Banks with thousands and tens of thousands of employees shudder when dozens or hundreds of demonstrators display their resentment of "Wall Street" and when surveys show that lots consumers dislike or blame banks. Then articles blossom, telling us how to convince employees that they should not be ashamed of being bankers.

These overreactions from the industry give the strong impression that some of us have guilty consciences. Otherwise, why join the fuss and amplify the distractions? Nothing new here, get on with business.

As compared with most other sources of goods and services, banks have unique propensities to annoy and in fact harm their customers. There are the bounced checks, declined authorizations, rejected loan applications, penalties for violating account rules—and the adverse impacts on customers' credit and finances of all of these. Banks do all those things, other consumer marketers don’t. Were banks ever popular?

And in general, the bigger your bank is, the more customers you will have who dislike you. Even forty years ago, when banking concentration was much lower, a consumer survey showed that the population ranked banks inversely to their size — because bigger banks had more customers, and hence more people hated them.

Whether we’re popular or not, the need to motivate employees to generate more value remains the same. The most effective way to accomplish this also remains the same.

Since many seem to consider our present circumstances extreme, let’s take an extreme example.

Often soldiers have gone on fighting to the bitter end, even though confronted with incontrovertible evidence that their cause is unjust and that their side is sure to lose. Their "morale" may have been terrible, but they didn't stop fighting.

Researchers have found that the main reason why military people go on pushing and taking risks even in an objectively hopeless situation is a force dubbed "unit cohesion." This is the responsibility felt by the individual to close teammates. It exists in units of 10 or 50, not 1000. 

The key reason why high personnel turnover saps performance of an army or a business, even when seemingly justified or even unavoidable, is that turnover destroys unit cohesion. If you don’t know your teammates, then you don’t care much about them.

Unit cohesion is the opposite of individual competition, and so it is impeded by individual incentives. If there is a fixed pot to be divvied up, then you want your co workers to do worse rather than better.

Unit cohesion is not improved by incentives that make each person's rewards dependent on the performance of people that he doesn’t even know and can’t help or influence.

If you don't want your associates to sit on their hands because they hear that the economy has collapsed and bankers are to blame, then you need to encourage associates in small units, people who are in frequent contact with each others' work, to help each other. Make sure that rewards reflect small unit and not just individual performance.

Allow substantial latitude for the unit to adjust the roles and rewards of its members to improve the total result. Once you don’t have to homogenize individual workloads simply in order to measure performance—a very poor criterion for job element allocation — task assignments can be adapted to optimize total value produced.

Take as an example a unit of several dozen people who bid for and make decisions on indirect auto loan applications coming from dealers. If the goal were to make an irreproachably "fair" evaluation of the individual underwriters, then we'd hand out the applications randomly and the underwriters would work largely in isolation — potentially competing with each other to do more and better.

But many will not compete. They'll be content with achieving average performance — or doing just well enough to avoid disciplinary action. There will be little sharing of knowledge, insights and best practices, no levering of specialized skills against particular credit situations.

Unit cohesion, in an environment of prompt, incisive reporting of unit results and facile communication, yields higher production volume and quality, as well as greater job stability and satisfaction. The underwriters can effectively pool and focus their knowledge of particular dealers, vehicles and customer situations. Individuals with special capability for acquiring information, for evaluating data or for negotiations can leverage these abilities for the benefit of the group.

A cohesive work unit is a self-organizing and highly adaptive organism. With access to feedback, professional expertise and limited coaching, it can achieve super additive accomplishments and rewards. See for yourself.

Andrew Kahr is a principal in Credit Builders LLC, a financial product development company, and was the founding chief executive of First Deposit, later known as Providian. He can be reached at