What can be done to rebuild the reputation of our banks? It’s an important question as the fall in reputation has been considerable
Problem after problem heaps up at the banks’ doors seemingly affecting every aspect of their business. We are all familiar with the scandals: LIBOR fixing, mis-selling of Payment Protection Insurance and interest rate swaps, serious computer glitches, let alone the taxpayer funded bailouts costing an estimated £1.2 trillion according to the National Audit Office.
Reputation has been hit on several measures. For example, researchers from Said Business School show that Barclays was hit by a fine of £290m for LIBOR fixing but also suffered a loss of £3.5bn off its share price in one day due to fears of litigation and general loss of trust. Reputational damage costs dear.
HR practitioners are already playing a major role in reform. Their contributions are critical.
Banks are restructuring and transforming to new business models; in a few years’ time banks will look quite different as retail arms separate from investment banks.
HR practitioners will be there to support the change and help establish new cultures.
Many leading banks are already reviewing corporate values, ethics programmes and codes of conduct; HR practitioners are working hard to ensure these are incorporated into every process from recruitment, training, promotions to pay reviews.
HR leaders are playing a key role right now in collecting and reviewing behavioural evidence that senior managers are truly living the values so that this can be fed into the pay review.
HR business partners are monitoring and advising on the implementation of corporate values in their specific areas to make them real and practical.
At the centre, HR professionals are identifying and reporting on HR risks throughout the business.
Although there has already been plenty of change to compensation packages, there will be more to come.
Compensation mechanisms and vesting periods will evolve as regulators and shareholders seek greater alignment to long-term performance and a further reduction in risk behaviours. Compensation expertise will continue to be at a premium.
It is just as well that, from my observation of nine years back in the City of London, that the financial sector is supported by a group of capable and dedicated HR professionals. Their knowledge, executive capability and business influence will be needed to accelerate the recovery of their companies’ reputations.