The majority (62%) of financial firms now penalise misconduct and non-compliance to a ‘great degree’ according to research from Mercer.
The Global Financial Services Executive Compensation Snapshot Survey reviewed the practices of 68 financial services companies based in 20 countries in Europe, North America, and Asia. It found that 58% were confident that they were communicating clear culture objectives around risk, and 60% can show evidence of setting the right tone at the top.
Over 90% of banks and 72% of insurance organisations have policies in place that allow them to reclaim money paid to individuals as bonuses. Such policies are mostly triggered by individual misconduct (89%), individual breach in compliance (89%) and negative business performance (74%).
Only 11% of firms still reward positive risk behaviours to a ‘great degree’, while 38% do not reward such actions at all.
Dirk Vink, principal in Mercer’s talent business, explained that establishing an effective employee performance management system continues to be a highly challenging task for financial services organisations. “However, when done right it can have a greater impact on behaviour and performance than just changing compensation plans,” he said. “Performance management reform is a key lever to help manage toward desired culture change.”
Mark Quinn, partner and head of Mercer’s UK talent business, said that firms are now responding to the fact that the reputation of traditional financial services firms suffered badly following the financial crisis. “Esteem turned to stigma as a new generation of graduates started rejecting a culture they viewed as aggressive and lacking in integrity” he said.
“Banks, in particular, who have since been struggling to attract and retain the best new talent, are realising that these so-called millennials are not just in it for the money. They look for a sense of pride and purpose in their work, as well as flexibility and career support. To attract them, companies need to develop a strong and genuine purpose-led employee value proposition.”
