Five lessons HR must take from the banking industry’s conduct


Transparency, efficiency and a focus on culture. AHRI’s Chairman, Peter Wilson AM, delves into the key lessons that HR professionals should take away from the Royal Banking Commission.

All of us will have been following the daily progress of the Royal Commission into Financial Services (RC) and also the testimony and confronting evidence given about inappropriate practices by the large banks, and the pain suffered by many customers as a result.

While many of us would have felt for our HR colleagues in those institutions, it’s also worth asking what our profession can learn more generally from RC events. There is little doubt that we will be able to identify with what’s been happening at the Royal Commission. But are we sure that we are pursuing best practices and responsible conduct with our own customers, staff colleagues and other stakeholders with our organisation?

1. Be transparent

First there is product and service transparency in the relationship with our customers. This means we must ensure that not only are our co-workers developed and trained to explain clearly what customers can expect from our different products, but also that they understand the terms, obligations and risks of what they are taking on. That’s at the beginning. We also need to ensure that customers understand the future risks and assessments that we need to undertake as part of our mutual business relationship.

2. Respond promptly

Second, the evidence at the RC shows we need to be alert to rectifying errors promptly and take due care in effecting any changes in our servicing arrangements with customers, and to do that in ways that explain causes and reasons simply, professionally and clearly.

3. Develop culture

Third, we need to develop and deliver the right culture for our staff with customers and stakeholders. Commissioner Ken Haynes has questioned all the big banks for saying they put customers first. Quite the contrary, it is clear that their communications have not been transparent and that the banks haven’t intervened to correct prolonged systemic mistakes. Or, when a service hasn’t been delivered but fees have still been deducted (sometimes to deceased persons). And when customers have been treated brutally and blind-sided on sudden terminations of product life or the total relationship.

4. Review performance systems

Fourth, the RC has brought both remuneration and performance systems into high focus. Incentive systems can be very valuable to motivation of staff and enterprise growth. However, those based on rewards for incremental sales that represent a high proportion of total potential remuneration, raise considerations of sales culture and ethics. They also ask the question about whether supervisors are aware of how bad conduct impacts relationships with the customer and disproportionate returns from the latter’s share of wallet, as the RC has uncovered.

5. Manage risk

Finally, we can reflect on the RC experience in terms of our risk management and quality assurance functions. This affects us at all levels of enterprise operations. HR practitioners must ensure their organisations operate within the law and the requirements of the regulators, where appropriate, and also respond efficiently to customer experiences, and the competitive environment itself.

This institute has been monitoring these royal commission events closely, on our members’ behalf. We encourage all practitioners to do the same and contribute to ideas and suggestions that our profession can take on board to ensure we remain ahead of the game. As we must.

 


Gain practical skills to solve ethical dilemmas at work with AHRI’s corporate course ‘Workplace ethics’.

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[…] set the tone in her opening speech, touching on the tumultuous year that has been. Using the Banking Royal Commission as an example, Goodear said the problematic times call on the HR profession to “truly […]

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Five lessons HR must take from the banking industry’s conduct


Transparency, efficiency and a focus on culture. AHRI’s Chairman, Peter Wilson AM, delves into the key lessons that HR professionals should take away from the Royal Banking Commission.

All of us will have been following the daily progress of the Royal Commission into Financial Services (RC) and also the testimony and confronting evidence given about inappropriate practices by the large banks, and the pain suffered by many customers as a result.

While many of us would have felt for our HR colleagues in those institutions, it’s also worth asking what our profession can learn more generally from RC events. There is little doubt that we will be able to identify with what’s been happening at the Royal Commission. But are we sure that we are pursuing best practices and responsible conduct with our own customers, staff colleagues and other stakeholders with our organisation?

1. Be transparent

First there is product and service transparency in the relationship with our customers. This means we must ensure that not only are our co-workers developed and trained to explain clearly what customers can expect from our different products, but also that they understand the terms, obligations and risks of what they are taking on. That’s at the beginning. We also need to ensure that customers understand the future risks and assessments that we need to undertake as part of our mutual business relationship.

2. Respond promptly

Second, the evidence at the RC shows we need to be alert to rectifying errors promptly and take due care in effecting any changes in our servicing arrangements with customers, and to do that in ways that explain causes and reasons simply, professionally and clearly.

3. Develop culture

Third, we need to develop and deliver the right culture for our staff with customers and stakeholders. Commissioner Ken Haynes has questioned all the big banks for saying they put customers first. Quite the contrary, it is clear that their communications have not been transparent and that the banks haven’t intervened to correct prolonged systemic mistakes. Or, when a service hasn’t been delivered but fees have still been deducted (sometimes to deceased persons). And when customers have been treated brutally and blind-sided on sudden terminations of product life or the total relationship.

4. Review performance systems

Fourth, the RC has brought both remuneration and performance systems into high focus. Incentive systems can be very valuable to motivation of staff and enterprise growth. However, those based on rewards for incremental sales that represent a high proportion of total potential remuneration, raise considerations of sales culture and ethics. They also ask the question about whether supervisors are aware of how bad conduct impacts relationships with the customer and disproportionate returns from the latter’s share of wallet, as the RC has uncovered.

5. Manage risk

Finally, we can reflect on the RC experience in terms of our risk management and quality assurance functions. This affects us at all levels of enterprise operations. HR practitioners must ensure their organisations operate within the law and the requirements of the regulators, where appropriate, and also respond efficiently to customer experiences, and the competitive environment itself.

This institute has been monitoring these royal commission events closely, on our members’ behalf. We encourage all practitioners to do the same and contribute to ideas and suggestions that our profession can take on board to ensure we remain ahead of the game. As we must.

 


Gain practical skills to solve ethical dilemmas at work with AHRI’s corporate course ‘Workplace ethics’.

Leave a reply

1 Comment On "Five lessons HR must take from the banking industry’s conduct"

avatar
  Subscribe to receive comments  
Notify me of
trackback

[…] set the tone in her opening speech, touching on the tumultuous year that has been. Using the Banking Royal Commission as an example, Goodear said the problematic times call on the HR profession to “truly […]

More on HRM