HR Exposed - The Banking Royal Commission is a call for action
In the past week the Australian Government’s Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry released its interim report. When summarising their findings on the question of why the misconduct occurred – their simple answer is: “… greed – the pursuit of short term profit at the expense of basic standards of honesty.”
This conclusion should come as no surprise to any person with common sense and a basic knowledge of human behaviour – and particularly to HR professionals who are the organisational experts in people and culture and the owners of the remuneration systems that rewarded this behaviour. HR people should know that many of the people management practices we have championed and administered for decades, actually undermine human and organisational performance and produce the kind of greedy, self-serving behaviour that the Royal Commission has exposed. This is not just a problem in the Financial Services sector. It is a problem in organisations across sectors and it is a major contributor to organisational underperformance and to customer and employee distrust and disengagement.
With the high profile exposure provided by the Royal Commission, now is the time for the HR profession to step up and call out the problem, and highlight the need for systemic change in business’s and HR’s dysfunctional “good” people management practices.
Why have obviously dysfunctional people management practices become “best practice”?
Most HR professionals at some stage in their careers come to realise that many of the core HR processes they are administering are not producing the performance and engagement outcomes they are intended to support. Some of us have then tried to improve those management tools and processes – a task that usually involves a lot of wasted time and effort that is equivalent to changing the colour of the lipstick on the pig. What is actually needed is to challenge the underlying assumptions and evidence about human beings that those practices rest upon.
However, the dilemma with questioning those basic assumptions becomes quickly apparent to anyone who has tried. Such questioning brings us into conflict with entrenched business management ideology together with forces of powerful self-interest. People with the most power, money and status are likely to feel they have the most to lose if we were to ditch those dysfunctional practices and change our people management processes to ones that really support human and organisational performance.
So despite the fact that the research evidence has been accumulating for over 50 years and normal common sense tells us a systemic change needs to occur in what “good practice” looks like – so far I have seen no stepping up by the HR profession to call for such change. The silence is deafening.
Ignoring the research evidence
For the past 50 years, organisations have largely ignored the research evidence from the fields of psychology, sociology, anthropology, marketing and advertising about the dynamics that shape human behaviour and performance in groups and organisations. We have continued with people management practices based on ideology and false assumptions that have produced toxic organisational cultures that have stunted the human spirit and limited our potential for exponentially better business performance that benefits society.
Well known authors and researchers over the years have pointed out the large body of evidence against much of our so-called “good management practice” in organisations. Much of this work has been summarized by Stanford Professors Jeffrey Pfeffer and Robert Sutton in the compelling 2006 work Hard Facts, Dangerous Half Truths and Total Nonsense and three years later in 2009 by Daniel Pink in the best selling book Drive. In fact, Jeffrey Pfeffer has written a series of books over the years, with the latest published this year, calling out the fact in each one, that despite the evidence, business people management practices have not fundamentally changed.
One wonders why there has been so little change when the research points out:
- Compensation and bonus systems in many organisations have provided an excuse for an unfair distribution of organisational wealth to certain demographic groups, and individuals, have rewarded amoral behaviour under the guise of achieving narrow performance targets, have undermined teamwork, and have stunted organisational performance and damaged organisations’ brands and reputations.
- Many modern people management practices undermine human performance - hurting engagement, creating insecurity and tenuous working relationships, increasing turnover, destroying people’s physical and emotional health, and limiting the achievement of human potential and performance.
- The gig economy and the rise in the contingent workforce is creating a new generation of workers with little job security, employment benefits or safety net in times of trouble, or the incentive to be engaged at work. Their existence is glamorised by stories of flexibility, freedom and independence that disguise their disadvantage and vulnerability.
- Apparently-objective recruitment practices have helped to disguise selection biases and discrimination, have disregarded the import impact of context, diversity, and learning and growth within teams on people’s performance, and have produced implicit quota systems that maintain the status quo and the interests of certain demographic groups under a guise of merit-based selection.
- The cult of the individual and of formal leadership has overshadowed the importance of the group, the context, informal networks of influence, and sideways connections and relationships that are particularly important for the effective functioning of individuals in complex organisations.
- HR systems and practices have been complicit in producing such outcomes through reinforcing the self-interest of power groups and maintaining the status quo. The HR profession has either demonstrated an apparent lack of knowledge about decades of research evidence about human behaviour that indicate the need to change HR practices, or has been unable to influence evidence-based change in core management practices.
If the Banking Royal Commission points out nothing else, it shows there is a crying need for a revolution in HR that brings humanity and evidence-based ethical people management practices into main stream organisational people management.
But for leaders and Human Resource practitioners who see the problem and want to make a difference, there is little information available to guide the change needed. Where are the examples of the practical application of the evidence about human behaviour to reshape people management practices? Who is creating healthier organisations and workplaces in which people thrive and produce breakthrough performance outcomes to build long term profit and customer loyalty?
There is no alternative best practice guide and it is very difficult to challenge traditional mindsets and question the status quo alone.
Time for change?
I am hoping that the exposure of wide-spread organisational dysfunction in the Royal Commissions hearings has caused more good leaders to wonder what needs to change in people management practices to prevent this kind of behaviour happening in their organisation.
Maybe leaders and organisations are now more open to questioning the status quo of traditional people management practices and accepting the evidence that has been available for more than 50 years – certain aspects of our “good practice” people management create dynamics that allow toxic cultures to prosper, customers and staff to be disrespected and de-humanised, and human potential to be wasted in organisations. Things need to change.
What can you do?
As I have said, it is very difficult to challenge traditional mindsets and question the status quo alone, so I thought the time could be right to find leaders and HR practitioners who are already creating such systemic changes in people management practices in their organisations and who are willing to share their experience and contribute to a groundswell for a revolution in HR and people management practice.
I am looking for such people to interview for a book I am researching and writing. These people may be leaders or HR practitioners who have tried new approaches to people management in their organisations that are consistent with the research on human behaviour and common sense. Or they may be at the beginning of the journey and are struggling with this challenge and need more support to be able to make change happen.
They may be academics or researchers in the fields of organisational psychology, neuroscience, sociology, anthropology, marketing or advertising who are involved in the application of research into human behaviour and performance in organisations and groups, and who can contribute knowledge of the research evidence – particularly across disciplines.
Whoever they are, they are interested in sharing their experiences and stories to help others and to build evidence-based approaches to managing people that create organisations that are people-friendly and unlock the enormous untapped potential in people to deliver exponentially better outcomes.
What to do next
If you are one of these people or you know of someone you think I should talk to and who is prepared to share their experience and contribute to creating a difference in people management practices, please contact me.
Consultant | Advisor | Change Leader
Work with Susan
Susan specialises in people-focused strategy development and implementation, people and culture, human resource management, and transformation and change. She brings practical experience and thought leadership gained from many years of leading successful performance improvement and change in some of Australia’s leading businesses and government. See more on her website, email her on firstname.lastname@example.org or phone on +61 (0)409 887685.