Will new banking plans restore public confidence?

by | Oct 25, 2012 | News

Simon Hayward from Cirrus writes for People Management

The news that Lloyds Banking Group is considering abandoning annual bonuses for senior staff is an indication that Lloyds, like many other major banks, is re-examining its business practices as it aims to place values back at the heart of its organisation.

Lloyds’ chairman Sir Win Bischoff is the latest banking leader to speak out about the need to focus on longer-term objectives which benefit customers, employees, shareholders and other stakeholders rather than short-term objectives focused on immediate profit.

His views follow an announcement by Barclays that it is to scrap commission-based sales targets for front-line staff and will pay bonuses purely on customer satisfaction.

Sir David Walker, chairman designate of Barclays, said last week that the appropriateness of incentives must be analysed and that structures where revenues were related to performance were fundamentally flawed and corrupt. These are bold words which few thought we would ever hear from a big bank leader before the dawn of the banking crisis.

Lloyds’ proposals – currently being put to investors – would align bankers’ pay with the long-term interests of shareholders. Lloyds reportedly hopes that the plan will demonstrate to both politicians and the public that it is becoming a more responsible and values-led organisation. This is further evidence that big banks are taking their responsibility to society more seriously.

Will Lloyds’ plans convince a cynical public that real change is happening? Maybe not right away. But if its leaders can be role models for a new set of values, successfully engage employees with these values, and transform its business practices to support them, we should all start seeing a real change in culture and more satisfied employees, customers and shareholders.

Please click here to read Simon’s article on the People Management website.

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