Banks need to re-evaluate core purpose, CIPD warns
Proposals published by the Parliamentary Commission on Banking Standards to change banking for good, are welcome and necessary, but insufficient in themselves to change banking culture.
This is the view of the Chartered Institute of Personnel and Development which highlights the need for improved leadership, from executive board to the frontline, as well as a greater focus on training and development and more opportunities for staff to be consulted if culture really is to change.
This month's CIPD report, Rebuilding Trust in the City, based on a survey of 1,000 employees working in the sector found:
• Despite the work of banks to reform pay practices, two thirds of bankers believe that some people in their organisation are still rewarded in a way that incentivises inappropriate behaviour, highlighting the need to reform bonuses that can reward excessive risk taking.
• Three in ten employees think senior bankers should be imprisoned where there is evidence of gross misconduct or negligence leading to substantial failure, for example a tax payer bailout.
• However, only four in ten respondents said there has been any initiative led by senior executives to change culture in the organisation over the last 12 months, and just 43 per cent think the culture in their organisation has become more customer focused.
• When asked what changes would be most effective in changing culture, 41 per cent of banking employees agree regulatory reform was important, however 38 per cent cited enhanced whistle blowing protection for people who challenge when they see something is not right and 36 per cent said greater consultation and engagement with staff.
• A third of respondents, rising to 42 per cent of senior managers said different leadership at board level would be most effective in changing their bank's culture.
Peter Cheese, CIPD chief executive, said: "The core of the problem is a failure of culture and lack of accountability, entwined with a decline of trust in leaders that pre-dated the crash, but has been hugely exacerbated by it. These problems are far from unique to the banking sector, a point clearly illustrated by the coincidental publication today of a report into the failings of the Care Quality Commission.
"Banks need to re-evaluate their core purpose and the values which should define their behavioural expectations and norms. A key part of this is to re-consider their longer term duty to customers, shareholders and the wider stakeholders they impact, including the communities in which they work. Employees need to be able to understand and relate to the purpose and values at every level. This needs to be reinforced through how leaders and managers behave on a daily basis and how they are recruited, managed, developed and promoted.
"If we define corporate values in practical and meaningful ways, we can define organisational cultures that are truly values-driven and which are lived, breathed and consistently reinforced through actions and behaviours day-in-day out, from top to bottom."