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Employee OutlookFocus on rebuilding trust in the City

Sum

mer 2013

Chartered Institute of Personnel and Development

The CIPD is the professional body for HR and people development. It has over 130,000 members internationally – working in HR, learning and development, people management and consulting across private businesses and organisations in the public and voluntary sectors.

As an independent and not for profit organisation, the CIPD is committed to championing better work and working lives for the benefit of individuals, businesses, economies and society – because good work and all it entails is good for business and society at large, and what is good for business should also be good for people’s working lives.

The CIPD brings together extensive research and thought leadership, practical advice and guidance, professional development and rigorous professional standards to drive better capabilities and understanding in how organisations of all kinds operate and perform, and in how they manage and develop their people.

A Royal Charter enables the CIPD to confer individual chartered status on members who meet the required standards of knowledge, practice and behaviours.

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Employee OutlookFocus Summer 2013


Contents

Summary of key findings 2

Employee attitudes to working in the sector 5

Trust in the banking and financial services sector 9

Values in the finance sector 11

Changing the culture of the banking and 18 financial services sector

Professional standards and qualifications 22

Reward and culture change 23

Conclusions 26

Background to the survey 28

Focus on rebuilding trust in the City

2 Focus on rebuilding trust in the City

Employee attitudes to working in the sector Salary is the most commonly identified factor that attracted respondents to work in the banking sector, cited by 32% of respondents, closely followed by career opportunities (31%) and challenging and interesting work (27%). In all, 20% of respondents say they were attracted to the benefits package available on top of salary, while 12% identified bonuses as one of the reasons they are working in the profession.

Employees working in the banking and financial services sector are more likely to be proud than embarrassed to say they work in the banking sector. In all, 35% of

respondents say they would be either proud, or very proud, to tell someone they met for the first time that they work in banking or financial services, compared with 15% who say they would be embarrassed or very embarrassed.

In all, half of respondents working in banking and financial services

say that the negative public perception of the banking sector is a fair reflection of what has gone on in recent years.

However, a third of employees believe ‘problems in the banking sector are overblown by the media, based on the wrongdoings of a small minority of organisations’.

Just 8% of respondents agree that ‘problems over banking culture are in the past but people’s perceptions take a long time to change’.

Almost a third of respondents (29%) think failing senior executives should be imprisoned where there is evidence of gross negligence or misconduct. A further 13% of employees would like to see failing bankers banned for life from being a company director, while 36% say that failing bankers should be removed from the approved persons list and barred from working in the sector in the future.

Trust The findings suggest fairly high levels of trust, particularly relating to whether their employer has, in general, good motives and intentions (65% agree or strongly agree), treats them in a consistent and predictable manner (63%) and believes that employees themselves can be trusted (58%).

Summary of key findings

Almost a third of respondents (29%) think failing senior executives should be imprisoned where there is evidence of gross negligence or misconduct.



The majority of employees believe that the decisions made by their chief executives (62%) and the board (57%) are always or mostly in line with the values of the organisation.

Respondents were less confident that their employer has high integrity (54%), with 21% disagreeing/strongly disagreeing, is open and upfront with them (46%), with 30% disagreeing/strongly disagreeing, is not always honest and truthful (37%), with 41% disagreeing/strongly disagreeing and does not treat them fairly (25%), with 51% disagreeing/strongly disagreeing.

Just under half of the sample (46%) agreed or strongly agreed that when trust had been breached, their organisation worked actively to try to restore working relationships.

Encouragingly, a high proportion of employees feel trusted at work: 92% said they feel trusted to a great or to some extent. Senior managers are more likely to agree to a great extent (53%) that they feel trusted at work compared with individuals at other job levels (41%).

Values The majority of respondents in the survey said they were aware of their organisational values – to a great (38%) or to some (52%) extent. However, there are limitations in the communications reaching lower job levels: 61% of senior managers are well aware of the organisational values, compared with only 36% of staff at other levels.

The survey also shows that there is significant misalignment between the values of staff and those of the organisation they work for.

Across the sample there is a concern over the strength of organisational values in guiding the behaviours of individuals around the organisation. Overall,

54% of the respondents rate their organisational values as strong or very strong, however 33% of respondents said that their values influence behaviour amongst certain teams/levels but are ignored at others.

More than one in ten employees (13%) say that their organisation’s values are weak or very weak, with some people, or the majority of people, in the organisation behaving in ways that don’t reflect its values.

The majority of employees believe that the decisions made by their chief executives (62%) and the board (57%) are always or mostly in line with the values of the organisation. However, respondents are more sceptical about whether junior managers and their own colleagues make decisions that are in line with organisational values, with just 50% saying this is the case.

Changing the culture of the banking and financial services sectorUnder half of respondents rank customers first as their organisation’s most important stakeholders, with a third identifying shareholders as their most important stakeholders.

One in ten respondents cite regulators as their organisation’s most important stakeholders, 9% rank employees first, while 7% rank the investment community as most important.

Senior managers are marginally more likely to identify customers as their organisation’s most important stakeholders (53%) than employees at other levels of seniority (47%).


Less than four in ten respondents say there has been any initiative led by senior executives to change culture in the organisation over the last 12 months, with 45% saying the opposite and 16% who don’t know.

There is a fairly even split between respondents who think the culture of their organisation has become more customer focused (43%) in the last 12 months and those who think there has been no change (39%). One in ten respondents think their organisation’s focus on shareholders and making profits has increased over the last 12 months.

Professional standards and qualificationsThe survey suggests that more progress could be made in professionalising the sector, with the majority of employees working in banking and financial services not holding any professional qualifications. Of the 47% who do, senior managers are the majority.

Just 30% of respondents are members of any industry body with professional standards, rising to 57% of senior managers and falling to 27% of employees below that level.

Reward and culture changeThe survey suggests there is significant dissatisfaction with how people are rewarded and incentivised in the banking and financial services sector.

Respondents are more likely to disagree (39%) than agree (36%) that rewards are generally fair, based on people’s efforts and achievements.

Almost two thirds (65%) of employees agree that some people in their organisation are still rewarded in a way that incentivises inappropriate behaviour, with little difference between the views of senior managers and those of other employees.

A similar proportion of respondents (64%) agree that how people are rewarded and what they are rewarded for is not clear, compared with 14% that disagree.

In all, 67% agree there is still too much secrecy around what senior managers earn. Senior managers are less likely than employees at other levels to agree this is the case, however 54% of senior managers agree with this statement and just 23% disagree.

In all, 32% of respondents say that if the rules and regulations limited how much they could earn then they would leave the sector, rising to 46% of senior managers.

The biggest area of agreement is over whether some people in their organisation are still paid excessively, with 75% of respondents agreeing this is the case. Employees at levels below senior management are most likely to agree (79%) but even 66% of senior managers agree that some people in their organisation are paid excessively.

75% agree people in their organisation are paid excessively.



Why the debate about banking culture is importantThis survey was conducted against the backdrop of an ongoing public debate about the need to change culture in the banking and financial services in the aftermath of a range of high-profile and catastrophic failings. These include excessive risk-taking and poor lending practice in the run-up to the 2008 financial crisis and government bailout, mis-selling of payment protection insurance and the fixing of LIBOR rates.

These failings are being investigated by the Parliamentary Commission on Banking Standards which is

exploring, among other issues, the professional standards and culture of the UK banking sector.

However, little is known about how banking culture is perceived by those employed in the sector and whether banking is, in fact, becoming more focused on delivering long-term value and first-class customer service, rather than short-term gains in the service of shareholders looking to maximise return on their investment.

This survey attempts to shed some light on these issues to provide a state of play on whether banking

culture is on the mend or whether, behind some fine words from some chief executives in the sector, it is business as usual.

Identification with the professionSalary is the most commonly cited factor that attracted respondents who chose to work in the banking sector, cited by 32% of respondents, closely followed by career opportunities (31%) and challenging and interesting work (27%). In all, 20% of respondents say they were attracted to the benefits package available on top of salary, while 12% identified bonuses as one of the reasons they are working in the profession. Overall, a greater proportion of respondents in large organisations were attracted by pay (34% vs 26% in SMEs) and benefits (24% vs 10%), while SMEs fare better on providing challenging and interesting work.

Just one in ten respondents say they were attracted to the profession because of what the organisation they joined stood for, or its values. Senior managers are nearly twice as likely to say they were attracted by challenging and interesting work on offer as respondents working at other levels, who are more than twice as likely as their senior colleagues to have ended up in banking by accident (see Table 1).

Employee attitudes to working in the sector

AllSenior

managerOtherlevel

The salary 32 35 32

Bonuses on offer 12 18 12

Benefits package (on top of salary) 20 17 22

Recommended by family or friends 10 10 9

Values/what the organisation stands for 11 17 10

Career opportunities 31 34 31

The role the organisation performs in wider society 5 9 5

Challenging and interesting work 27 43 26

I ended up in the profession/organisation by accident – I applied for a job and got it

40 20 42

Status 10 20 9

It was something I always wanted to do 7 15 6

The company had a respected graduate training programme

5 5 5

Other 10 14 8

Don’t know 3 2 3

Table 1: Reasons given by employees for what attracted them to work in the banking and financial services sector (%)


Employees working in the banking and financial services sector are more likely to be proud than embarrassed to say they work in the banking sector. In all, 35% of respondents say they would be either proud or very proud that they work in banking or financial services, compared with 15% who say they would be embarrassed or very embarrassed.

Senior managers (51%) are more likely than employees working at other levels (32%) to say they would be proud to tell someone they met for the first time that they worked in banking (see Table 2).

In all, half of respondents working in banking and financial services say that the negative public perception of the banking sector is a fair reflection of what has gone on in recent years.

However, a third of employees believe problems in the banking sector are overblown by the media, based on the wrongdoings of a small minority of organisations.

Just 8% of respondents think that problems over banking culture are in the past but people’s perceptions take a long time to change.

Senior managers are less likely than more junior members of staff to agree that the negative public perceptions towards the sector are a fair reflection of what has happened in recent years.

Senior managers are also significantly more likely to think that problems in the banking sector are overblown by the media based on the wrongdoings of a small minority of organisations (42%) compared with employees at other levels (32%).

AllSenior

managerOtherlevel

Very proud 10 22 8

Proud 25 29 24

Neither embarrassed nor proud 49 38 52

Embarrassed 12 7 12

Very embarrassed 3 5 3

Don’t know 1 0 0

Table 2: The proportion of employees that would feel proud to tell someone they met for the first time that they work in the banking/financial services sector (%)

AllSenior

managerOtherlevel

It is a fair reflection of what has gone on in recent years.

51 46 51

Problems in the banking sector are overblown by the media, based on the wrongdoings of a small minority of organisations.

33 42 32

Problems over banking culture are in the past but people’s perceptions take a long time to change.

8 6 9

Table 3: Employees views on the negative public perception of the banking/ financial services sector (%)

V8%Just 8% of respondents

think that problems over banking culture are in

the past but people’s perceptions take a long

time to change.



V17%One in six (17%) say that they have personally had experience of being bullied or put under excessive pressure to behave in a way that was either counter to their personal ethics or to the interests of their customers.

One in six (17%) say that they have personally had experience of being bullied or put under excessive pressure to behave in a way that was either counter to their personal ethics or to the interests of their customers (see Table 4).

Employees below senior management level are more likely than senior managers to say this is the case. Employees working in banking are significantly more likely than those in insurance, brokerage or investment to say they have been put under excessive pressure or bullied within the last two years to behave in ways that are counter to their personal ethics or the interests of customers.

Respondents are more likely to say they have been bullied or put under excessive pressure to behave in ways that are counter to their personal ethics when they are asked to look back more than two years ago. Nearly a quarter of respondents (23%) said this had happened, with senior managers (30%) more likely than respondents at other levels (21%) to say this was the case.

Looking back more than two years, 22% of respondents said that they had been bullied or put under excessive pressure to behave in ways that were counter to the interests of their customers. Again, senior managers were most likely to say this was the case, as were respondents working in banking, as opposed to those in insurance, brokerage or investment.

AllSenior

manager Otherlevel Banking Insurance

Brokerage and

investment

behave in ways that are counter to their personal ethics, within the last two years

17 15 18 20 16 14

behave in ways that are counter to the interests of customers, within the last two years

17 16 17 21 14 13

behave in ways that are counter to their personal ethics, more than two years ago

23 30 21 29 15 19

behave in ways that are counter to the interest of their customers, more than two years ago

22 24 21 27 16 19

Table 4: Respondents views on whether they have felt bullied or put under excessive pressure to... (%)


Looking ahead, a significant proportion of respondents working in the banking and financial services sector would like to see greater penalties imposed against senior executives whose decisions lead to banks or other financial services organisations failing and for example needing government financial support.

Almost a third of respondents (29%) think failing senior executives should be imprisoned where there is evidence of gross negligence or misconduct. A further 13% of employees would like to see failing bankers banned for life from being a company director, while 36% say that failing bankers should be removed from the approved persons list and barred from working in the sector in the future.

One in ten respondents think that losing their job is punishment enough for failing bankers and a further 5% say they should lose any public honour they hold.

Senior managers are marginally more likely to believe that failing senior executives should be banned from working in the sector in the future, while respondents at other levels are more likely than their more senior colleagues to believe that failing senior executives should be imprisoned where there is evidence of gross negligence or misconduct.

AllSenior

managerOtherlevel

They should be removed from the approved persons list, and barred from working in the sector in the future.

36 40 36

They should be banned from being a director of any company for life.

13 13 12

Losing their job is sufficient punishment. 10 9 10

They should lose any public honour they hold but be allowed to work in the sector.

5 5 4

Where there is evidence of gross negligence or misconduct they should be imprisoned.

29 24 30

Table 5: What employees working in the banking and financial services sector think should happen to senior executives whose decisions lead to banks or other financial services organisations failing and for example needing government financial support (%)

V36%36% say that failing bankers should be removed from the

approved persons list and barred from working in the

sector in the future.



Employees’ perceptions of their employerWe asked employees in the finance sector to respond to a number of statements relating to trust in their employers in general. The findings suggest fairly high levels of trust, particularly relating to whether their employer has, in general, good motives and intentions (65% agree or strongly agree), treats them in a consistent and predictable manner (63%) and believes that employees themselves can be trusted (58%).

Respondents were less confident that their employer has high integrity (54%), with 21% disagreeing/ strongly disagreeing, is open and upfront with them (46%), with 30% disagreeing/strongly disagreeing, is not always honest and truthful (37%) with 41% disagreeing/strongly disagreeing and does not treat them fairly (25%) with 51% disagreeing/strongly disagreeing. Respondents were also more likely to agree than

disagree that their employer cannot be fully trusted (39% vs 38%).

Differences in senior managers’ views and other employees’ views can be observed in perceptions of their employer. Senior managers rated their employer higher on integrity, consistency, benevolence and transparency. They were also more likely to trust their employer.

At the same time, there was broad agreement between senior managers and employees in their assessment of organisational fairness, honesty and the extent to which the employer trusts employees.

Employees’ perceptions of their senior managers, line managers and colleaguesAfter gathering respondents’ perceptions of their employers in general, we wanted to explore the extent to which trust levels vary according to different groups in the

V65%The findings suggest fairly high levels of trust, particularly relating to whether their employer has, in general, good motives and intentions (65% agree or strongly agree).

Trust in the banking and financial services sector

AllSenior

managerOtherlevel

has high integrity 54 (21) 63 (17) 53 (21)

treats them in a consistent and predictable fashion 63 (19) 75 (11) 62 (20)

is NOT always honest and truthful 37 (41) 37 (48) 37 (35)

in general, has good motives and intentions 65 (15) 73 (8) 64 (15)

does NOT treat them fairly 25 (51) 25 (59) 26 (47)

is open and upfront with them 46 (30) 61 (21) 45 (34)

cannot be fully trusted 39 (38) 31 (50) 40 (33)

believes that employees can be trusted 58 (19) 61 (17) 58 (21)

Table 6: Proportion of respondents agreeing or strongly agreeing (disagreeing or strongly disagreeing) that their employer... (%)


organisation – senior managers, line managers and colleagues.

The overall scores here are more positive than general perceptions of employers, suggesting that when you personalise trust relations, ratings increase. Colleagues receive the highest scores across the board, with line managers being the second most trusted group.

The biggest perceived gap between senior managers, line managers and colleagues is in relation to benevolence (concern for others beyond their own needs), integrity and transparency (being open and straight talking).

Confidence and trust in senior managersWe also asked respondents to comment specifically about the confidence and trust they have in their senior managers. Overall respondents’

confidence (+21 net agreement) is higher than their trust (+17 net agreement) in senior managers. Net scores for confidence (+36 vs +17) and trust (+33 vs +12) are also much higher in SMEs compared with larger finance organisations.

Overall, these scores reflect well on the finance sector when compared with the CIPD’s Employee Outlook scores for the private sector in general, which were +12 for trust and +14 for confidence in Spring 2013.

Breaches of trustWe also asked respondents about breaches of trust in their organisations and whether, when trust had been breached, their organisation worked actively to try to restore working relationships. Just under half of the sample (46%) agreed or strongly agreed that this was the case. That means that over half work in organisations where, when trust is

breached, attention is not given to restoring it. As might be expected, senior managers (57%) were more likely to say their organisation actively tried to restore trust after a breach than employees working at other levels and employees in SMEs (51%) were more likely to agree than those working in larger organisations (45%).

Employer trust in employeesHowever, when it comes to organisation trust, perceptions of employer trust in employees is just as important as employees’ trust in the organisation. Trust needs to be reciprocated. Encouragingly, a very high proportion of employees feel trusted at work: 92% said they feel trusted to a great or to some extent. Senior managers are more likely to agree to a great extent (53%) that they feel trusted at work compared with individuals at other job levels (41%).

Senior managers

Line managers Colleagues

are competent 84 88 92

have concern for others beyond their own needs 65 80 83

have high integrity 74 83 88

are open and straight talking 73 82 88

behave in a way that reflects the values of the organisation

83 86 87

are consistent in their behaviours 77 81 88

Table 7: Proportion of respondents saying that their senior managers, line managers, and colleagues to a great or some extent... (%)

AllSenior

managersOther level SME

Large organisations

Net agree 46 57 46 51 45

Neither agree nor disagree 24 21 24 20 25

Net disagree 20 19 20 17 21

Don’t know 10 4 10 12 9

Table 8: ‘When trust has been breached, my organisation works actively to try and restore working relationships’. (%)



Awareness of organisational valuesHigh awareness of organisational values reflects the importance that organisations attach to communicating values to employees. The majority of respondents in the survey said they were aware of their organisational values – to a great (38%) or to some (52%) extent. However, closer look at the data reveals that there are limitations in the communications reaching lower job levels: 61% of senior managers are well aware of the organisational values, compared to only 36% of staff at other levels. There were no statistically significant differences between individuals of different age groups or job tenure. However, those who agree or strongly agree that they

are satisfied with their current job were also more likely to be aware of organisational values.

We also asked the respondents to record their organisational values in their own words. Those who did frequently mentioned focus on customer, quality of service delivery, and efficiency in achieving targets. See word cloud overleaf.

However, when quoting integrity and responsibility as part of the corporate brand, some noted a difference between espoused values and their actual enactment.

Values in the finance sector

AllSenior

managerOtherlevel

To a great extent 38 61 36

To some extent 52 31 55

Not at all 6 5 6

Don’t know 2 – 2

Not applicable - my organisation doesn't have any values

1 3 1

Table 9: Proportion of individuals aware of their organisational values (%)

61%%

54%

82%Agree

Aware

Aware

Agree

%Agree

36%ware

%

%Agree

65%

Agree

%

Agree

Disagree

12%%

23%

Neither

%

Awareness of the organisational values

Senior managers

Other levels


Respondents were also asked to rate between 1 and 10 the extent to which they agree or disagree that their personal values match their organisational values, with 1 representing totally disagree and 10 totally agree. This shows that there is significant misalignment between the values of staff and those of the organisation they work for. Respondents were more likely to disagree (58% of respondents rating between 1 and 5) that their views matched the values of their

organisation than agree (42% rating between 6 and 10) (see Table 10).

Value-based behavioursAcross the sample there is a concern over the strength of organisational values in guiding the behaviours of individuals around the organisation. Overall, 54% of the respondents rate their organisational values as strong or very strong, however 33% of respondents said that their values influence behaviour amongst certain teams/levels but are ignored at others.

(% of respondents)

1 (Totally disagree) 8

2 11

3 17

4 10

5 12

6 8

7 12

8 12

9 5

10 (Totally agree) 5

Mean 5.06

Table 10: The extent to which respondents agree or disagree that their personal values match their organisation’s values and ideals (where 1 equals totally disagree and 10 equals totally agree).



More than one in ten employees (11%) say that their organisation’s values are weak or very weak, with some people, or the majority of people in the organisation, behaving in ways that don’t reflect its values.

The majority of employees believe that the decisions made by their chief executives (62%) and the board (57%) are always or mostly in line with the values of the organisation. However, respondents are more sceptical about whether junior managers and their own colleagues make decisions that are in line with organisational values, with just 50% saying this is the case.

There is a notable difference between senior managers and other levels of staff regarding the extent to which they believe values positively influence decisions at various organisational levels.

Senior managers rate all stakeholders higher than other employees do. Interestingly, 82% of senior managers rated themselves as acting in line with organisational values, while only 54% of employees thought the same of their senior managers.

AllSenior


Large organisations

Very strong: our values are played out in everything everyone does

7 17 6 10 6

Strong: most people in our organisation behave in line with values

47 51 47 53 45

Neither strong nor weak: our values influence behaviour amongst certain teams/levels but are ignored at others

33 19 33 26 35

Weak: some people in our organisation often behave in ways that don’t align with our values

11 11 12 9 12

Table 11: Proportion of respondents rating the strength of organisational values in influencing the behaviours of people in the organisation (%)

AllSenior

managerOtherlevel

Chief executive 62 74 62

Executive board/board of directors 57 73 57

Senior managers 54 67 54

Middle managers 53 67 52

Junior managers 50 56 50

Staff without management responsibility 50 57 48

Myself 68 82 66

Table 12: Proportion of respondents who believe that the decisions made by stakeholders at various levels of organisations are always or mostly in line with organisational values (%)

61%%

54%

82%Agree

Aware

Aware

Agree

%Agree

36%ware

%

%Agree

65%

Agree

%

Agree

Disagree

12%%

23%

Neither

%

Senior managers act in line with

organisational values

Senior managers

Other levels


Similar disparity between senior managers’ views and other employees’ views can be observed in

their assessments of the presence of certain values in the organisational context. Senior managers rated their organisation higher in terms of integrity, consistency, benevolence,

and transparency. They are also more likely to trust the employer. At the same time, there was broad agreement between senior managers and employees in their assessment of organisational fairness, honesty and the extent to which the employer trusts the employees.

The more values were perceived to be influencing behaviours across the organisation, the more likely respondents were to be engaged.

AllSenior

managerOtherlevel

has high integrity 54 63 53

treats them in a consistent and predictable fashion 63 75 62

is NOT always honest and truthful 37 37 37

in general, has good motives and intentions 65 73 64

does NOT treat them fairly 25 25 26

is open and upfront with them 46 61 45

cannot be fully trusted 39 31 40

believes that employees can be trusted 58 61 58

Table 14. Proportion of respondents agreeing or strongly agreeing that their employer... (%)

EngagedNeither engaged nor disengaged Disengaged

Strong or very strong values 81 37 5

Weak or very weak values 3 19 78

Table 13: Engagement level of employees, by strength of values reported

The more values were perceived to be influencing behaviours across the

organisation, the more likely respondents were to be engaged.



Values and engagementAs all of these beliefs correlated positively with employee engagement, it is unsurprising that senior managers in the banking sector appear to be more engaged overall, despite 95% of them working more hours than they are contracted to do, compared with 73% of staff at other levels. Senior managers are also less likely to say they achieve the right work–life balance than staff at other levels (41% compared with 54%) and more likely to report they are under excessive pressure everyday (27%) than other employees (16%). Nevertheless, a higher proportion of senior managers say they go the extra mile at work and are satisfied with the content of their job role and their job overall.

What can be done to reinforce values/make them meaningful for staff?Respondents who said that the values of their organisation were evident in some employees’ behaviour and decisions were asked why they thought organisational values influenced employees’ behaviour and decisions.

The most commonly identified reason for why employees thought their organisational values influenced employees’ behaviour and decisions was that values were reinforced through staff appraisals and performance reviews, with 50% of respondents identifying this as a factor.

AllSenior


Large organisations

go the extra mile (agree/strongly agree) 68 75 68 70 67

often work more hours than they are contracted (agree/strongly agree)

74 95 73 72 74

achieve the right work–life balance (agree/strongly agree) 53 41 54 54 53

are under excessive pressure every day 17 27 16 12 18

have positive relationships with colleagues (agree/strongly agree) 84 84 84 80 85

find their job as challenging as they would like it to be (agree/ strongly agree)

61 74 60 63 61

have opportunities to learn and grow (agree/strongly agree) 52 62 52 52 52

are satisfied with content of job role 57 75 56 63 55

are satisfied with their job 58 72 57 64 56

would recommend their employer (likely/very likely) 55 64 54 58 54

know very clearly what the core purpose of their organisation is (agree/strongly agree)

80 86 79 79 80

are motivated by core purpose (agree/strongly agree) 42 59 40 49 39

Table 15: Proportion of respondents who… (%)

V41%Senior managers are also less likely to say they achieve the right work–life balance than staff at other levels (41% compared with 54%)


The next most commonly identified reasons for values positively affecting employee behaviour was the ease with which employees could translate them into their day-to-day activities (37%), that the values are meaningful to employees (35%) and that values are role-modelled by line managers (30%) and senior managers (27%).

In contrast, placing profit ahead of organisational values (45% of those who believe values are not evident mentioned this), inconsistency of rigour in adherence to values (41%) and lack of recognition for behaving in line with values (34%) were top three reasons for the organisational values not being evident from employees’ behaviours .

A significant concern among the respondents is the lack of consequences for those individuals whose behaviour consistently goes against organisational values. Only 53% believe that violations of written rules and procedures are punished. These beliefs strongly correlate with trust invested in the organisation: those who don’t see violations of values punished also trust their employer less.

AllSenior


Large organisations

Values-based behaviours are reinforced through staff appraisals and performance reviews.

50 35 54 35 54

Employees can easily translate them into their day-to-day activities 37 40 36 40 36

Our values are meaningful to employees. 35 37 34 37 34

They are role-modelled by your line manager (your line manager behaves in a way that reflects our values).

30 25 31 25 31

They are role-modelled by senior managers (senior managers behave in a way that reflects our values).

27 30 27 30 27

They are role-modelled by the chief executive/managing director (the chief executive/managing director behaves in a way that reflects our values).

27 27 27 27 27

Table 16: Reasons for organisational values being evident in some employees’ behaviour and decisions

50% of employees thought their organisational values influenced employees’ behaviour and decisions because they were

reinforced through staff appraisals and performance reviews.



According to employees in the finance sector, those who breach values are equally likely to be reprimanded or get away with undesired behaviours. In all, 31% of respondents say that individuals whose behaviour is consistently at odds with organisational values are reprimanded. However, a similar proportion say nothing happens (31%) and 6% even say that these individuals seem to be rewarded or promoted.

Worryingly, 7% of respondents in large organisations believe that individuals who behave inconsistently with the organisational values are rewarded or promoted. In contrast, 27% of respondents in SMEs are unaware of behaviours that are inconsistent with organisational values in their organisations.

AllSenior


Large organisations

They are reprimanded. 31 37 31 31 31

Nothing seems to happen to them.

31 27 32 29 32

They seem to be rewarded or promoted.

6 6 6 2 7

Don’t know 15 7 15 10 17

I am not aware of this situation ever happening.

17 23 16 27 13

Table 18: Proportion of respondents indicating particular consequences for those employees whose behaviours consistently go against organisational values

All

Profit is placed ahead of organisational values. 45

There is one rule for senior managers and another for everyone else.

41

There is no recognition of behaving in line with our organisational values.

34

The values are not meaningful for employees. 29

People are not disciplined or dismissed for failing to adhere to organisation values.

28

People don't really understand them. 24

Table 17: Reasons for organisational values NOT being evident in some employees’ behaviour and decisions

V7%Worryingly, 7% of respondents in large organisations believe that individuals who behave inconsistently with the organisational values are rewarded or promoted.


Who are the most important stakeholders for the banking and financial services sector?The survey suggests there is a wide range of views among employees on who are the most important stakeholders for banks, suggesting there is some way to go before more organisations in the sector adopt customer-centric cultures.

Under half of respondents rank customers first as their organisation’s most important stakeholders, with a

third identifying shareholders as their most important stakeholders.

One in ten respondents cite regulators as their organisation’s most important stakeholders, 9% rank employees first, while 7% rank the investment community as most important.

Senior managers are marginally more likely to identify customers as their organisation’s most important stakeholders (53%) than employees at other levels of seniority (47%).

Initiatives to change banking cultureLess than four in ten respondents say there has been any initiative led by senior executives to change culture in the organisation over the last 12 months, with 45% saying the opposite.

Respondents working in banking are much more likely to say there has been a culture change initiative led by senior executives in the last 12 months (53%) than respondents in insurance or brokerage and investment.

Changing the culture of the banking and financial services sector

AllSenior

managerOtherlevel

Customers 47 53 47

Shareholders 33 27 34

Regulators 10 9 10

Employees 9 13 9

Investment community 7 6 7

Members of the public 5 5 3

Other 7 0 8

Table 19: The proportion of respondents who ranked the following stakeholders as their organisation’s most important stakeholder (% of respondents)

Table 20: The proportion of respondents who say there has been a culture change initiative led by senior executives in the last 12 months (%)

AllSenior

manager Other level Banking Insurance

Brokerage and

investment

Yes 39 36 40 53 29 24

No 45 59 44 32 55 59

Don’t know 16 5 16 15 16 17

Under half of respondents rank customers first as

their organisation’s most important

stakeholders, with a third identifying

shareholders as their most important

stakeholders.



Among employees who say there has been a culture change initiative within their organisation in the last 12 months led by senior executives, opinions are split over how effective these initiatives have been. Just 17% of respondents agree culture change initiatives have been very effective and that they can see a real change in how most people in their organisation behave. Just over half of respondents judge culture change initiatives to have been moderately successful, with some people starting to change the way they behave.

A fifth of respondents say that culture change initiatives have been an ineffective and superficial exercise, with no change achieved as a result.

There is a fairly even split between respondents who think the culture of their organisation has become more customer focused (43%) in the last 12 months and those who think there has been no change (39%). One in ten respondents think that their organisation’s focus on shareholders and making profits has increased over the last 12 months.

Senior managers are less likely than their more junior colleagues to agree that there is a greater focus on customers.

Respondents working in banking are much more likely to say that their organisation’s culture has become more customer-focused in the last 12 months (51%) than those in insurance (34%) or brokerage or investment (34%).

Table 21: How effective employees judge culture change initiatives to have been to date (%)

AllSenior

managerOther level

Very effective – I can see a real change in the way most people behave.

17 18 16

Moderately effective – some people are starting to change the way they behave.

52 48 53

Ineffective – nothing has changed, it has been a superficial exercise.

21 20 22

It is too early to judge the effectiveness.

11 15 9

AllSenior


Brokerage and

investment

Yes, there is more focus on customers.

43 36 43 51 34 34

No, the focus on shareholders/ making profits has increased.

11 10 12 9 15 12

No, there has not been a change.

39 53 37 33 42 47

Don’t know 8 1 7 8 9 7

Table 22: Proportion of respondents who think the culture in their organisation has become more focused on meeting the demands of customers as opposed to the demands of shareholders/making profits in the last 12 months (%)

Senior managers are less likely than their more junior colleagues to agree that there is a greater focus on customers.


Regulatory reform, enhanced whistle-blowing protection for employees and greater consultation and engagement with staff are the three most commonly identified ways of achieving effective culture change in the banking and financial services sector.

In all, four in ten respondents identify regulatory reform as an effective means of culture change, while 38% cite enhanced whistle-blowing protection for staff and 36% say greater engagement and consultation with employees would affect culture change.

Just under a third of employees believe a different type of leadership at board level would change organisational culture, while a quarter of respondents cite improved line management and a fifth greater diversity on the board.

Senior managers are more likely than more junior members of staff to think that a different type of leadership at board level would change organisational culture.

Employees at levels outside senior management are more likely to think that culture change will be achieved by greater consultation and engagement with staff and through enhanced whistle-blowing protection.

Almost four in ten respondents are confident or very confident that the right steps are being taken to improve the image or status of their profession, with just over a fifth of respondents disagreeing (see Table 24).

Table 23: Respondents views on which of the below changes would be most effective in changing the culture of the banking and financial services sector (%)

AllSenior

managerOther level

Regulatory reform 41 44 41

Different type of leadership at board level 32 42 32

Greater diversity on the board 21 22 21

Greater consultation and engagement with staff

36 26 37

Enhanced whistle-blowing protection to protect people in the organisation who challenge when something is not right

38 34 37

Improved line management/supervision 26 29 26

Other 7 7 7

Not applicable – I don’t think the culture should change

9 7 8

Table 24: The proportion of staff that are confident the right steps are being taken to improve the image/status of the banking and financial services professions (%)

AllSenior

managerOther level

Very confident 7 9 7

Confident 31 32 31

Neither confident nor not confident 32 31 32

Not very confident 13 12 13

Not at all confident 8 10 8

I’m not aware of any steps that are being taken

8 6 8

V4/10Almost four in ten

respondents are confident or very confident that the

right steps are being taken to improve the image or

status of their profession, with just over a fifth of

respondents disagreeing.



In terms of what activity is happening within organisations, the most commonly reported change likely to have a bearing on organisational culture which has occurred over the last two years is the inclusion in training and development programmes of a greater focus on ethical behaviour and improving customer service. Four out of ten respondents identified this as a change. This was followed by changes to performance management/appraisal systems to recognise and reward behaviour linked to values and ethics, identified by 35% of employees.

Almost a third of respondents say that awareness of procedures for deterring/disciplining poor behaviour has increased and 17% report the introduction of new procedures to support whistle-blowing.

One in ten respondents identify changes in the composition of management to encourage more ethical decision-making.

Respondents working in the banking sector are more likely to report most of these changes than those working in insurance, brokerage or investment (see Table 25).

Table 25: Respondents views on what changes have been made in their organisation in the last two years (%)

AllSenior

managerOther level Banking Insurance

Brokerage and

investment

The composition of management has been changed to encourage more ethical decision-making.

11 14 11 15 8 5

Incentives for good behaviour for senior staff have been introduced.

9 13 8 10 9 6

New procedures to support whistle-blowing where there are instances of inappropriate behaviour have been introduced.

17 17 17 20 16 14

Training and development programmes now include a greater focus on ethical behaviour and improving customer service.

41 42 41 45 36 40

Awareness of procedures for deterring/disciplining poor behaviour has increased.

31 38 30 31 32 30

The performance management/appraisal processes have been changed to recognise and reward behaviours linked to values/ethics.

35 31 36 43 31 26

The size of bonuses has fallen. 0 0 0 0 0 0

More of my bonus is now paid in shares. 0 0 0 0 0 0

None of these 9 8 9 6 11 11

The most commonly reported change likely to have a bearing on organisational culture is the inclusion in training and development programmes of a greater focus on ethical behaviour and improving customer service.

V1/10One in ten respondents identify changes in the composition of management to encourage more ethical decision-making.


The survey suggests that more progress could be made in professionalising the sector, with the majority of employees working in banking and financial services not holding any professional qualifications. Of the 47% who do, senior managers are the majority’.

Among those working in banking, only just over four in ten employees hold any professional qualifications.

Just 30% of respondents are members of any industry body with professional standards, rising to 57% of senior managers and falling to 27% of employees below that level.

Respondents working in banking are significantly less likely to belong to any industry body with professional standards than those working in insurance or brokerage and investment.

Professional standards and qualifications

Table 26: Proportion of respondents holding any professional qualifications for the sector or profession they work in (%)

AllSenior


Brokerage and

investment

Yes 47 69 46 42 46 56

No 52 29 53 57 51 43

Don’t know 2 2 2 1 3 1

Table 27: Proportion of respondents who are members of any industry bodies with professional standards (%)

AllSenior


Brokerage and

investment

Yes 30 57 27 24 33 37

No 68 42 71 74 64 62

Don’t know 2 1 2 2 3 2

V30%Just 30% of respondents

are members of any industry body with

professional standards.



The survey suggests there is significant dissatisfaction with how people are rewarded and incentivised in the banking and financial services sector – although these findings no doubt reflect perceptions and concerns about executive pay and pay differentials across sectors and wider society.

Respondents are more likely to disagree (39%) than agree (36%) that rewards are generally fair, based on people’s efforts and achievements. Senior managers are more likely than more junior members of staff to agree that rewards are fair and less likely to disagree.

Reward and culture change

Table 28: The extent to which respondents agree or disagree with the following statements about how people are rewarded and incentivised in the banking and financial services sector (%)

AllSenior


Brokerage and

investment

Rewards are generally fair and based on people’s efforts and achievements.

Net agree 36 46 35 36 31 41

Net disagree 39 30 41 41 41 35

Some people are still rewarded in a way that incentivises inappropriate behaviour.

Net agree 65 61 66 65 65 65

Net disagree 12 19 12 12 12 12

How people are rewarded and for what is still not clear.

Net agree 64 62 65 63 67 64

Net disagree 14 15 13 16 12 11

There is still too much secrecy around what senior managers earn.

Net agree 67 54 68 69 67 63

Net disagree 12 23 12 13 12 13

The new rules and regulations around rewards is a disincentive.

Net agree 32 46 30 35 23 35

Net disagree 20 20 20 22 20 15

If rules and regulations limited how much I can earn then I would leave the sector.

Net agree 25 37 24 26 24 25

Net disagree 39 36 39 39 37 42

Some people in the organisation are still paid excessively.

Net agree 75 66 79 79 73 71

Net disagree 9 19 8 8 9 11

61%%

54%

82%Agree

Aware

Aware

Agree

%Agree

36%ware

%

%Agree

65%

Agree

%

Agree

Disagree

12%%

23%

Neither

%

Respondents’ views on whether some people are still rewarded in a way that incentivises

inappropriate behaviour


Almost two thirds (65%) of employees agree that some people in their organisation are still rewarded in a way that incentivises inappropriate behaviour, with little difference between the views of senior managers and those of other employees.

A similar proportion of respondents (64%) agree that how people are rewarded and what they are rewarded for is not clear, compared with 14% that disagree.


A third of respondents agree that the new rules and regulations around rewards is a disincentive, with a fifth of respondents disagreeing. More than half of senior managers agree the new rules and regulations around reward are a disincentive, compared with just 30% of employees at other levels.

In all, 32% of respondents say that if the rules and regulations limited how much they could earn then they would leave the sector, rising to 46% of senior managers.

The biggest area of agreement is over whether some people in their organisation are still paid excessively, with 75% of respondents agreeing this is the case. Employees at levels below senior management are most likely to agree (79%) but even 66% of senior managers agree that some people are paid excessively.

There are mixed views among respondents over whether the ways in which people are rewarded support efforts to build long-term value and serve the customer.

A fifth of respondents say that the ways in which people are rewarded in their organisation support efforts to ensure that employees at all levels are building long-term value and serving the customer – and always have done. A further 22% say reward policies have been updated recently to achieve this, while 11% say they haven’t been, but there are plans in place to change them.

Table 29 Employees’ views on whether the ways in which people are rewarded support efforts to build long-term value and serve the customer (%)

AllSenior

managerOtherlevel

Yes, and they always have done. 21 32 21

Yes, reward policies have recently been updated in this way.

22 29 21

No, but there are plans to change them. 11 11 11

No, and I know of no plans to change them. 26 22 27

Don’t know 20 6 20

V32%In all, 32% of respondents

say that if the rules and regulations limited how

much they could earn then they would leave the

sector, rising to 46% of senior managers.



A quarter of respondents say that how people are rewarded does not support efforts to ensure employees are building long-term value and serving the customer – and they know of no plans to change this.

Employees working in the banking and financial services sector are marginally more likely to report that their overall level of remuneration has increased over the last two years (33%) than decreased (27%), with 41% saying there has been no change.

Respondents working in banking are less likely than those working in insurance, brokerage or investment to report their overall level of

remuneration has increased in the last two years and more likely to say it has decreased.

Across the whole sector, respondents are more likely to report that the proportion of their total remuneration paid through a bonus has decreased (30%) than they are to say that it has increased (17%). However, nearly four in ten respondents say there has been no change.

Employees working in banking are more likely to say the proportion of their total remuneration paid through a bonus has decreased over the last two years (39%) than those in insurance (23%) or brokerage and investment (19%).

Table 30: The proportion of respondents saying their overall level of remuneration has increased, decreased or stayed the same over the last two years (%)

AllSenior


Brokerage and

investment

Increased 33 30 34 26 39 38

Decreased 27 28 27 35 19 19

Stayed the same 41 42 39 39 42 43

Table 31: Respondents reporting whether the proportion of their total remuneration paid through a bonus has increased, decreased or stayed the same over the last two years (%)

AllSenior


Brokerage and

investment

Increased 17 19 17 14 19 21

Decreased 30 28 30 39 23 19

Stayed the same 38 40 39 35 43 41

Not applicable, I don’t receive a bonus

14 14 14 13 15 19

V33%Employees working in the banking and financial services sector are marginally more likely to report that their overall level of remuneration has increased over the last two years (33%) than decreased (27%).


‘The change will take place when the leadership of the providers [the banks] is about being focused on what customers want and need. And I don’t think there has been a great deal of change so far’. This was the view of Benny Higgins, the Chief Executive of Tesco Bank and a former Head of Retail Banking at the Royal Bank of Scotland, speaking in May 2013 to the Daily Telegraph.

Higgins’ views will no doubt have interested members of the Parliamentary Commission on Banking Standards, which is exploring, among other issues, the professional standards and culture of the UK banking sector – and is due to report its findings shortly.

Higgins’ concern that progress on changing the culture of the banking and financial services sector has had limited success to date is reflected in many ways in the findings from our survey.

The survey finds that among respondents working in the banking sector, just over half agree there has been any initiative led by senior executives to change culture in the last 12 months. Among employees who say there has been a culture change initiative, less than a fifth agree this has been very effective and that they can see a real change, while just over half of respondents judge culture change initiatives to have been moderately successful. A fifth of

respondents say that culture change initiatives have been an ineffective and superficial exercise with no change achieved as a result.

These findings suggest that while some senior leaders in parts of the banking sector are having at least partial success in changing culture to become more customer focused, some parts of the industry are largely operating as before.

This is reinforced by the survey findings that a third of respondents still identify shareholders as their organisation’s most important stakeholder, with only about 50% identifying customers as their most important stakeholder.

One potential obstacle to changing banking culture is the extent to which organisational values, which are often refreshed and referenced to provide a framework for culture change, actually influence how people in the organisation behave.

Encouragingly more than half of respondents say their organisational values are strong, with most people behaving in line with the values. However, a third of respondents say the organisation’s values only influence the behaviour of some people, while 11% report that values are frequently ignored.

Senior managers are more likely to be convinced that values are guiding

behaviour than employees at more junior levels, which highlights the need to find ways of measuring and assessing how values are impacting on behaviour from the top down.

Among employees who said the organisation’s values were evident in at least some employees’ behaviour, the most commonly cited reason was that values-based behaviours are reinforced through staff appraisals and performance reviews.

Barclays is an example of a bank which is addressing this issue by developing a ‘balanced scorecard’ to measure staff against its five new core values: respect; integrity; service; excellence and stewardship.

Among respondents who said organisational values were not evidenced in employees’ behaviour and decisions, nearly half said that this was because profit is placed above organisational values, while 41% said that there was one rule for senior managers and another for everyone else.

The impact of organisational values is also undermined because of perceptions among employees that staff whose behaviours are at odds with stated values are not punished. Just under a third of employees said staff whose behaviours are at odds with their organisation’s values are reprimanded. However, a similar proportion said nothing seems to

Conclusions



happen to them and 6% said such individuals seem to be rewarded or promoted.

Another key issue which influences how people working in banking view the prevailing culture in the sector is the controversial matter of reward. Our survey shows there are some significant concerns among employees over how and how much some staff in banking are rewarded and incentivised – findings that no doubt reflect concerns about executive pay and pay differentials across sectors and wider society.

Overall, respondents are more likely to disagree (39%) than agree (36%) that rewards are generally fair and based on people’s efforts and achievements. Even more concerning is the finding that two thirds of employees agree that some people in their organisation are still rewarded in a way that incentivises inappropriate behaviour, with little difference between the views of senior managers and those of other employees. A similar proportion of respondents (64%) agree that how people are rewarded and what they are rewarded for is not clear, compared with 14% that disagree.


Three-quarters of the survey sample, including two-thirds of senior managers, agree that ‘some people in the organisation are paid excessively.

These findings highlight the importance of ensuring that job and work design enable reward policies to be better aligned to rewarding appropriate behaviours.

The survey findings also emphasise the need for employers in the sector to make it clearer across the workforce how people at different levels are rewarded and what for, as well as making sure that rewards are proportionate to individual performance and long-term organisational performance.

Overall, the survey suggests much still needs to be done to transform culture in the banking and financial services sector to ensure it becomes more focused on creating long-term value for the customer and wider society.

This is why the CIPD has been supporting the work of the Chartered Banker Institute Professional Standards Board (CB:PSB) which aims to restore public confidence and trust in the industry and promote a culture of professionalism amongst individual bankers. It is doing this by developing and supporting the implementation of industry-wide professional standards which set out the knowledge, skills, attitudes and behaviours expected of all bankers. The CB:PSB aims are to:

• develop a series of professional standards to support the ethical awareness, customer focus and competence of those working in the banking industry;

• facilitate industry and public awareness and recognition of the standards;

• establish mechanisms for the implementation, monitoring and enforcement of the standards; and

• help build, over time, greater public confidence and trust in individuals, institutions and the banking industry overall, and enhance pride in the banking profession.

The CB:PSB’s Chartered Bankers Code has now been subscribed to by banks employing about 75% of the UK banking workforce. In addition

70,000 individuals will have the Foundation Standard by July.

Of course, professional standards cannot be effectively embedded unless the right leadership and management and HR practices are in place, beginning with buy-in from the board.

To help organisations achieve this, the City Values Forum and City HR Association are developing training programmes, guidance and tools to support effective culture change. These initiatives include:

• the development of a Governing for values toolkit to provide boards with a practical resource that clearly signposts best practice in the governance of values and highlights the tools available to assess the executive processes which integrate values into the business’s day-to-day operations

• a Leadership with integrity leadership and management programme with a heavy emphasis on embedding values

• best practice guidelines and frameworks to demonstrate how organisations can integrate a commitment to values through their formal appraisal process, and other aspects of performance management and HR practice – for example recruitment

• the creation of Integrity resources – a one stop shop website, which brings resources together on this work

• the development of gold standard HR policy and practices, supported by the production of guidance and toolkits.

The CIPD will be supporting the promotion and use of these resources to ensure HR practitioners have the right knowledge and tools available to them to effectively support attempts to transform, over time, the culture of the banking and financial services sector.


YouGov conducted the online survey for the CIPD of 1026 UK employees working in banking, brokerage and investment and insurance between 26 and 30 April 2013.

This survey was administered to members of the YouGov Plc UK panel of more than 400,000 individuals who have agreed to take part in surveys. Panellists who matched the sample profile (as explained above) were selected at random from the YouGov Plc UK panel and were sent an email inviting them to take part in the survey.

Size of organisation was classified in the following way: micro business (2–9), small business (10–49), medium (50–249) and large (more than 250).

Background to the survey


CIPD Outlook Series

Employee Outlook

This is the focus report for the Summer 2013 Employee Outlook. Each quarter the Employee Outlook focus report concentrates on topical data from the quarter’s main report.

The Employee Outlook is part of the CIPD Outlook series, which also includes the Labour Market Outlook and the HR Outlook. Drawing on a range of perspectives (and with the opportunity to compare data across our regular surveys), this triad of research enables the CIPD to offer a unique insight and commentary on workplace issues in the UK.

Labour Market Outlook

The Labour Market Outlook, published in partnership with SuccessFactors, provides a quarterly update on key HR, economic and labour market statistics. The aim of the survey is to produce an industry-valued benchmark of key HR statistics that can be used by CIPD members, as well as those in government, policy and wider business circles.

cipd.co.uk/labourmarketoutlook

HR Outlook

The HR Outlook provides valuable insight and expert commentary on the HR profession. It explores the size and shape of HR functions, comments on the capabilities of HR professionals and outlines emerging trends and future priorities.

cipd.co.uk/hroutlook

Others in the series

Issued: June 2013 Reference: 6214 © Chartered Institute of Personnel and Development 2013

Chartered Institute of Personnel and Development151 The Broadway London SW19 1JQ UKTel: +44 (0)20 8612 6200 Fax: +44 (0)20 8612 6201Email: [email protected] Website: cipd.co.uk

Incorporated by Royal Charter Registered charity no.1079797

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