Home' HR Monthly : September 2019 Contents 6
t was only a year ago that we received daily shock-horror updates
from testimonies at the Hayne Royal Commission into misconduct
in the banking and financial services industry. At that time, senior
financial services executives and directors from the big banks and
insurers paraded through the witness box to reveal a litany of wilful
and accidental disasters of fees for no service and pressure selling of
unwanted and poor value products, among many other things.
At the centre of these unfortunate events, Hayne identified the core
issue of poor cultu re. Banks and insurers were seen to possess, and
had even encouraged, a permissive environment for bad behaviour
by employees. Culture is a somewhat nebulous concept that is often
subjected to confused or erroneous interpretations. In simple terms, it
represents the rules of engagement in the workplace, or “how things are
done around here”. As former Australian of the Year, David Morrison
stated, “if, as a coworker, you see but walk past bad behaviour, you are
just as culpable as any perpetrator”. While Morrison was responding
to poor culture in the military following the ADFA Skype sexual
harassment incident, his comments are applicable to the essence of what
makes a bad culture – whether that’s in an army battalion or a bank.
Culture has two important components that aren’t difficult to measure
on an organisation wide basis: alignment and engagement. Alignment
metrics enable an organisation to assess whether co-workers identify
with leaders, missions, values and the road ahead. Engagement scores
will show whether co-workers are switched on by looking at how
connected and valued their contributions are towards achieving big
Culture is not that hard a concept to grasp. The main reason that
leadership in poorly behaving organisations run a mile from formally
measuring their own culture is a covert belief that the status quo
has facilitated their seniority and economic rents, and the plunder of
While there is anecdotal evidence of companies hoping the current
pressures to understand and remediate bad culture will just go away, two
high profile examples have recently emerged of positive breakthroughs
around changing critical sources of bad culture, identified by Hayne.
The first being ANZ which stated it was scrapping individual bonuses
and replacing them with individual participation in a group profitability
pool. This represents a huge breakthrough in thinking and approach. It
takes control away from an individual to falsify outcomes from bonus
drivers that are too close to the former’s personal influence. In the past
this has mainly been the institutional, securities and foreign exchange
traders in a bank who’ve had greater autonomy than their colleagues in
mainstream retail branch or business lending roles.
Until now, these so called ‘hot shot banking traders’ have lived ‘the
dream’ – bu mper bonus harvests when conditions are great, big nights
out at sex clubs to celebrate, and any losses to be socialised back to the
bank’s capital base when there is a slump. These professionals belong in
their own small business where they have to live with the consequences
of their own decisions throughout all economic cycle stages. It’s expected
many of these hot shot traders will leave ANZ and set themselves up in
this way. That’s a win-win for the economy as professionals will now
self-select into culture clubs where they belong. Exposure to personal
loss will make these people care about a positive culture. Even if they
don’t care, their hot shot colleagues will not put up with bad behaviour
that puts their livelihood on the line.
Secondly, AMP has just introduced a ‘future of financial advice’
model that walks the talk on Hayne. Conf licted commission structures
are gone, as are professionals who won’t or can’t meet the new higher
educational standards to be a financial adviser. Advice provided will
now be comparable to what industry superannuation fu nds offer.
There are still many gaps left for resolution in the provision of
financial advice, economically and efficiently, to all that need it.
The good news from recent announcements from ANZ and AMP is that
the cultures at both institutions are likely to improve in the future.
Let’s hope many other organisations consider this
and make business decisions that will improve
their own workplace cultures. •••
Some organisations are heeding the lessons of the royal commission.
BY PETER WILSON AM FCPHR AHRI CHAIRMAN
To read past Perspective columns by Peter
Wilson, visit hrmonline.com.au
21/8/19 1:40 pm
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