Monday, 21 January 2013

Is the wind changing in our financial institutions?

It was very encouraging to read about Antony Jenkins the new CEO of Barclays and his statement to his 140.000 employees at Barclays. ‘Behave or leave.’ He has asked his employees to sign up to the new code of conduct. Their five key values, ‘respect, integrity, service, excellence and stewardship’ He also went as far as linking bonus to performance which will be assessed ‘not just on what we deliver but how we deliver it.’  Therefore bonuses will be assessed against the new ‘purpose and values’ criteria.

This is the first time I have read or heard a CEO of a very large financial services organisation talk this way. He is using the right language and grasping the core issue of the problem. Time MCG has been arguing for this for some time now. Finally a CEO who has taken the courage to look into the root of the endemic cultural problem whose sector has inflicted the worst financial catastrophe ever to the detrimental effect of the wider part of our society. I really hope that these are not just words and that they remain true to themselves. I hope the bank has carefully defined what they mean by these five core values and how they will be executed.  Let me start by enlightening on two of these core values; Integrity and service.

Integrity. Integrity is a core value closely aligned to honesty and trust. This is linked to our very own interior which is why it so often hidden from others and a very difficult value to measure and to deliver. In my own experience this has been such a rare commodity when it comes to being faced with the drivers and shakers of business. Please read my last article which explains my definition of integrity and how we can put it into practice.
 
Service. We are paid to serve, to deliver and to contribute to our customer’s needs. This is where we have to work in ourselves to become more selfless whereby avoiding our very own needs. Service does not mean that we are here to invent what we think our customers want or by convincing them that this is what they actually need as gone are the days new products are forced down their throats. It is not for the customer to fall under the delusional hoax or clever tactics of the service provider simply for the providers own benefit. Remember what the Goldman Sach’s employee said ‘we saw our clients as muppets.’
 
No; a customer need is a gap that truly requires filling or a requirement that is visibly missing or requires changing or improving. A customer will actually have a problem in which it is up to the service provider together with the customer to work through a solution together and ultimately to be paid for that solution. That is service, and that is how we re-instil trust.
Finally Mr. Jenkins has taken the courage to analyse the bonus culture and how we measure success. Here he is going straight for the carrot; which has so foolishly contributed to the greed culture and as he correctly calls it the quick buck mentality or short term profit of the last 20 years. He wants to change this. He wants to reward people on upholding their values. To reward on the basis of measurement of service, purpose and customer satisfaction. This has to be step into the right direction.

Mr. Jenkins; what you are doing and saying is excellent. It goes without saying that if you are setting the high standards with your employees it also starts with yourself and your board as action must speak louder than words. Double standards and hypocrisy I hope is also in the history books with regard to the financial institutions where we have so often seen other CEO’s fail. This means that the remuneration of top management must be realigned with other sectors in Europe. Your bonus pool for your management team must also be limited until your goal of proper service and trust has been achieved within the culture of your bank. There will be no pay off if you fail in your objective.
 
In terms of your employees; changing a culture will not happen overnight. The rotten apples don’t just ripen. Something that is culturally endemic in mentality does not change at a strike of a magic wand. It will take a generation and changes will occur through strong leadership and the examples set by others just like it will take a generation to bring our national debts down to manageable levels. We can set the momentum in motion by simply getting rid of the rotten apples if they do not change. We will need a highly successful and stringent recruitment intake. We must allow for regular annual assessments of management and training ensuring continued and improved high quality of employees.  A tough warning system and lay off program will need to be put into place for those with sub-par behaviour even if this means whether the employee is making a lot of revenue for the organisation. An employee without values and a code of conduct, making considerable profit serves to no purpose whatsoever and sets the wrong example.
 
Executing your plan might have a knock on effect on your short term profit and shareholder value. In the long term your policy will win and your organisation will be a happier placer for it. Hats off to you! Imagine; if you can get this right there will be no need for regulation. Your employees will start to fulfil their true potential, dreams and talent. Your customers will be better off for it and the general public will regain trust in their financial institutions. I hope the new Barclay’s leadership sets a precedent for CEO’s of other financial institutions to follow suit.

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