital. Thinking ahead and planning are pointless in such an environment, so nutty people or idiots are the perfect employees for such positions.

The employee training needed to deal with customers is deceptively simple, so hiring idiots is often quite enough. Quickly learning and understanding how to handle ninety percent of the transactions a bank teller encounters requires no unusual talent. Unfortunately, the other ten percent of the job involves recognizing and correctly handling tricky transactions that are disasters when handled wrong. Gaining the experience needed to recognize and handle the unusual transactions can take thirty years rather than three days.

Hiring idiots gets the people needed to handle the ninety percent of all transactions that are simple. The other ten percent are not worth worrying about because the extensive use of decision-making committees guarantees that any blame will be diluted and dispersed to everyone on the committee. Committees exist for this purpose. Manning them with idiots helps lower staff costs because low-cost idiots can mess things up just as effectively as can more highly paid people.

Employee Presentation.

The use of idiots in financial institutions in no way implies that just any idiot will do. The image which an employee presents is critical to gaining customer trust and respect, so the idiot must have the first mandatory prerequisite of any successful con artist – a sincere and honest face. Presenting an idiot to customers as being competent and trustworthy is theater, and only requires basic acting skills. A bath, a shave, and an $800.00 suit will fully supply this needed image of competence. This formula applies to both bankers and bankerettes because banking is a sexually indiscriminate world wherein all idiots are equal, and all receive essentially equal and minuscule pay for equal work.

The remaining idiot presentation stage props consist of a fine mahogany desk, a plush carpet, and high-quality drapes for the office windows. These expenses along with the $800.00 suit save a financial institution an enormous amount in staff costs. How? It’s easy. A neurotic and insecure idiot wants to look important and will work for a much lower salary than a competent idiot, and the resulting payroll savings will quickly pay for the stage props’ high costs. The last accoutrement for our image adorned employee is to give him/her an impressive and much-valued job title instead of a decent salary.

Financial Committee Requirements.

There is one last warning for committee decision-making. The group must always make the decision for which it will be least criticized should things go wrong later. Never make a good decision that could subject you to criticism if it were to go wrong. Never think outside of the box since that risks making a good decision instead of a safe decision.

Financial committees must always focus focused on avoiding risk, especially when making loan decisions. Risk is just uncertainty of outcome. Lending money to a temporarily unemployed worker cannot be allowed because he may or may not be able to pay the funds back. i.e. the uncertain outcome makes the loan risky. On the other hand, loaning money to a scam artist with perfect financial paperwork is perfectly fine because there is no risk from uncertainty of outcome. Everyone knows with complete certainty that the loan will never be repaid. The committee cannot be criticized for making a loan involving no risk – that is, one having complete certainty of outcome.

Computerizing The Complexity Trap.

The Organizational Complexity Trap created by computerizing large financial organizations is mind-boggling. Computerization is necessary to deal efficiently with the huge quantities of information involved, but computerization also requires that those implementing and maintaining the computer systems communicate primarily with their project peers instead of with their supervisors. The people working on different facets of a project cannot be successful unless each person makes sure his piece fits together properly with the project’s other pieces. Any managerial move that blocks communication between computer project workers is a formula for disaster. Lateral communication is far more important than is vertical communication.

Successful computer project bosses must set down the goals for the group, listen to the concerns of the project’s workers, and function as the tiebreaker when the workers can’t agree on how to proceed. Sitting back and listening is the polar opposite management model from the jackboot Nazi management model required to keep up good financial control in the rest of the organization. The resulting complexity tangle between the two opposing management models disrupts the organization’s entire sociology and creates a cobra-mongoose relationship between the IT department and everyone else. The over-specialization needed to handle the organization’s ever more narrowly focused tasks only further expands the gulf between the two pieces of the organization.

The Conclusion.

You now have the basic knowledge needed to navigate modern financial Complexity Traps. Just don’t lose sight of the fact that all complexity traps will implode at some point. Make sure you are alert enough and agile enough to jump clear before it happens.

Now you can honestly say “Nobody told me.”

Copyright © 2016-2019 Charles E. Dial. All rights reserved.
Posted Aug 15, 2016 at 11:11. Revised Aug 14, 2019 at 08:17. –> Retrieved Oct 23, 2019 at 01:08.
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Author: J.D. Nobody

The Complexity Traps Editor and content creator, J.D. Nobody, OC '61, posts to Complexity Traps based on military, financial, and software development experience. He explains the ways complexity devolves into simplicity and collapses under its own weight. The post The Importance of Being Nobody explains J.D. Nobody's role in complexity.

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