Monday, June 11, 2012

Declaring that what bankers do matters but  'how we do it matters even more', Lady Susan Rice, Managing Director of Lloyds Banking Group in Scotland, spoke about 'change from within' the financial services sector, and 'how bankers can re-earn trust', at a forum in the City of London on 29 May. It was organised by the think-tank Tomorrow's Company and the Chartered Institute for Personnel and Development (CIPD), and hosted by Linklaters international law firm.

Lady Susan Rice, Managing Director of Lloyds Banking Group in ScotlandRice, the first woman to lead a British clearing bank, is the Chair of the new Chartered Bankers: Professional Standards Board (CB: PSB), launched last October. She said that the CB: PSB will publish its first professional standard this summer, based on a Code of Professional Conduct which has been agreed by nine banks. The aim is to promote ethical awareness, competence and focus on customers amongst the 350,000 employees of the nine leading UK banks who are members of the CB: PSB: 'how they can carry their personal standards and values to what they do on the job.'

Bankers had talked 'a lot about the “what” but not enough of the “how”' of their operations, which was essential for the health of society. What had gone wrong that led to the crash of 2008? 'We lost sight of our values,' she said. 'If we operate with values, we'll have sustained value.'

She outlined the four 'C's of structural change: Competition, Capital, Compensation (the right level of pay and reward) and Controls (regulations). These were 'a form of engineering to shape the future'. But 'tick box compliance isn't enough,' she said. There was also a need to focus on Customers and Colleagues. 'Banking is not only about profit. Banking is nothing if it is not about trust.'

The Standards will focus on 'what people should do and not just on what they shouldn't do' in order encourage 'a culture of what is right' and to 'restore values of trust, integrity and probity.' To achieve this, she added to her list of 'C's the words Community, Conscience and Care.

On the panel responding to her remarks, Joe Garner, head of UK retail banking and Deputy CEO of HSBC Bank plc, said that 'integrity means living your values'. Admitting that HSBC had sometimes got things wrong, he emphasised the bank's commitment to 'courageous integrity' in decision-making when things get tough. The bank had conducted a day's brainstorm with the senior leadership team, focussing on 'what they love; what they fear and what they've got in their pockets'. It had led to profound discussions ranging over family, illness and death. Staff showed ability to deal with difficult decisions in their personal lives and so had the competence to do the same in their working lives, 'bringing their whole self to work.' They were 'people first and bankers second.'

Professor Veronica Hope-Hailey of Cass Business School in the City called for 'benevolence towards people in the workplace and outside the workplace in the community'. Trust in business, she said, had not suddenly slipped down the ratings, post the banking crisis. Cass research before the crash had shown that trust was on the wane even then. She pleaded to 'kill spin' and for business leaders to have the moral courage to tell the truth. If there was to be forgiveness towards bankers, 'the rest of us should not engage in finger-pointing,' she said. 'The more we paint banking as a venal sector, the more we will attract venal people into banking.' Warning how easy it was to lose trust she quoted the saying that 'trust comes on foot but leaves on horseback.' Trust took a long time to build but could be quickly lost. Those that enhance trust showed great moral courage, she added.

Peter Cheese, Chairman of the Institute of Leadership and Management who takes over as CEO of CIPD in July, said that the crash of 2008 was a result of 'putting financial performance above ethical behaviour. Culture is not part of the game but is the game. Culture is driven from the top. Trust is absolutely critical to sustainable performance.' He was not against bonuses, but the critical issue was how they are measured. Human Resources, he added, 'used to be seen as the conscience of organisations' and needed to reassert their influence.

Chairing the event, Tony Manwaring, CEO of Tomorrow's Company, said that getting the culture right 'is the surest form of competitive advantage'.

Concluding, Susan Rice deplored the limitations of quarterly reporting. Cultural change in organisations can happen very quickly, she said in response to a question from the floor on how long it would take, but it could take 'half a generation' for the public to notice the change. Joe Garner added that social networking could shift cultural perceptions far more quickly than in the past.

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