Some of Australia’s mainstream media reported on Prime Minister Malcolm Turnbull‘s admonishment of the banking sector on April 6 2016. He accused them of having an unhealthy culture, reflecting a general and growing public dissatisfaction with large financial institutions, insurance companies and other corporations.
Given that the dominant perspective on occupational health and safety (OHS), at the moment, is the importance of an organisational culture that values workplace safety, it is worth looking at Prime Minister Turnbull’s words and those of prominent executives and financial regulators recently reported in the mainstream press.
ABC’s 4 Corners program revealed, in March 2016, apparently heartless treatment of clients by the insurance arm of the Commonwealth Bank, known as CommInsure. This instigated an investigation from the Australian Securities and Investments Commission (ASIC) into the corporate culture of the Bank. According to another ABC report, ASIC Chairman Greg Medcraft stated:
“What I have said before is that, clearly, there is an issue of culture in some parts of, well a lot of, the banks,”
“What has to happen is that people have got to not just talk about culture – actions have got to start speaking louder than words on culture and they’ve got to start thinking about putting their customer first.
“I think what has happened to CommInsure should be a signal to the industry more broadly.”
At a 199th birthday party for Westpac Bank, the Prime Minster said some nice things about his ancestor being an early client of the bank but, referring to recent incidents including CommInsure, he acknowledged that there was a cultural problem with the banking sector generally. He said
“Wise bankers understand that banks need to very publicly demonstrate that their values of trust, integrity, placing the customer first in every way – these must be lived and not just spoke.
They recognise that remuneration and promotion cannot any longer be based solely on direct financial contribution to the bottom line.
Employees who live those values, impart them to others and call out those who do not should be rewarded and recognised and promoted in a healthy banking culture.
The singular pursuit of an extra dollar of profit at the expense of those values is not simply wrong but it places at risk the whole social licence, the good name and reputation upon which great institutions depend.”
His words and those of Medcraft above would be familiar to OHS professionals who are advocating attention to corporate safety culture as the modern way to progress workplace safety. The reference to “values”, “trust” and the call for action should be very familiar.
Talking about culture is not an analysis of culture
However the financial sector seems to be coming late into an analysis of organisational culture. One of the risks about dysfunctional cultures, in relation to finance and safety, is that an acknowledgement of a “bad” culture is often as far as analysis goes. Culture is frequently offered as a reason for a failure but it is more likely to be used as an excuse. Culture is difficult to define, so it is difficult to recognise, so it is difficult to fix. This is the status of debate on show in Australia’s banks and politics at the moment.
What is needed is attention to the values that create a culture rather than the culture itself. However this may prove enormously uncomfortable as these values go to the heart of capitalism, the economic system on which the banking practices and structures are based, and therefore a foundation to how all businesses operate. To have Prime Minister Malcolm Turnbull, who has been deeply and professionally involved with the finance sector, criticise capitalism – “pursuit of an extra dollar of profit at the expense of those values” – is extraordinary.
Many are using the continued discussion of culture is a delaying strategy until the government or the society can be distracted. Because culture is a fluffy concept to most people – “the way things are done round here” – it can be seen as being given attention without achieving the fundamental change that is required.
Examples of this delaying strategy can be seen from some of the coverage by the Australian Financial Review (AFR) of its own Banking & Wealth Summit. In a four-page wraparound on April 6 2016, its headline read “Scandals put spotlight on bank ethics and culture”. The opening paragraph said:
“David Murray, who led the government’s financial system inquiry, has launched a scathing attack on the corporate watchdog [ASIC] for championing the idea that company directors should be held legally responsible for poor corporate culture”.
Perhaps company directors should be held accountable for failures, but surely corporate leaders can be held responsible for allowing a culture that perpetuates the “singular pursuit of an extra dollar of profit at the expense of those values”! Just because you did not create a culture does not mean that you should not try to change it.
OHS and the Financial Culture debate
The AFR article later reported David Murray as advising a strategy that mirrors the current OHS approach. It said:
“Instead of prescribing corporate culture, Mr Murray argued that it was better to encourage boards to think about their industry and what were the best strategies to pursue, and then to adopt the appropriate governance to achieve their goals.”
The Australia OHS profession has, with regulatory support, been pushing for the inclusion of workplace safety as a standard element in corporate governance, and consideration of OHS as part of a company’s due diligence decision making. It has been emphasising the need for leadership from Boards and executives in order to set the safety standards expected of all employees. This has been largely successful as can be seen from the support for the strategy from Safe Work Australia, safety regulators and some corporate advice firms.
That OHS strategy needs to be pushed hard at the moment so as to differentiate its approach from the financial cultural fluff that is dominating the business newspapers and, inevitably, the political discourse.
Regardless of what one thinks about the performance of safety regulators in Australia, their enforcement strategies on traditional workplace risks have been successful. Yet, to some extent, the significance is in their existence as well as their performance.
In comparison with ASIC, the various WorkSafes have been very effective. The financial sector has been allowed far more self-regulation of their activities than businesses have experienced in relation to OHS. Trade unions would point to their own presence being instrumental in OHS change as the financial sector has no body that has a similar role of influence in banking as the unions have had in workplace.
Safety needs to compete with the media’s current fascination with financial culture so that the OHS cultural change strategy is not swamped by the far less defined debate happening over banking, insurance and financial services. If it does not, the OHS/safety culture gains over the last five to ten years will be lost.
The words of Australia’s Prime Minister at a major bank’s birthday party should provide some hope that cultural change arguments have the political ear of the government in this election year. Talking to the Government about the cultural achievement in safety would be a much more effective strategy than accusing the Ministers of not caring about worker deaths.
Kevin – dealing with the very big end of town here where people get upset if their view is not the pre-eminent and accepted view in line with their own economists and traders (some of whom have also been involved in recent years in things like insider trading). It does not matter which of the big banks you think about there have been recent scandals.
Additionally another big bank which own an insurance company has been in process of rationalising all its insurance policies of which there are many supposedly to make it easier on the basis of scale, but suprisingly (well not really surprising) some fees and charges may go up.
Seems this is a recurring issue with some big banks. Really goes to prove that this industry has not learnt at all and does not exhibit any empathy towards its small customers and yes they need to be held accountable. Loyalty used to count for something, but not in recent decades.
Of equal interest is the comments by the PM and the Reserve in talking about digital currency and how close it is, using the proposals as cutting out drug dealing, other rackets and offshore activities and allowing every cent of your hard earrned money to be tracked, while the banks strangely remain silent not telling their customers anything about this.
Of course with many nations now having banks running negative interest rates supposedly to stimulate the economy (banks please explain in simple terms for everyone how this impacts any savings you may have with them as I have my own views on what this does to Joe Average) and most western countries devaluing the value of their own currencies by continually printing more money and having huge growing deficits (Australia’s deficit is according to analyst reports – $417bn – not just the government deficit which grows daily), you have to ask is it just one big purple circle with politicians shooting the breeze, responding to some perceptions and taking care of the banks at the same time.
Your examples in your earlier blog on proposal for penalties and deferred undertakings lines up very nicely on this. More power to a proper investigation and really holding senior personnel responsible!