Be careful what you wish for. The banking industry crisis from an HR perspective

Would you choose to fly on an airline that provided huge bonuses to pilots based on how many passengers and how much freight they could cram on their aircraft and on how few costs they incur? Not unless you were desperate. We really want those people up the front end of our plane to be hired on their skills and their tendencies to comply with regulations and place safety first. 

In the report from the Financial Services Royal Commission, Commissioner Kenneth Hayne AC pointed out the failings of that industry included organisational culture, governance and remuneration. "In almost every case, the conduct in issue was driven not only by the relevant entity’s pursuit of profit but also by individuals’ pursuit of gain," Commissioner Hayne said in his final report.

Paying high incentives to people to push the boundaries without a proper governance process in place is a high-risk strategy. Thank goodness our airlines have a culture of safety rather than an individual pursuit of financial gain.

While we don't know specifically what factors were being considered when the banking miscreants were being recruited, they probably weren't hired for their adherence to rules nor excluded for arrogance. It is quite possible the banks wanted, as many organisations do, people with ambition, an aggressive approach to doing business and were willing to pay for results.

This case reinforces the importance of organisations spending time identifying carefully the competencies required for the business to be successful. Rather than just a "wish list" or a series of descriptors for some behaviours, we need to ask the question: will someone who has these competencies succeed in our business and is that what we want? There is an old HR joke about the briefs given for recruitment which often list conflicting attributes: "a real go getter who will quietly do what they are told", "a team player who will work independently."

After identifying the really necessary and important competencies, we can then consider how to recognise and reward people who demonstrate them.

Starting with the overall direction of the business, what needs to be achieved, what values are important and what successful people in the past have brought to the business, will soon lead to the core competencies required.

If a bank was doing this and really examined what its customers needed, integrity may come out fairly high on the list. The behaviours required to demonstrate integrity might then be identified and can be built into the recruitment, training and performance management systems. More importantly, in the case of the banks, it would be important that incentives could not be earned if there was any doubt at all about individuals’ integrity.

Developing the desired competencies with specific behaviours allows planning, recruitment, training, performance management and remuneration to be congruous. This need not be a major exercise and can bring significant benefits to a business as well as provide considerable protection and meet community standards.