Tue Nov 20

Toppling bankers can be satisfying, but it's not enough to heal a sick culture

Written by Mathew Donald, Academic - Management, Leadership and Organisational Change, Charles Sturt University

AMP’s chief executive Craig Meller, chairperson Catherine Brenner and other directors fell on their swords after the banking royal commission revealed the insurer had spent a decade charging customers for phantom services and lying to the corporate watchdog.

NAB senior executive Andrew Hagger resigned ^[1] after the commission revealed he had withheld critical information from regulators about the “fee for no service”^[2] lurk.

Freedom Insurance directors David Hancock and Katrina Glendinning bailed out after the commission revealed their company’s aggressive sales tactics included selling a complicated insurance policy over the phone to a man with Down syndrome ^[3].

There’s symbolic power in heads rolling when organisations do wrong. It can be particularly cathartic for victims of bad behaviour.

But merely changing leaders is no guarantee of a fresh start or new direction for those organisations. On its own it will not heal a sick culture or prevent future malfeasance.

Not so simple

A change in leadership, granted, may be necessary. Staff and stakeholders need to be able to trust their leaders. But this is only the start, not the solution.

My research has been focused on the particular leadership and management qualities that will effect the way an organisation changes.

Change is not a simple process. An organisation’s culture is influenced by its many established structures, processes and policies. These evolve over time. They influence, and are influenced by, the behaviours and attitudes of staff. Multiple factors will probably need to be addressed simultaneously to effect change.

Politics’ revolving door

The limitation of relying on leadership change as a singular strategy is demonstrated by Australian federal politics. In the past decade both major parties have twice deposed incumbent prime ministers.

In each case the motivation for change was the idea a new leader would improve the party’s electoral popularity. That has proven a flawed strategy, with each new leader also subsequently shafted. The most recent change, replacing Malcolm Turnbull with Scott Morrison, looks like it will work no better.

The irony is that such moves have increased the public’s disillusionment with the culture of the major parties. It has compounded perceptions there is something rotten with the political system. A revolving door of leaders has done nothing to reverse the view politicians are out of touch with the community.

Sticky wicket

Cricket Australia provides another case study where leadership change is no guarantee of cultural change.

The scandal of the Australian men’s cricket team being caught cheating quickly led to senior players being disciplined. Then a sweeping cultural review was commissioned.

Finally, after the release of the report, chairman David Peever buckled to demands he take responsibility for overseeing a culture of “winning without counting the costs”. Then two of the organisation’s senior executives, Pat Howard ^[5] and Ben Armafio ^[6], were sacked.

Despite the various changes, it’s still not clear the organisation has changed sufficiently to rebuild trust internally or with the public.

What’s true for a cricket team or political party is true for a bank or any other type of company. Relying on a change in the top job to change the organisation is a recipe for future disappointment.

New directions are easy to spin, yet quite hard to initiate and see through. There is a need for multilayered actions to improve engagement and restore trust. The entire organisational culture needs to repeatedly reinforce an ethical vision. Everyone needs to know what needs to change, and be engaged in making those changes.

In short, the entire organisation needs to own the solution.