Banking Royal Commission should not limit our thinking about culture

Australia is to have a Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.  What’s this to do with occupational health and safety (OHS)? Not a lot, at first blush.  OHS professionals and safety practitioners need to watch this Royal Commission because it could led to a fundamental reassessment of corporate culture. The OHS discipline is beginning to understand that it operates within that organisational, or corporate, culture; the same culture that will be examined over the next twelve to eighteen months.

SafetyAtWorkBlog has written repeatedly on safety culture and the potential OHS changes from investigating the corporate culture of banks.  An analysis of corporate culture inevitably includes discussions of due diligence, corporate governance, leadership, accountability and ethics – all elements that are critical to understanding and building safe systems of work.

In a media release on 30 November 2017, Prime Minister Malcolm Turnbull, who has been dragged to the inevitability of a Royal Commission, stated that

“All Australians have the right to be treated honestly and fairly in their dealings with banking, superannuation and financial services providers. The highest standards of conduct are critical to the good governance and corporate culture of those providers.” (emphasis added)

This phrase was repeated in the introduction to the Royal Commission’s draft Terms of Reference.

The investigation of culture comes to the fore in the Terms of Reference as investigation into various issues will determine if they

“….are attributable to the particular culture and governance practices of a financial services entity or broad cultural or governance practices in the industry or relevant subsector…”

Treasurer Scott Morrison has denied that this Royal Commission is an investigation of Capitalism echoing the words in the media release above:

“Instead of the inquisition into capitalism that some have called for, the Royal Commission will take a conventional, focussed approach. It will not be a never-ending lawyers’ picnic.”

Regardless Capitalism will be examined as it is the economic model on which the operational structures of the banks, and the products they offer, exist.  Investigating the banking sector and not looking at Capitalism would be like looking into a workplace fatality without considering the employer’s operating model or the accountability of the decision maker.  OHS is about the treatment of workers and those affected by the work. In the context of banking, the latter could be considered customers, those affected by the banks’ work and the decisions of those banks.  The moral thread is of a similar length and path.

An organisational, or safety, culture has been defined as “the way we do things round here”.  It is a nebulous construct with unclearly defined offshoots and subsets defined by geographical, political, social, gendered and demographic boundaries.  A Royal Commission into the culture of an industry will flounder unless that culture can be clearly defined.

Adam Creighton focussed on banking statements about culture in The Australian newspaper on December 1 in an article called “Don’t bank on culture to bring about change” (paywalled).  Various banking executives and financial regulators said:

“There is still a major problem with culture, conduct and accountability at the major banks,”

“No regulatory speech these days is complete without a few words on the issue of culture,… While regulators have certainly put culture in the spotlight, it is the industry that needs to do something about it”.

“Culture isn’t a fixed thing. It has to evolve to support the business strategy,”

Creighton pointed out how any examination needs to pierce the smoke and mirrors use of culture by the banks to make sure that remuneration structures promote behaviour that benefits the clients, for

“This is the problem, not culture, but it’s awkward to talk about remuneration.”

Hopefully rather than accepting the excuse of culture the Royal Commission will examine the ethics and morality of the banks as these concepts have been refined over many more decades than “culture”.  The problem is that the ethics and morality of banks are based on the economic theory of Capitalism so it is very difficult to see how the Royal Commission will avoid the “inquisition” that so worries the Federal Treasurer.

OHS professionals want influence at the senior executive and Board levels of companies on the widely held belief that culture (and thereby safety) is established from the top.  To achieve the desired level of influence the OHS People need to understand the Business People, to speak the lingo and understand the decision-making processes and power relationships revealed by the organisational charts.  As such this Royal Commission into the misconduct of banks and others will be invaluable.

However, this still operates under the neoliberal structure that sustains the concept of the benevolent leader.  As neoliberalism fades or, at least, is genuinely questioned, safety people may need to examine the fundamentals of OHS more closely and take advantage of some of the recent social network analysis (SNA) outlined by Professor Jeffrey Braithwaite in Wollongong last week.  Just as OHS professionals are being urged to look at “work as done” rather than “work as imagined”, SNA has the potential to reveal the reality of safety decision-making rather than the imagined, and traditional, leadership structures.

A Royal Commission will provide many answers but this does not mean they are the right answers or the only answers.

Kevin Jones

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