By Daniel Hunter
Less than one in three financial sector workers outside of senior management say they’re proud to work in the sector, almost two thirds of all workers in the sector believe some people in their organisation are rewarded in a way that incentivises inappropriate behaviour, and three in four financial services workers (eight out of ten workers in the banking sector) say they think some people in their organisations are paid excessively.
“Financial services remains a sector under fire. Despite median pay across the sector being in line with other industries, and many workers whose working lives couldn’t be further removed from the extraordinary and atypical world of investment banking, even within the sector too many workers’ pride in their work and faith in efforts to repair broken cultures is being torpedoed by the high profile and damaging behaviours of the recent past," Peter Cheese, the CIPD Chief Executive, warned.
The report, which is being launched at a panel event hosted in collaboration with the Chartered Banker Institute, seeks to place the issue of culture and trust within the sector at the centre of debate ahead of the publication later this month of the Parliamentary Commission on Banking’s final report.
Employee Outlook: Focus on rebuilding trust in the City, is based on a survey of more than 1,000 employees in the financial sector and finds that 75% agree that some people in their organisation are still paid excessively. Employees at levels below senior management are most likely to agree (79%) but even 66% of senior managers agree that some people are paid excessively.
Perhaps even more worryingly, almost two thirds (65%) of employees agree that some people in their organisation are still rewarded in a way that incentivises inappropriate behaviour. A similar proportion of respondents (64%) agree that how people are rewarded and what they are rewarded for is not clear, while 67% agree there is still too much secrecy around what senior managers earn. Senior managers are less likely than employees at other levels to agree this is the case, but even amongst senior managers, 54% agree with this statement and just 23% disagree.
The survey also found that less than half of respondents rank customers as their organisation’s most important stakeholder, while a third consider shareholders to be their number one priority. While 43% said there had been a shift in focus towards the interests of customers in the last year, 39% had seen no change in focus and one in ten had seen the emphasis shift away from customers, in favour of profits and shareholders.
“For too long, many of our financial institutions had been built on cultures that encouraged and rewarded excessive risk taking and singular focus on short-term financial gain," Peter Cheese, chief executive at the CIPD, said.
"These cultures reflected a loss of sight of core purpose, at the expense of responsible and sustainable business success, and driven by the disproportionate influence of some parts of investment banking over a vast and important industry that also encompasses critically important retail banking support for individuals and businesses. It’s encouraging to see the wider recognition of these failures, but this survey shows there is still much more work to be done. I hope the Parliamentary Commission on Banking’s final report later this month will acknowledge the importance of addressing cultural and behavioural shifts as much as regulatory change.
“Organisations 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.
“HR has to reflect on its part in what’s gone wrong in the banking sector, and step up to the crucial role we should play in understanding corporate culture, and in measuring, incentivising and promoting actions and behaviours that will make sure that we rebuild trust in the sector. Whilst banking has been at the centre of a lot of the debate, there have been similar failings in many other sectors. In organisations from the NHS, to the food industry and the media, we’ve seen similar problems. Even within banking, the headline grabbing actions of the investment banking arms of these organisations has skewed perceptions of an industry that, on the high street, is not out of kilter with the shops, offices and other businesses it operates alongside and is critical in supporting. In all these places we need to be pulling all the right levers to create organisational cultures in which people can speak up, innovation prospers and sustainable approaches to business are rewarded.”
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