Expert View: Money rules, but loyalty is priceless

The two news stories gripping Britain have one thing in common. The game of "what the butler saw" and the revolt of the "Nasty Party" are all about loyalty; the perceptions of the individuals concerned, the disappointed expectations of their bosses. In one case we are asked to believe in an extraordinary self-sacrifice to the spirit of semper fidelis (always faithful). In the other we see a leadership style that threatens more than it inspires. But this national debate on the issue of loyalty has even more relevance in the City.

The star culture conquered the financial markets some time in the Eighties. It was at that point that the managers and owners of financial institutions woke up to the fact that in this, the ultimate people business, a scintilla of difference in performance between one professional and the next could be translated into massive profit.

From this began a no-holds-barred war for talent. Established institutions were ripped apart, as new (American) firms came into the market and simply lured people away with piles of cash. A new bonus culture dramatically increased the upside potential of professionals' earnings. In the last 20 years we have seen star analysts, and rainmakers in finance generally, enjoy a massive appreciation in their relative value.

A Wall Street friend of mine tells of a staff problem. A disgruntled trader complained he was humiliated by his continuing failure. He was making "barely" a million dollars a year and his wife was threatening to leave him. Ridiculous, until you remember that one broker I know last year paid much more than that for a vintage car. An analyst recently sued her employer for sex discrimination when she found a colleague had been paid a £1.2m bonus versus her paltry £400,000.

We now live and work in what can only be described as a money culture. But this cornucopia has not been distributed to all. A graduate trainee or secretary may earn more than in other industries, but the real salary multiplication has been at the top of the tree only.

The consequence is that we have also seen the death of individual house cultures. It wasn't that long ago that we used to speak of "Warburg's people" or a "Capel's man". One or two houses still have some defining characteristic. Take Cazenove, which employs few people who didn't go to Eton, let alone public school generally. Or Goldman Sachs, where the money culture has developed to a real extreme, resulting in almost psychotic working practices.

But in general little, if any, difference separates one house from the next. The poaching, the mergers and the acquisitions, have combined to eradicate individuality.

And here's the rub for the owners and managers of the businesses that began this carousel. The wads of cash may have bought improved performance and heightened productivity, but they have also brought about the destruction of the people culture. Equally significant in this has been the removal of the last shred of job security in this current recession. Surely it is clear now to most City slickers that they are only as good as their last deal. Companies have little if any loyalty to their employees. Is it any wonder the staff feel the same about their employers?

Bankers may not have to sign the Official Secrets Act, or swear allegiance to their masters. But the liberal use of carrot and stick may soon make this necessary. Many of the abuses of the Nineties occurred because people felt loyalty only to themselves, and in a highly pressured environment, somehow felt the company owed them more.

Perhaps it's time for the industry to question some of these values, and to return to treating people like people. Time, in fact, to start "talking in colours".