Australian royal enquiry prompts The Co-operative Bank to get rid of employee incentives
When Australia conducted a Royal Commission looking into misconduct in banking, superannuation and financial services, the New Zealand government started looking closely at practices within the banks on our shores.
The specific line of enquiry was employee incentive schemes and if they were driving the right employee behaviour and creating the right outcomes for customers.
The enquiry was a blessing in disguise for Sarah Able, chief people and culture officer at The Co-operative Bank, who used the opportunity to create a new scheme that aligned more holistically with the organisation’s culture.
“We had a look at our incentives and thought, rather than tweaking our scheme to try and make it work, we stood back from it and asked, ‘Well, is it working for us at all?’ And, actually, we decided it wasn’t a great fit for us in terms of our culture or our business model.”
The bank’s existing incentive scheme was quite complex and focused on the individual. Performance- and target-driven, it was very competitive and often employees were in competition with the person sitting next to them for a bonus, she said.
“So, we stood back and said, ‘We’re a co-operative bank, we actually want our people to be really working together, to be working as a team to achieve things, rather than as individuals,’” said Able.
The Co-operative bank operates differently to most major banks in New Zealand. It is fully owned by its customers who benefit from a profit rebate system that has paid $15 million back to customers since 2013.
“We thought doing something similar with our staff felt like a really good alignment” said Able. “So that’s when we decided that a profit-sharing scheme would be much more aligned with who we are.”
Incentive schemes are typically a mainstay in the banking sector, so the revolutionary idea was going to take some work. Able began working with the CEO to design the scheme and get buy-in from the workforce.
“There are always people whenever you have change that would prefer things stay the way they were, and anything that impacts on financial outcomes for people, they’re going to have a strong opinion on that,” said Able.
But for the most part Able said that with the right communication, implementation was “pleasantly surprising” for her.
“I thought we would have our work cut out for us in terms of trying to convince people this was a better way to do things, but people actually got it – we are a co-operative, we’re not a big bank, this actually makes sense for us, and they could see why this will work,” said Able.
The profit share scheme has been in place for three years now and Able believes that getting rid of the old incentives scheme has had a huge effect on the organisation’s engagement and culture.
“What you are getting is people who believe what we believe, and they’re there for the right reasons and that has created people who are more aligned with our culture. You’re surrounded by people who are collaborative, everyone’s working together to achieve something, rather than individually.
“It feels like we are all in it together, whether you’re the CEO, or one of our staff in the Whangārei branch you’ve all got the same goals that you’re working towards and you’re all sharing in the success of the organization,” said Able.
