With reward schemes under the microscope following the Banking Royal Commission, Maximus looks at how financial services can approach motivation differently and refocus the business towards impact and customer centricity.
“It’s money in the bank!” was once a saying that stood for certainty of turning a profit; the reliability of a positive outcome. However, that idiom has lost its edge since the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services turned Australia’s largest industry on its head.
Customers are seeking greater accountability, convenience, product relevance and a better experience than ever before, specifically – but not limited to – banks and insurance companies. With the sector across the board looking at how it can shift away from purely financial motivations for its leaders and people, Maximus re-examines the world we find ourselves in and offers some practical advice.
SWITCHING FROM EXTRINSIC TO INTRINSIC MOTIVATORS
The finance industry’s reliance on extrinsic motivation has been too strong, and while not the root cause of misconduct in the sector it has been a contributing factor, says Director of Maximus Brent Duffy.
“Extrinsic motivators are ingrained in our society, from the reward ‘stickers’ given to young children at school, through to pocket money and even exam marks,” he muses. Intrinsic motivation is harder to instil. “You need to know what each individual’s innate motivations are,” Duffy notes.
Chris Slattery a Director at Maximus, says a major problem uncovered in the Royal Commission is that monetary rewards may have been set up to increase value to shareholders. But organisations have gone outside their own rules when rewarding people, such as paying bonuses irrespective of targets being met. When these benefits are paid under questionable conditions, it creates a system that encourages self-interested behaviour and takes away from organisation and customer impact.
STEWARDSHIP AND OTHER INCENTIVES
There are a range of ways to motivate people outside profit-linked bonuses. Duffy cites the ideas of management writer Peter Block, whose book Stewardship talks about driving accountable and committed workplaces without resorting to control or compliance strategies.
“Stewardship is not about that patriarchal leadership, it’s about distributing accountability widely, moving away from a drive for short-term immediate gain and looking to longer-term common good for communities,” Duffy explains. “Banks are trying to tackle this but are reverting to ‘control and compliance’ strategies through governance and risk, rather than shaping a new path and refocusing intrinsically on their shareholders, customers, their people and the community.”
Personal accountability, evidence of impact, individual growth and concepts of working for a common societal good can be more nuanced and more effective motivators for performance, he adds. As more millennials join the workforce, they are telling companies they want rewards beyond pay. “They want more flexibility and look for organisations with social responsibility, ethical standards, integrity.” says Duffy.
PUTTING PURPOSE BACK AT THE HEART
“We’ve spent the last few years talking to leaders about their purpose, identifying why they chose to be a leader and what that looks like beyond themselves: what they provide to their team, their peers, their organisation and the community they lead in,” says Duffy.
Incentives should facilitate the organisation so that it fulfils its purpose, he says, rather than individuals; but there are still ways to introduce innovative schemes.
Professional services firm ARUP is one example of a group making this line of incentive work. This multinational includes every single employee in their profit share scheme. Coupled with business goals that include serving the community, the organisation is a highly valued place to work.
Companies that look to deliver what their customers need and aim to deliver genuine service and value, set themselves up for future business success.
“Financial organisations are now talking much more about defining their purpose in relation to their customers as key stakeholders.”
– Chris Slattery, Director at Maximus
FOCUSING ON COMMUNITY VALUE TO RE-ESTABLISH A SENSE OF PRIDE
“Financial organisations are now talking much more about defining their purpose in relation to their customers as key stakeholders,” adds Slattery. “The challenge is taking that brave move to do it and live it through leadership and the broader organisation.” Previously, she says, boards and executives concentrated on short-term shareholder return – a main criticism by the Royal Commission.
Macquarie Bank is another financial institution that has been lauded for its willingness to take on responsibility for misconduct. The company’s incentive scheme rewards good performance over seven years or so, switching focus to long-term goals.
Underpinning all of this is a more balanced approach to leadership which can inspire in a new world of motivation.
Driving a culture of shared and individual accountability through the business: rebuilding institutional trust, making people accountable, incentivising the right behaviours and setting up organisations to motivate beyond bonuses in the future; these are critical moves for organisations to make if they want to drive value in the future, commercially, for their employees, and for the wider community.
This article was originally published in the 3rd edition of M Magazine, an exclusive print magazine aimed at inspiring and driving change through Australia’s executives and heads of HR.
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