What the LIBOR scandal can teach us about employee wellbeing

But everyone else was doing it

“We know that we’re not posting um, an honest LIBOR, and yet we are doing it, because, um, if we didn’t do it, it draws, um, unwanted attention on ourselves.”

This quote from a Barclays employee in 2008 perfectly captures the important role played by a basic human instinct in propagating the rigging of LIBOR: The drive to fit in. Individually and institutionally.

This desire for acceptance in the workplace is an extremely powerful determinant of employee behaviour. Including behaviour that influences their wellbeing.

If the social norms and expectations in your team, your division, or your company encourage behaviours that degrade, rather than improve, the wellbeing and performance of your people, then you have a problem. This is true even if your principles and policies say otherwise.

Everyone conforms to some degree

The need to belong is hardwired into the human brain. We do what we think is expected of us based on widely accepted – but mostly unwritten and unspoken – social norms. This is called social conformity.

This served us well from an evolutionary perspective. Social cohesion was crucial for group (and therefore individual) success. And going against the group could be very costly in terms of survival and reproduction. Fitting in is a deeply wired human need.

There are several explanations for why we conform to social norms:

  1. We assume that it must be a good thing to do if everyone is doing it
  2. We fear being subject to social sanctions for not doing it
  3. We have a personal desire to self-categorise with the group regardless of value or sanctions

And be under no illusion here – virtually everyone conforms. Just to differing degrees.

LIBOR rigging wasn’t all about greed

The first time outsiders heard about the LIBOR fraud was in April 2008, when the Wall Street Journal published an article with the headline, “Bankers Cast Doubt on Key Rate Amid Crisis”. Over the following few years, the enormity of the scandal would emerge. Banks were fined, traders were fired, and a few key players went to prison.

Nefarious intent certainly played a part. There were huge incentives to manipulate LIBOR (interest rate trading businesses at the major banks made billions from it) and there were ludicrous conflicts of interest that enabled it to happen (the Foreign Exchange and Money Markets Committee – the group responsible for overseeing LIBOR setting – was made up of staff from the contributing banks).

But to blame the whole thing on greed and conflicts is an oversimplification and misses a crucial point. Why did everybody simply go along with it? Why did nobody speak out?

The answer is, as you’ve probably guessed, is social conformity.

Conformity allowed LIBOR manipulation to go on unchecked for years before it was exposed. It had been going on for so long, it had become normal. Just part of everyday business on fixed income trading floors at major banks across the world.

“According to the trader, “everyone knew” and “everyone was doing it”. There was no implication of illegality. After all, there were 20 to 30 people in the room – from management to economists, structuring teams to salespeople – and more on the teleconference dial-in from across the country,” an article in The Telegraph reported in July 2012, “The discussion was so open the behaviour seemed above board. In no sense was this a clandestine gathering.”

In other words, manipulating LIBOR was a social norm. Everybody wanted to fit in with the group. Some assumed it must be fine since nobody was trying to hide it. Some realised it was wrong but didn’t want to go against the group. Some didn’t think about right or wrong and just wanted to self-categorise with everyone else.

When it comes to behaviour, social norms have a more powerful influence than individual agency and morals, and formal rules and regulations.

The hidden hand in employee wellbeing

If there is an expectation that emails should he replied to at all hours – if checking emails late at night is normal behaviour – your staff will never be able to switch off from work.

This is a bigger problem than you might think. Stress levels remain high, which impacts the quantity and quality of sleep. Night after night. Gradually compounding damage to physical and mental performance.

Is having an answer to an email at 11pm more important than having an energetic, enthusiastic, and engaged team member the following day?

It doesn’t matter what policies you have in place. It doesn’t matter how much you’ve spent on sleep education. It doesn’t even matter if the expectation is only perceived. If staying connected to work 24/7 is an embedded norm or expectation, you will have under-slept and underperforming staff. Full stop.

Of course – and I want to be very clear about this – certain businesses may, from time to time, require that emails be answered, calls be taken, or work be done at unsociable hours. That’s fine. It’s all part of keeping the wheels of finance turning. I worked in investment banking for 15 years – trust me, I get it. The problem is when it becomes normalised or expected (even if the expectation is only perceived).

Workplace norms and expectations can either encourage or discourage healthy behaviours. Consider the following examples:

  • Take a break during office hours for relaxation or exercise
  • Eat a quick lunch (of convenience food) at your desk
  • Stay in the office until all your seniors have left for the day
  • Be on back-to-back Zoom calls when you’re working from home
  • Use a standing desk or get up and move around the office regularly
  • Go to the pub most nights after work with colleagues
  • Come into the office later or leave earlier to take care of your children
  • Get takeaway pizza in the office so you can work late most nights
  • Travel the night before for morning meetings rather than get the 5am flight
  • Work most Saturdays and Sundays

By now, you probably have an array of principles and policies to promote wellbeing. You may even have invested in a wellbeing programme. But have you assessed and addressed the unwritten, unspoken social norms and expectations that have such a powerful impact on the health and performance of your people?

The LIBOR scandal did a great deal of harm. Let’s learn from it to create a great deal of good.

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