Perceptions of excessive reward still prevailing within UK financial services

FINANCIAL SERVICES

Perceptions of excessive reward still prevailing within UK financial services

Almost two-thirds of financial sector workers believe some people in their organisation are rewarded in a way that incentivises inappropriate behavior. Three-quarters say they think some of their colleagues are paid excessively. These are among the main findings of new research by the Chartered Institute of Personnel and Development (CIPD).

The research is based on a survey of more than 1,000 employees in the financial sector.

Peter Cheese, chief executive at the CIPD, said:

“For too long, many of our financial institutions had been built on cultures that encouraged and rewarded excessive risk taking and singular focus on short-term financial gain. These cultures reflected a loss of sight of core purpose, at the expense of responsible and sustainable business success, and driven by the disproportionate influence of some parts of investment banking over a vast and important industry that also encompasses critically important retail banking support for individuals and businesses. It’s encouraging to see the wider recognition of these failures, but this survey shows there is still much more work to be done."

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Key survey findings

• 75% of respondents agree that some people in their organisation are still paid excessively. Employees at levels below senior management are most likely to agree (79%), but even 66% of senior managers agree that some colleagues are paid excessively.
• Perhaps even more worryingly, almost two-thirds (65%) of respondents agree that some people in their organisation are still rewarded in a way that incentivises inappropriate behaviour.
• A similar proportion of respondents (64%) agree that how people are rewarded and what they are rewarded for is not clear, while 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, but even amongst senior managers, 54% agree with this statement and just 23% disagree.

Cheese said: “HR has to reflect on its part in what’s gone wrong in the banking sector, and step up to the crucial role we should play in understanding corporate culture, and in measuring, incentivising and promoting actions and behaviours that will make sure that we rebuild trust in the sector.”

A final word

“Financial services remains a sector under fire. Despite median pay across the sector being in line with other industries, and many workers whose working lives couldn’t be further removed from the extraordinary and atypical world of investment banking, even within the sector too many workers’ pride in their work and faith in efforts to repair broken cultures is being torpedoed by the high profile and damaging behaviours of the recent past” - Peter Cheese, CIPD Chief Executive.

Want to know more?

Title: Employee Outlook: Focus on rebuilding trust in the City, Chartered Institute of Personnel and Development, June 2013.

Survey details: The report was based on an online survey of 1,026 UK employees working in banking, brokerage and investment and insurance, conducted by YouGov for the CIPD between 26 and 30 April 2013. Among the sample, 495 respondents were from the banking sector, 295 from insurance and 237 from brokerage and investment.

Availability: The full report is available to download from www.cipd.co.uk/hr-resources/survey-reports/employee-outlook-focus-rebuilding-trust-city.aspx.

The Chartered Institute of Personnel and Development 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. For more information visit www.cipd.co.uk.