Zuercher Kantonalbank recently did away with a traditional management tool: setting annual targets for its employees. Avaloq, the banking software maker, has decided to follow suit and to go one step further, information obtained by finews.com shows.
The decision by Zuercher Kantonalbank CEO Martin Scholl to abolish the annual targets for his staff took the industry by surprise. Now, a second company of the financial-services sector has followed suit.
Avaloq, the maker of banking software, is adjusting the way it qualifies the work of its employees. «We abolished the classic performance management by the end of last year,» said Christina Huebschen (pictured below), global head of human resources at Avaloq, in an interview with finews.com.
Team Evaluation
Freienbach-based Avaloq has done away with the qualification of employees and also abolished most of the individual performance-based bonus.
Instead, each team will evaluate its own performance, following two main criteria: did we reach our targets? How well did we worked together?
Team Bonus
The company pays out four fifths of the total variable remuneration sum to the teams, based on their own performance evaluation. One fifth remains reserved for special team and individual achievements – paid out on the spot, at the time of the success, Huebschen explained.
Avaloq says the new bonus system strengthened the collective spirit and improved cooperation within the teams. At the same time, individuals are under pressure to perform better, because the team depends on the performance of all.
Collective Incentives
If some team members think that another doesn’t perform properly, the new system may foster discord. Huebschen said that the new system was a project only and that the company was eager to gain experience with the change.
If the executive committee decides to make the change permanent, the basis will be laid for a promising development of the organization toward more efficiency and better motivated staff, the human resource manager said.
Way Forward
Swiss banks in general know strict hierarchies, where employees are mainly looking to improve their own performance – not surprisingly, given that their remuneration is based on their personal efforts.
Experts say that the industry would be well advised to adjust their organizations in a way to enhance employees’ scope for decision making. Making hierarchies flatter improves the communication within a company, Ralf Metz said, who founded the me&me coaching firm together with Andreas Messerli.
Who Are the Decision Makers?
Many banks have deeply entrenched structures of decision making, staff qualification and management, signs of a strong urge to exert power and control within a company, me&me says. The two founders of the coaching company have a past at UBS and Credit Suisse.
A simple question suffices to see how progressive an organization is in terms of structures, Messerli says: «Who makes the decisions at your company?»
Holacracy – U.S. Innovation
Traditional management structures increasingly are pushed aside by newer ways of organizing a company. They prove superior to the old hierarchical structures in respect to how they foster innovation and co-determination. One such model is called holacracy, a system applied by Brian Robertson, the founder of Ternary Software, based in Pennsylvania, U.S.
Wefox, an insurtech company, and Liip.ch, an Internet agency, are two Swiss companies to have adopted the structure. Liip.ch has reorganized in 2015 and managed to improve sales by 30 percent since.
