Banking continues to be hit by one scandal after another. Mis-selling PPI, fixing Libor, helping wealthy clients avoid taxes – the big banks continue to get slapped with fines; and no doubt, this is not the end of it.
Regulators are rightly getting tough with banks, and banks are taking note. So much so that a recent PwC report suggests that the climate of fear is now holding back banks and bankers, and even threatening to lead to more unethical behaviour!
“The get‐tough approach to poor performance in financial services is creating a climate of fear. And that risks breeding more unethical conduct, not less – exactly the opposite of what regulators, businesses and the public want. The threat of fines, bonus clawbacks and even prison won’t on its own prevent further mis-selling and market‐rigging scandals.”
It seems incredible to think that the threat of punishment could lead to greater misbehaviour. I’m sure the public will have even less sympathy with bankers if this really does hold true…
But the report highlights a principle that we certainly believe is important for organisations across all sectors – and that’s the importance of creating a positive culture where good performance, ethically achieved, is recognised and rewarded, and and led from the top. This is about inspiring teams and individuals, empowering them to make decisions and at the same time, reminding everyone of where the line is drawn.
The report advocates what we would consider is simply ‘good employee engagement’:
- Leaders putting the spotlight on the positive outcomes of good behaviour.
- Using recruitment and rewards to foster the right kind of competitive culture.
- Employing systems to encourage innovation and creativity as well as spot warning signs of bad behaviour.
So this only serves to confirm what we might have known. There was a complete vacuum of ethical leadership. Should it take a banking crisis to tell us this? If so, it’s a very expensive lesson.