Putting Profits Before People

in banking •  3 months ago

This article is my own work and originally appeared in Medium. I worked for the Commonwealth Bank from 1981 -2005 before manufacturing my escape. The revelations emerging about the Commonwealth Bank culture in the wake of the Royal Commission into the Australian Banking system have shocked many. I've barely raised an eyebrow.

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When I started work at the Commonwealth Bank, I was barely eighteen. That would make it 1981.

The Commonwealth Bank was a much different beast to what it is now. Its mascot was an elephant and its slogan was “get with the strength.” It was the people’s bank, a government institution proud of its legacy and its place in the regulated system.

Its introductory training paper-based training course made much of it as being seen as a training bank founded on the core principles of ethics, honesty and accuracy. Its third in charge was a young kid by the name of David Murray, all of three years older than me and seen even then as the great white hope.

It was safe, reliable, secure and very conservative. On reflection, the seeds of what it has become had already been sown, but nobody who I worked with then could imagine the price gouging, profit taking, people killing (and I don’t use that word lightly) “institution” that it has dissolved into today.

I was just a kid. I didn’t understand banking (I’m not sure that I ever really did), I didn’t understand economics but I could and did feel the “vibe” of the place. People who worked there were proud of the place and their job.

They were also government employees.

There’s nothing wrong with government employees. However, I believe that there’s a mindset, particularly in middle management levels that is both docile and compliant. You have to get along to get along. That’s my impression anyway.

In any case, the culture of the Commonwealth Bank was not equipped for the twin shocks of deregulation and privatisation.

These two “initiatives” laid the groundwork for the total devastation and dare I say rape of what was once a noble institution.

Paul Keating moved to privatise one third the Commonwealth Bank ostensibly to save the basket case that the State Bank of Victoria had become after being allowed to play with the big boys in the world of global/corporate finance. He was caught between a rock and a hard place — let the State Bank fail or sell the family jewels to save it. He chose the latter and in doing so opened the door to the barbarians who would ravage and spoil the Commonwealth Bank.

Once a third was sold, it was inevitable that the rest would be sold off.

Once the Commonwealth Bank shrugged off the “shackles” of Government ownership and was “allowed to compete on an even footing” the yes people in middle management worked assiduously to tell their masters that the manure that was piling up around the doors of the bank was in fact sweet smelling fertiliser that was producing a bountiful harvest.

There was no handbrake of cautious common sense. Those who stood on the front line and tried to be rational and apply the principles that they were raised on were “managed” out of the business. Core values like accuracy, integrity and honesty were discarded by the new broom that was essentially a sales culture.

The drive was to be bigger and better than any other Australian bank — no matter what.

Sales and referral targets were introduced and every frontline staff member was held accountable to meet these artificial, arbitrary and unrealistic targets.

By this time, I’d managed to rise to Assistant Branch Manager in a country town. Branch targets were released for the coming year and we were meant to write 5ooK a week in Home Loans. The previous year the average was 75K.

American companies were hired to drive this burgeoning sales culture. The combination of American hype, sales tracking and subservient middle management was a potent, toxic brew. The place went totally nuts.

Confused, and seeking guidance, I rang a mentor who I knew to be still in the business. His message was stark. “Listen mate the bank is like a river. It’s flowing one way only. You and I have a choice. We either swim with it or swim against it. Now if you swim against it you’ll drown, so you’d better start swimming with it.” He resigned within 6 months after that conversation. I hung on.

The demands and targets became sillier. Pay scales were restructured to incorporate performance-based bonuses. By the time I left, 20% of my salary was dependant upon performance. I only ever received a quarter of that regardless of branch performance.

Retail banking became an exercise in doublethink, group think and blind allegiance. We were required to believe memorandums that read “In order to deliver better service, we are reducing branch staff.” It didn’t precisely say that, but when you cut away the weasel words and self-serving bulldust that’s what it meant.

There’s only so much garbage you can swallow before you start to choke on it.

There’s only so many times you can agree to unrealistic targets and shameless sales activities before you cry enough.

There are only so many times you can manage good people out of the business because they can’t meet sales targets.

Eventually, I did all of those things one time too many.

I left in 2005 I think. Even then the die was well and truly cast. The sales culture and related bonus system was already tearing at the fabric of the bank’s soul. People were already gaming the system — not for profit but to survive. The pressure on branch managers was horrendous.

I made many good friends in the Commonwealth Bank. Most of them left before I did. Some remained. I think of them often. They were good people trapped in a bad situation.

Some never made it out intact. Nervous breakdowns are common in the banking system.

I’ve watched the revelations about the CBA with sadness and a sense of inevitability. These days had to come.

Nothing surprises me.

Today I read of the Dollarmite scam being run in some branches. I don’t know any of the people involved, but I know what drove them. It wasn’t greed. It was sheer desperation driven by an insane system that demanded results.

I guess you wouldn’t understand unless you’d been there yourself.

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My name is Mark Hodgetts. I’m a freelance writer, eking out a crust writing
content for businesses. I’d much prefer to write more articles like this.
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Hi @markhodge ..... best of luck

I agree. Bankers sell a very sensitive commodity called money (through loans) and it does not make sense to give lofty targets as if they are selling popcorn. Wheels will come off at some stage.