Clashing lawsuits over sexual harassment allegations at Citigroup this week have jolted the bank’s reputation, but they should prompt soul searching across the investment banking industry.
Julia Carreon, a senior executive in Citi’s wealth management division, sued the bank on Monday, the Financial Times reported, alleging that the human resources department forced her out after she was sexually harassed by Andy Sieg, head of Citi Wealth.
Her suit claims that when HR investigated the issue she, not Sieg, was its main target.
Citi maintains her suit is without merit and on Tuesday it countersued, alleging Carreon had “fabricated a legally infirm and patently false theory that Mr Sieg sexually harassed her”.
It pointed to statements she had made praising Sieg, even after she asked to leave Citi.
GlobalCapital offers no opinion about the merits of the dispute, which courts will have to decide.
But many in investment banking will feel a pang of recognition at Carreon’s words to the FT: “In my opinion, Citi’s HR doesn’t investigate misconduct, they manage outcomes for senior management.”
Old school modernised
The modern cliché — underlying countless jokes about “I’ll call HR” — is that personnel officials are all-powerful thought police ready to pounce on any breach of woke codes of behaviour with cold and humourless vengeance.
The investment banking culture of the 1980s and 1990s, riven with bullying, casual sexism, racism and homophobia, has undoubtedly been massively — though not entirely — cleaned up, something only a few dinosaurs regret. HR teams have laudably carried out and encouraged much of that work.
Employees’ expectations of what constitutes acceptable treatment have risen, and most of the time, they are met. Many firms have behaved in an exemplary way towards individual staff members facing personal and family difficulties, supporting them through hard times and enabling them to return to work when able.
Hopes dashed
But something is not right. Time and again, employees who have enjoyed working at a firm and progressed well suddenly run into an interpersonal problem at work, often with their line manager.
Excessive demands, criticism, unfair blame and lack of responsibility can quickly amount to bullying and an unbearably unpleasant working existence.
It would be nice to be able to say that this happened more often at smaller, backward firms. Unfortunately, the reverse is truer. Anecdotally, these cases often occur at the biggest, most prestigious banks which really — resisting the temptation to use Trumpian capital letters — ought to know better.
The ruthless competitiveness that has driven them to the apex of the industry can make them harsh places to work.
When a painful situation like this strikes, employees turn to the HR department, as they have been taught to do ever since they joined — believing in the firm’s inspiring mantras about its people being its most valuable asset.
They expect redress — or at least, a sympathetic hearing, an even-handed, transparent and timely process to consider all of the evidence and adjudicate the issue, and an outcome that bears some relation to fairness.
Far too frequently, what they experience is like a lift door opening to reveal a dizzying perspective down an empty shaft.
Brusque, impersonal treatment; silence for weeks or months; isolation from colleagues and an overwhelming sense of powerlessness can pervade.
When the manager complained of has status within the firm, the disciplinary process seems to close protectively round them, leaving the employee who has asked for help shunned and bereft.
It’s often said that if an employee can claim sexual or racial discrimination the firm is more likely to cave in and give them a speedy settlement. Plenty who have actually suffered such treatment would disagree.
Missing the point
Whatever the rights of the Carreon case, workers in the industry know that, for all its efforts to become more egalitarian and humane, investment banking has serious blind spots.
They cannot be dismissed as accidental, since the pattern is clear. When relations between employee and boss turn sour, political clout many times overrides justice.
In milder cases, a sexually oppressive manager gets shunted sideways rather than being properly disciplined. In worse, a suffering employee can be smothered in bureaucratic procedures which amount to silencing, or is even persecuted.
Banks, especially the big ones, can afford to pay people off or keep them dangling for months in limbo. Their reputations can even bear a few scandals, especially at lower levels. Firms are good at counting and impassively weighing such expenses.
What they fail to grasp is the opportunity cost of this behaviour. Every bad manager who goes unchecked will continue to demoralise those around. Talented staff are hampered or driven away.
Instead of that, imagine the encouragement and burst of fresh air that would flow through the firm from resolving disputes impartially, swiftly and sensitively.
The fault should not be pinned on HR staff alone — they feel they have to defer to senior management.
Only a top-to-bottom, multi-year reform of investment banks’ culture of management and employee relations can rid the industry of this shame.
That has to start with a clear message from the top. Will any CEO take the opportunity on their coming annual results call to take a stand, admit their bank needs to change and seize the opportunity to set the firm apart from competitors by its healthy culture? Citi’s Jane Fraser, perhaps?