Shifting the dial on banking culture: Back to basics in a post-Royal Commission world

by Janet Houen, Group Manager, Organisational and Change Communication

Published on
April 4, 2019

‘Trust is Dead’, scream the headlines. ‘Customers Betrayed, ‘Culture Must Change’, ‘Heads Will Roll’. These are familiar refrains from recent Australian corporate history, with no more glaring example than the long-resisted Banking Royal Commission.

‘Brand promise’ has clearly not matched reality, undermined by a profit-driven performance system, with an overlay of often broadacre indifference to ethical practice. Executive and other bonuses kept flowing, bad behaviour was either overlooked or tacitly endorsed, dividends grew and grew, and many customers were left floundering in the wake.

Of course, it’s not all of them — financial institutions, board members, employees — but we know now how entrenched the problems are in many, often driven by built-in reward and incentive practices. That poses some hefty questions about how long it will take to turn the ships around (assuming the Commission’s recommendations are adopted and have related regulatory oomph). The Australian Banking Association’s Anna Bligh admitted recently that “banks are only making modest progress” to date on changing reward structures for frontline staff and brokers, and that shifting culture is a massive challenge. It also seems there will be some collateral damage along the way, impacting smaller financial services and broker operations whose business models will have change imposed (change which may indeed break them, if current media coverage of that segment of the sector’s concerns is accurate), regardless of their track-record. Perhaps — on a positive note — there may also be a ground-breaking opportunity for the emergence of new or reshaped players with a different vision.

Whatever way you look at it, reputations have taken a beating. If it was your business, where would you even start?

Let’s take it back to basics. We all know culture is an elusive concept — the ‘secret sauce’ that supports success (or forgives underachievement). In this case, it seems to boil down to three critical factors: leadership, accountability, and plain-old garden-variety integrity.

Despite years of investment in employee value propositions, lofty values and mission statements, annual employee engagement surveys, exotic retreats, ‘customer-centric’ strategies and leadership training, it is clear there has been a missing link between these aspirations, and the reality of systems and practices that drive operational behaviours.

Leaders must be the lynchpin for the culture change. Achieving real buy-in to the day-to-day practices which drive a healthy culture can only happen if you have leaders (at all levels) who know what is expected and have a genuine and regular link-in to the bigger picture. They must have accountability for guiding their teams’ behaviours and for actioning feedback, and must be supported with core communication tools and consistent materials to set them up for success, making it as easy as possible for them to fulfil that vital role. And yes, they must be recognised for their efforts.

In a geographically dispersed, diverse environment like a big bank, the strength of the internal communication network is key, not only to helping leaders do a great job of leading, but also in creating real and present line-of-sight for employees so they can truly be ‘brand ambassadors’, understanding what is going to be different and how they will contribute to the turnaround. From a change perspective, making sure the internal communication network is fit-for-purpose, engaging and targeted is a priority — the ability to get consistent messages to all in a timely way, led by the right voices, with room for ‘listening’, will be a critical success factor.

Financial institutions are not charities — correct. Shareholders expect a profit — correct. But people are people — a culture is built on them, and by and large individuals want to do the right thing, do a good job, and be part of something greater. If the banking sector is to achieve a renaissance in the eyes of its customers and employees post-Royal Commission, a refocus on the basics of leadership, accountability and integrity is the truly meaningful place to start, underpinned by robust and ongoing internal communication efforts.