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Christine Kininmonth
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+ About Christine Kininmonth

Christine Kininmonth is a journalist, former Sky News and Channel 7 Newsreader, and former panellist on ABC TV’s The New Inventors. She was also a business owner for 20 years.  An avid reader, Christine believes reading is essential to business success. She presents The Growth Faculty’s Business Book Club each week.

Greed is not good

Thursday, February 07, 2019

The industry is a large industry, large participants, lots of people. Things go wrong. It's a human system, therefore things go wrong. Sometimes things go wrong through dishonesty. Sometimes things go wrong because of neglect, carelessness, or just sheer coincidence.

– Justice Kenneth Hayne, Commissioner, Banking Royal Commission.

 

Despite 76 specific recommendations announced this week, two key issues keep bubbling to the surface from the Banking Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.

Why did it happen, and what changes could be made to the financial services culture to stop it happening again?

In both, the interim and final reports, Justice Hayne determined that the answer to “why” seemed to be greed – the pursuit of short-term profit at the expense of basic standards of honesty.

“How else is charging continuing advice fees to the dead to be explained?” he asked.

Greed led to financial institutions focussing on one thing, and paying lip service to the other.

The Report concluded:

      Selling became their focus of attention. Too often it became the sole focus of attention.

      Getting culture and conduct right is not a supervisory requirement. It is necessary for banks’ and banking’s economic and social sustainability.

Why were these industries so intent on selling?

Because, the rewards were linked to something other than what was best for the organisation.

According to organisational culture expert Patrick Lencioni, bestselling author of The Advantage, most companies’ compensation and rewards programs get divorced from this purpose, and take on a disconnected life of their own.

When employees get a raise or bonus, he says, “...they need to understand that they are being rewarded for behaving or performing in a way that is consistent with the organisation’s reason for existing, core values, strategic anchors, or thematic goal.”

Similarly, they should understand that when they are denied a raise or bonus, it is because they did not perform in a way that was consistent with all those things. 

“These are great moments of truth for leaders to demonstrate that they are really committed to what they say is important,” he explains.

Lencioni asks leaders to answer six critical questions so they can create clarity and build a healthy organisation. Imagine, as you go down the list, the answers the banks should have kept top of mind:

  1. Why do we exist? (the fundamental reason we were founded)
  2. How do we behave? (the ultimate guide for our employees’ behaviour at all levels)
  3. What do we do? (our business definition)
  4. How will we succeed? (our plan for success and differentiation)
  5. What is most important, right now? (our single top priority we’re focussing on)
  6. Who must do what? (our respective responsibilities)

 Lencioni writes that members of any leadership team must take responsibility for ensuring that compensation and rewards programmes are simple, understandable, and, most important of all, clearly designed to remind employees what is most important.

“This is especially true at the executive level, because the way leaders themselves are rewarded and compensated will inevitably have an impact on how they motivate their people.” 

As the Banking Royal Commission report stated, getting culture and conduct right is necessary.

Patrick Lencioni would agree:

“The single greatest advantage any company can achieve is organisational health. Yet, it is ignored by most leaders even though it is simple, free, and available to anyone who wants it.”

See Patrick Lencioni LIVE in Sydney and Melbourne this March. Patrick Lencioni will be joined by Thinkers50 and best-selling author, Whitney Johnson as well as CEO Coach and author, Kevin Lawrence. This one-day summit will equip you with the field-proven model to create clarity of vision, cohesive leadership and high performance teams. 

Switzer has negotiated a $100 discount for our network: CLICK HERE FOR TICKETS

 

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