Blog Article

Banker bashers need to see the bigger picture!

Posted by Graeme Yell

Graeme Yell

Recent research by the LSE has estimated the cost to ten leading global banks of ‘scandals’, comprising fines, money set aside for compensation to customers and liabilities arising from other areas as a whopping £148bn.

One way to look at this is that all of the banks in the list are from the UK, Switzerland, Spain or US – combined these have a population of less than 500 million people – so the cost of scandals represents c£300 for every man, woman and child in the countries in which they are domiciled. It is a staggering figure whichever way you look at it.

Now I have heard more than enough ‘banker bashing’ for one lifetime.  Like the vast majority of people they go to work wanting to do a good job, which in most cases means doing what they believe the bank sees as important – and what is communicated to them as being the important things to achieve.

Why financial services sector people stand out
There are characteristic differences in the overall ‘make-up’ of people who work in the sector – these are detailed in our recent research “Appearances can Deceive” which is, we believe, the largest study of people working in financial services ever conducted, with data on over 800,000 employees from 2600 organisations.

However these do not highlight any significant differences with respect to people’s integrity or moral fibre and nor is there any reason to assume that there is any difference in this respect.

What we did find is a tendency to be overly confident in their own ability, highly task-focused and a predominant internal focus (rather than looking more broadly at the outside world)

Pay and processes are half the story
The response to these conduct issues – in terms of changes imposed by regulators or by the banks themselves – have been almost exclusively focused on what I would call organisational ‘hard wiring’ – processes and systems (with a particular focus on increasing control through introducing more checking and scrutiny).  There has also been particular regulatory pressure on pay as well.

Processes and pay have some bearing on how people work but behaviour is driven in far more complex ways than just through the application of rules or changes to pay. Believing that this is the case is a bit like suggesting you could raise children without any human contact but just through the judicious use of pocket money and the application of rules and restrictions around what they can and can’t do.

We have heard a lot from the media, government and bankers themselves about the need for culture change in banks. Here is where the rhetoric and the practicalities don’t match up. Applying tighter rules and controls will not achieve it.  In my experience very few people can even define culture, much less how you change it.

Changing habits
Culture drives behaviour because it is the set of shared assumptions, beliefs and values about ‘how we do things in this organisation’. Changing it needs to start from understanding it (a vital first step which most banks have skipped) and implies recognising, challenging and changing deeply ingrained patterns of behaviour and thought which have been reinforced by years of organisational habit.

Superficial pronouncements of new sets of values, and vague new ‘mission statements’ with a bit more emphasis on customers, will not do the trick.  In many cases we are seeing the same people as before exhorting the organisation to do things which fly in the face of what has made them successful in the past.

This is about as likely to succeed as lifting yourself up by your shoelaces.

This is where the findings from “Appearances can deceive” become highly relevant – the high levels of self confidence, the tendency to get deeply engaged in tasks and the narrow focus on their own organisation – all of these add up to a recipe for not taking the time to step back and look at the broader picture. All types of lasting personal and organisational change need to start from honest and accurate self assessment to identify not just what the issue (or its symptoms are) but why it happens and what steps need to be taken in order to address it.

 

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