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The landscape has changed and “banks are now wrestling with the changes they need to make to thrive both in the new economic environment and in this new landscape.” If leaders want to avoid disconnect and truly engage employees in a new model which delivers results for customers, shareholders and the wider world then the message has to be strong and consistent.
Employee engagement in its purest form reflects the extent to which employee beliefs and behaviours reflect the values and vision of the organisation. Loyalty, innovation, reputation and customer excellence all flow when engagement is brought into the mix.
But when we look at engagement, particularly in larger organisations, it can sometimes be difficult to separate engagement or loyalty within the team from engagement within the organisation. Admittedly in an ideal world when the leadership has taken time to define the strategy, vision and values and then to inculcate beliefs and behaviours throughout the organisation then the team should be the organisation; with every department or division working towards a common goal. However, the larger the organisation the more likely there are to be sub-cultures and therefore the more likely it is that team members will look no further than their own departmental leader for guidance.
If that departmental leader is fully immersed in the desired culture then there is no reason why engagement levels should not be strong. But the larger the organisation and the more that individuals relate to their department the greater the chance that disconnect can creep in between the organisational leaders and those further down the chain
“Be the change that you wish to see in the world.” Ghandi
To overcome this potential disconnect it is important for leaders to not only define the culture but to be seen to be living it on a daily basis. It’s no good talking about creating exceptional levels of customer service if you then impose targets which negate any hope of giving the time needed to customer queries. It’s no good talking about inclusion and diversity if you are overheard making derogatory remarks in the lift. And it’s no good talking about creating lasting value for investors if you then spend vast sums on entertainment or in awarding bonuses to a chosen few.
A report in August of this year from the High Pay Centre revealed that in 1998 the average FTSE100 CEO was paid 47 times more than their average employee. This year the figure has risen to a multiple of 130 times that of the average employee. Perhaps even more stark is the comparison made by Bank of England deputy governor Sir John Cunliffe in a speech at the Chatham House conference this week. Comparing the amount which is allocated to investors Sir John said that over the ten years to 2007, the average amount attributable to shareholders in the banking industry equated to 75% of that paid out in salaries. By 2013 that share had fallen to just 2%.
The speech which was entitled ‘regulatory reform and returns in banking’ provided an overview of three major developments in the regulatory landscape since the financial crisis; namely macro-prudent ‘machinery’, a strengthening of the international governance framework and the shift in prudent supervision to concentrate on areas of greatest risk. Sir John reviewed all three areas and then considered the commercial implications of these changes for the banking industry. When it came to the shareholder return comparison he commented that “average pay bill in banking is skewed very heavily towards the top earners,” and suggested that that needs to be addressed as banks adjust to receiving a smaller slice of the pie in future.
The rights and wrongs of salary multiples or shareholder multiples are perhaps questions for another time. But when organisations are trying to transform their culture, to move towards one which values engagement and looks to provide long term excellence for customers and shareholders then policies which appear to skew the pie in favour of a few simply don’t send the reforming message to anyone.
As Sir John said, the landscape has changed and “banks are now wrestling with the changes they need to make to thrive both in the new economic environment and in this new landscape.” If leaders want to avoid disconnect and truly engage employees in a new model which delivers results for customers, shareholders and the wider world then the message has to be strong and consistent.