Home' HR Monthly : July 2018 Contents July 2018 HRM magazine 21
n the early 1990s, Australian banks began a
process of shifting away from a conservative
‘custodial culture’ to a more innovative
‘sales culture’. With increasing emphasis on
‘share of wallet’ through additional financial
products and a focus on customer service,
banks gradually moved from actively avoiding
the provision of advice to being full service and
advice providers. Insurance companies did the
same soon afterwards.
At the same time, with the emergence of new
technology, these organisations went through
the process of putting back-office activities out
to tender, creating large, centralised processing
and call centres, and undertook considerable
downsizing of staff. They simultaneously moved
from the previous model of multiskilling, and
job rotation, to what was referred to as the
‘McDonaldisation of the banking industry’.
The emphasis was on structures, systems
and technologies to build performance, rather
than people and culture. It isn’t unusual for
organisations adopting these strategies to
misattribute their success to their culture. They
operate under the misguided belief that their
culture is supporting their business when, in
reality, it’s working against it.
Such a strategy can produce positive, short-
term business results, but will eventually create
For the financial services industry, that time
It is time now for a greater balance between
custodial and sales orientations. Society used to
expect banks and insurance companies to have
their customers’ best interests at heart. We didn’t
see them as selling us products, but as helping us
achieve our goals. Financial services companies
have used this to their advantage in advertising,
but it appears their ‘promise’ may have been at
odds with their core beliefs regarding customer
relationships (an outcome of culture).
Let’s be clear on what we mean by culture.
It is the shared beliefs, norms and expectations
that guide how employees approach their work
and interact. It sets the standards for how people
believe they are expected to behave in order to
survive, fit in and get ahead.
Culture is established over time by the
organisation’s systems, particularly those linked
with reward and punishment. The line credited
to Peter Drucker – “ What gets measured gets
managed” – should also be stated as “What gets
measured is what’s really important”.
If sales goals are measured more than service
goals, then staff will very quickly figu re out sales
goals are what really matter.
Training and goal-setting management
processes are drivers of culture. How staff
get trained to behave and how managers get
trained to manage, create expectations for
desirable behaviour. Adopting aggressive sales
management and incentive systems is known
to create cultural norms of turning work into a
contest, where success comes at any cost.
Remuneration drives culture. Short-term
incentives (be they bonuses for lower-level staff
or options for CEOs) drive a culture of internal
competition and a focus on short-term ‘wins’,
rather than longer-term effectiveness.
Selection and placement systems, and
performance evaluation, drive culture. Who
gets promoted and why they get promoted send
Leaders drive culture. Through role-
modelling, reinforcing and other leadership
approaches, individual leaders impact the
culture in unique ways. What’s more, the beliefs
leaders hold have significant impact on culture.
Leadership drives culture. Over and above the
individuals, the collective decisions leadership
groups make impact the culture.
Communication systems drive culture.
How information f lows up and down the
organisation, and what type of information
flows, combine to impact culture.
In short, culture is the result of a complex
interplay of multiple variables.
Simply getting rid of incentives (as many of
the executives fronting the royal commission say
they will) will not in itself change the culture.
What were the underlying beliefs that led to
these in the first place? What about all the other
factors mentioned above?
Culture will always have the last say. Those
organisations that believe their aggressive
cultures have led to their success will, one day,
pay the price for this. And for many companies,
it looks like “one day” has arrived. •••
Shaun McCarthy FAHRI is the chairman and
managing director of Human Synergistics
New Zealand & Australia, and a member of
AHRI’s Advisory Research Panel.
Rotten to the core
Just getting rid of incentives isn’t going to ‘cure’ the malaise in the banking and
financial sector, says Shaun McCarthy FAHRI.
“[There is a]
that their culture
is supporting their
business when, in
reality, it is working
21/6/18 4:46 pm
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