What can we learn from ANZ and Jordan Belfort?
Last Friday the Australian Financial Review revealed allegations made against ANZ by some traders in its global markets division about the bank’s apparent tolerance for alcohol, drugs and strip clubs. They are claiming millions in damages for an alleged toxic culture at the bank that led to their behaviour. From the bank’s perspective, the two traders have been sacked for unacceptable conduct and it will now be played out in the courts.
Whether the claims are substantiated or not, this is not an isolated incident in banking.
The Wolf of Wall Street
The film The Wolf of Wall Street is a 2013 American film adapted from the memoir of Jordan Belfort and recounts (from Belfort’s perspective) his career as a stockbroker in New York City, including an excessive, drug and alcohol-fuelled lifestyle made possible – in part at least – by rampant corruption and fraud.
The film did nothing to enhance the image of dealing rooms around the world, and the latest claims against ANZ have scratched the scab of a painful wound that many may have hoped had gone away – or at least been diminished – after the Global Financial Crisis. This is not to suggest of course that all traders are modern day manifestations of Jordan Belfort.
I’m sure many traders at ANZ and other banks would have read the latest claims over their morning coffees and felt saddened by the whole fiasco. Some might even be glad of the press and harbour a deep-seated hope that these latest events might shine a light on a culture they can barely tolerate. Others might feel the need for change but know that ‘culture’ is a powerful force – and deep down doubt themselves and wonder if they have what it takes to go against the norm. Others still, might be wondering what all the fuss is about and to toughen up.
APRA and the Culture of Australian Banks
In the same article, it has also been reported that the Australian Prudential Regulation Authority (APRA) is increasing its surveillance of the culture in Australia’s large banks as part of its prudential supervisory activities to reduce the risks of bad behaviour and misaligned incentives and the subsequent impact on the stability of the financial system.
In fact, APRA Chairman Wayne Byres has established an internal team to focus on governance, culture and remuneration. Byres said in November “tackling the underlying culture within financial firms is, to a large degree, the final frontier in the post-crisis response”. He also said that he had had many conversations with banks where he asked what was to stop various cultural change programs from being forgotten once they were rolled out. He commented that he was yet to receive a really convincing answer.
And Therein Lies the Problem…
I’m pleased the APRA chairman is forward thinking enough to ask the hard questions. What we must be careful of however is driving more ‘programs’ that actually don’t make much of a difference.
So, what can we learn from the latest events? I think there are three things:
Lesson #1: Culture Change is not a Program
While many aspects of changing a poor culture need a programatic approach to begin with, working on your culture should be less like The Wolf of Wall Street and more like The Never Ending Story. ‘Culture’ is impacted in a positive, negative or neutral way in every behaviour, decision, strategy and customer interaction. When we use terms like ‘roll-out’, it depicts an event, not an on-going strategy that becomes part of the DNA of the organisation – forever.
Lesson #2: Work on Four Areas Concurrently
Organisations need to become acutely aware of the way it goes about business in four areas – mindsets, behaviours, culture and systems. All four provide excellent levers for change and should be used generously.
For example, I was once talking with the head of technology of a large bank. He said they were too busy to work on culture because they had a large technology rollout which would consume their time and energy. I politely pointed out that he had in front of him a perfect opportunity for culture change! I outlined three areas for him to think about and leverage: (a) making sure the technology enables and drives the right strategy (the why); (b) making sure the technology drives the right behaviours (the what); and (c) ensuring the deployment (not the technology itself) is completely aligned with the espoused culture, values and ethics (the how).
Lesson #3: Make the Hard Calls
Tough decisions will need to be made. For example, I have worked with many organisations where some of the highest performers (as measured by the amount they bill for example) demonstrate the worst behaviours. When challenged, many sadly justify not getting rid of them on the basis of their financial (or other) value to the business and say they just have to put up with them – or to get rid of them would be too hard. There are some interesting case studies to suggest that when organisations made the hard calls, markets, customers, staff and stakeholders respond very positively. Rather than lose business, these firms thrive. Functional heads, particularly HR, must support managers who want to make courageous decisions to exit people who don’t deserve a place in your organisation.
Now back to ANZ…
Shayne Elliot, ANZ’s new CEO now has the job to clean up the mess. And it seems he might be the right CEO to get the bank and its culture back on course.
It is reported that within weeks of the announcement on October 1st 2015 that new CEO, Shayne Elliot would succeed Mike Smith as CEO, Elliot began work on a new strategy document to redefine ANZ’s commitment to customers and to operate within community expectations. He has also taken a stand against bad behaviours by leaving two other organisations.
It will take a holistic, concerted and ongoing approach to create a thriving, healthy and high performing culture. Rolling out another program, fiddling with incentives or putting out yet another Code of Conduct simply won’t be enough.
Phillip Ralph is the managing director of The Leadership Sphere and is an author, speaker, mentor, facilitator and coach. He can be contacted on 1300 100 857.
Phillip worked at ANZ between 2001 and 2007.
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