Mr Banker

Ah! jargon. We’ve all been guilty of using it. And sometimes business can’t seem to be conducted without it.

Know what I’m saying?

Recently my attendance at a long meeting — crammed with so much jargon that its purpose was utterly incomprehensible — resulted in a nasty workplace injury (too much nodding).

In my absence, a worrying thought occurred to me. Why had I been invited to a meeting that I could not understand and to which I could therefore not contribute?

To solve this problem I turned to first-principles. In my experience, the business world uses jargon for various reasons.

First, to convey status. The executive who employs the phrase “it was a hundred-dollar transaction” (pronouncing the “million” silently, as it were) is conveying that he or she is both far too busy to waste time actually speaking the word, and also far too important to be involved in smaller transactions.

Second, it serves as a type of Masonic handshake that allows one to assess the knowledge and status of others. For example, a new acquaintance at a cocktail party might refer to a recent transaction in which a client “wanted 120 basis points for a $75 line” and then wait to see whether I would (a) smile wryly at the client’s expectations, (b) shake my head grimly at the state of competition in the market, or (c) admit that I had no idea what he was talking about.

(However, this is not as searching a test as my new acquaintance intends. Although my regular mainstay, the thoughtful nod, won’t quite serve the purpose here by itself, if combined with an arched eyebrow it should answer nicely.)

Third, it allows us to maintain the illusion of communication without the attendant inconvenience of actual communication. This may not be clear to those who have not worked in a major corporate, so let me provide an example.

If our Credit department ever fully understood the deals proposed by our Leveraged Finance department they would try and stop them, thereby jeopardising the Leveraged Financed team’s very significant bonuses.

For this reason, we say “we are taking $500 at 65 basis points on a limited recourse deal at 15 times earnings on four-to-one gearing”, rather than the more technically accurate “we are lending half a billion dollars at wafer-thin margins to a shelf company with no other assets or cash flow that won’t even be able to pay the interest bill unless they can cut expenses by at least 10%”.

Fourth, it helps us to avoid thinking about what we are actually doing. To continue with my previous example, if the Leveraged Finance team themselves thought too much about the transactions that they enter into, there is also the possibility (admittedly slight) that they might recognise the incredible risks and call the whole thing off, thereby jeopardising the even larger bonuses of those to whom they report.

The get-together that prompted all this reflection was an internal meeting between old enemies well known to each other, so I can eliminate the first and second purposes, leaving only the “fool others and/or ourselves” motivation.

The situation appears to be thus:

  • There is a problem so large that no one is prepared to describe it in comprehensible terms.
  • Those responsible have recognised the need to shift the blame.
  • Those present at the meeting are now exposed to the risk of being aware of the problem but having done nothing about it.

Obviously an immediate action plan is now required.

Happily, my complete ignorance of the subject matter prevented me from asking questions, which, if appropriately minuted, may have suggested an awareness of the issue.

Email is a wonderful business tool that allows one to deny responsibility almost at the speed of light. For the guidance of my readers, I have copied my email to those present at the meeting, with some explanatory notes:

Dear All (not only implies that I am non-hierarchical but also ensures that no one can later deny receipt):

My apologies for a late response to the recent meeting. You may not be aware that I have been unwell recently (may garner sympathy from those who assume it was something serious).

The issues that we discussed at our meeting have, on reflection, given me cause for concern (good lord, this bit is actually true!).

My experience in this area is not recent (actually; non-existent) but unless someone is able to provide positive assurance that everything is as it should be (the “scapegoats, please raise your hand” gambit) it seems to me that the position is very simple.

Our existing policy framework should already deal with a situation like this, in which case we should follow it unless someone can advance a good reason otherwise (second go at “scapegoats, please raise your hands”). If it doesn’t, it should, and we should involve the policy team urgently now: first, to have the benefit of their expertise (keeping a straight face is not an issue in email!); and, second, to allow them to develop a policy with the advantage of a “real world” example to refer to.

Now, either my view will be ignored (in which case I’m off the hook) or followed (in which case I’m off the hook). No doubt the operational chaps will be furious about having to deal with the policy fellows (can’t say I blame them), but next time they may think twice about inviting me to a scape-goating meeting.

Problem solved!


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