Monthly Archives: July 2013

Understanding competency and behaviour is the key to changing banking culture

The recent report into banking culture published by the UK’s Parliamentary Commission on Banking Standards has not gone far enough and banks need a better understanding of their people’s competency and behaviour to facilitate culture change, according to Mary Clarke, chief executive of Cognisco, a specialist in assessing and managing People Risk in organisations. The recent Parliamentary Commission’s report “Changing Banking for Good” made several recommendations for changing the culture within UK banks. The most striking was that senior bankers who were found guilty of “reckless misconduct” should be jailed.

The report said: ” … too many bankers, especially at the most senior levels, have operated in an environment with insufficient personal responsibility”, and that “senior executives were aware that they would not be punished for what they could not see and promptly donned the blindfolds”.

Other recommendations included splitting up RBS into “good” and “bad” banks before going ahead with privatisation, a shake-up of the current approval regime for bankers, a radical overall of bankers’ bonuses and putting a full-time chairman in place in banks to ensure tough scrutiny of executive managers. Although many of the recommendations are necessary and there is a need to ensure that bankers act responsibly and are held liable for their actions, they have not gone far enough in dealing with the root causes of many of the recent banking scandals: human error.

Banks need to tackle the roots of these problems and this can only be done through identifying and then managing individuals whose behaviour might be deemed reckless, risky and unacceptable. To achieve this, a clear understanding is needed of how people behave when performing their jobs and the decisions they are likely to make in certain scenarios.

The culture of short-termism

The banking crisis has been blamed on too great an emphasis on short-term thinking ,or what John Kay, a professor at the London School of Economics, has described as a culture of short-termism. Left unchallenged, this way of thinking leads to unwanted behaviour, including excessive risk-taking, deceptive reporting and poor leadership: types of behaviour that have been largely responsible for many of the banking sector failures.

The majority of scandals and failures during the past five years have occurred as a result of human error or rogue behaviour, and so if banks are to reduce risks it will be critical for them to have a full understanding of how their people behave. The many high-profile cases over the years, such as the HSBC money laundering case and the Libor rate-fixing, have demonstrated what can go wrong if adequate controls are not put in place to assess behaviour.

HSBC was fined a record £1.2 billion in the U.S. for failing to implement anti-money laundering controls, and Barclays was fined £290 million in the UK for breaches of the Libor and Euribor rates. These are just a couple of the many examples in the banking sector that highlight what can happen if companies fail to manage the risks posed by employee behaviour.

When Lehman Brothers collapsed in 2008 it was the fourth-largest investment bank in America and the largest bank ever to file for bankruptcy. While there is much debate about what was the main cause of the bank’s failure, many have suggested that the bank had taken on too much risk in a booming market. Across the global banking industry, banking executives were largely given a free rein to take enormous risks because there were no checks in place to monitor People Risk.

In the good times, when the banks were making huge sums of money, no one saw any reason to change this culture of risk. The economic crisis has made it clear, however, that the fall-out has been catastrophic and that something radical needs to be done to ensure that this does not happen again. The problem is a complex one. It is not enough for organisations simply to assess the competency of their employees; they need to understand how they behave on a daily basis, as well as their attitude towards risk.

How can companies spot “risky” individuals?

One effective way to spot potentially “risky” individuals can be to introduce regular employee assessments which measure a combination of employee competence, knowledge and confidence to reveal what people know, how they use their knowledge and how they act in certain situations. By assessing competency and confidence together, companies can identify individuals who might pose a threat to their business, that is, people with low knowledge and high confidence as well as those with high knowledge but low confidence, who might not make the right decisions under pressure.

These kinds of assessments should enable managers to gain complete insight into how individuals are performing, their weaknesses and knowledge gaps and the decisions they are likely to make. The results will also help to identify star performers or weak links, i.e., individuals who might need more training or who are actually not fit to practice. Banks need to have procedures in place to test employee knowledge, skills, confidence and attitude and it is important, as the banking culture begins to change, that these procedures are implemented now. If managers in banks do not know where their employees’ skills and knowledge gaps lie, it will difficult for them to ensure that they have eliminated risk and will not be hit by other scandals.

People Risk inside an organisation does not sit in one easy-to-define central function. Rather, it exists in myriad behaviours and habits of individuals spread across all levels of the operation. Ensuring that the drivers of employee behaviour in relation to risk management are effectively embedded into the operations of the business will help to shape banking culture for the better.

Channel 4’s ‘The Call Centre’ highlights need for businesses to ensure call centre advisors are true Brand Ambassadors

Mary Clarke, CEO, Cognisco, a specialist in helping companies identify and mitigate People Risk, looks at how call centres can improve advisor performance using assessments.

 

The Channel Four fly on the wall documentary The Call Centre, on our screens in June provided great entertainment for viewers but also highlighted the high pressured sales environment that exists in call centres and the challenges managers face ensuring their agents not only can sell but also they have the right attitude towards customers.

Call centre advisors act as ambassadors for a company’s brand and uphold its reputation – they are often the only interaction a company has with its customers, so it is critical they perform well.

 

Managers must have confidence they have the right people in place do this important role as the wrong people with bad attitudes is very risky and potentially damaging in terms of losing customers, impacting reputation and brand and of course, profits.

But in a highly pressurized call centre environment, how do managers ensure their advisors provide a consistently good level of customer service? More importantly, how do they develop ‘outstanding’ advisors that will provide a superior level of customer service that could differentiate a company from its competitors?

 

Making call centres – the hub of service excellence

 

One of the key challenges many managers face is engaging their teams who are under tremendous pressure. Inbound call-waiting targets are posted up on team ‘scoreboards’, diverse enquiries have to be answered promptly, the advisors need in-depth knowledge about a range of products and services and be able to handle difficult customers in a consistently professional and calm manner. Employee turnover in call centres can be high – it is not an easy job.

Agents need a high level of competency and knowledge and they need to be fully engaged and motivated and consistently give high quality customer service. As depicted in The Call Centre, the boss ‘Nev’ invested a great deal in training as well as activities and incentives to engage and motivate his teams. But even with training, managers are really in the dark about how their agents handle customers – they can’t observe them on every call.

 

Competency-based employee assessments

 

Most manager want to have greater confidence in their advisors and one way of achieving this it through the introduction of employee assessments that test and measure the skills, knowledge and confidence of advisors in work-based scenarios. Such assessments will reveal how they perform and how they behave when handling customers and importantly identify areas of risk such as unacceptable behavior.

The assessments test and measure advisors in realistic ‘on the job’ scenarios by taking them through a series of situational judgment questions and asking them what they would do in certain situations, such as handling a customer complaint. The answers reveal the likely decisions and actions of an employee, as well as how they apply their knowledge when performing their jobs. The results highlight knowledge gaps and any unacceptable behavior or risky, giving managers a clear picture of the strengths and weaknesses of every individual.

We have partnered with a training company specializing in call centre advisor training, to launch a new assessment to improve advisor performance and behavior when handling customers. Based around 12 key behavioral competencies, the assessment focuses on key areas such as how customer services advisors present themselves to customers, how they listen and respond to customers, customer objections and complaints and how they listen and respond to customers and address their needs.

 

The assessment is designed to supplement and enhance existing training and assessment programs for advisors, as it will accurately identify skills gaps and specific training needs and give managers a true insight into the performance and behavior of their advisors. It also ensures the right training and coaching interventions are in place for each advisor, help eradicate any unacceptable behavior that could put the company’s reputation at risk.

Cultivating ‘outstanding’ call centre advisors is challenging however, it is not impossible. The key to winning and keeping customers is by delivering a consistently high performance of service to customers that will turn them into loyal fans and identifying and addressing risky and unacceptable behavior before it becomes a problem.

 

 

Putting a stop to ‘should never happen’ blunders in NHS hospitals

The NHS could improve patient safety by mitigating the risks of human errors, explains Mary Clarke, CEO of Cognisco

This week Health Secretary Jeremy Hunt discussed some shocking statistics about patients in the NHS. He confirmed that around 3,000 patients died needlessly last year as a result of poor care, nearly 500,000 people were harmed unnecessarily, and the NHS recorded 325 ‘never events’ – incidents so unacceptable that they simply should never have happened. According to a report from the BBC, in the past four years 750 ‘never events’ have taken place.

 

Responding to these figures Dr Mike Durkin, Director of Patient Safety for NHS England has conceded that the 750 ‘never events’ reported is too high. Other experts have pointed out that there are actually hundreds of thousands of other adverse events that aren’t published.

Government Ministers have announced that a list of 25 unacceptable errors likely to cause death or serious injury has been created, and they have warned hospitals that they will be stripped of funding if they are found at fault in these areas.

 

The costs of these catastrophic mistakes are huge. Last year, there were 111 ‘never events’ in hospitals around the country, costing the tax payer £3.9 million, the equivalent of £35,000 for each incident.

It is clear that the NHS needs to take major steps to address and eradicate incidences of incompetency that are affecting the lives of patients and are resulting in hefty compensation claims.

 

It is critical that these organisations identify and address their risks – particularly their People Risks – by uncovering critical skills and knowledge gaps at all levels and addressing them by using targeted interventions.

For the past three years we have worked with a leading NHS trust as they introduced an assessment programme with new ‘Skills and Drills’ training. The approach is intended to help eliminate the risks of serious case incidents and deaths in obstetrics. Last year, the NHS paid £400m in obstetrics damages. Improving patient care and eliminating the risk of serious case incidents or deaths is a priority for every NHS Trust and our project has helped to achieve major progress in these areas.

 

We have shown how significant improvements can be obtained by measuring and correlating employees’ confidence with competence and then adapting existing interventions such as ‘Skills & Drills’ training to focus on the area of greatest need/risk, particularly where it relates to the behaviour of staff.

Employees often know what to do but lack the confidence to act on it in an emergency situation.  If you can find that out before they are confronted with this ‘on the job’ then you can coach and mentor them to achieve a more confident performance. Our programme requires you to obtain a health check from employees before putting them through their training.  One can then target a learning and development budget to where there is the most need. The programme has improved the performance of clinical teams when handling emergency situations, it has also benefitted patient care and, since it was initiated, there has been a reduction in avoidable incidents.

 

The same approach could be introduced across NHS departments to improve the competence and confidence of multidisciplinary teams. Only with regular situational judgement assessments that map employee competence, confidence, engagement and behaviour will managers in the NHS discover what their staff truly know, how they work and the decisions they are likely to make on the wards.

Once individuals and teams understand that this process is about giving them everything they need to know and understand to be confident in their role then the level of enthusiasm and dedication they feel toward their job is significantly improved.

 

Engaged employees care about their work and about the performance of the NHS, and know that their efforts make a difference. With this knowledge, the right training, coaching and mentoring interventions can be introduced to manage and mitigate risks, improve performance, confidence and critically engagement in order to reduce the risk of ‘never events’ taking place.

Mary Clarke has served as Chief Executive of Cognisco since January 2004. She has worked for a number of technology based companies including start-ups and high growth businesses. She has held UK, European and Worldwide roles for small, medium and large businesses. Her knowledge of Sales and Marketing, together with experience in software and services organisations forms a basis of experience to guide Cognisco as it grows both nationally and into other geographical markets.

 

 

The identification of ‘reckless’ individuals is needed if banking culture is going to change

Mary Clarke, CEO of Cognisco, a specialist in assessing and managing People Risk in organisations, comments on today’s report from UK’s Parliamentary Commission on Banking Standards into banking culture and suggests it doesn’t go far enough in helping banks clean up their act.

This week’s Parliamentary Commission report into Banking Standards ‘Changing Banking for Good’ made several recommendations. The most striking was that senior bankers guilty of ‘reckless misconduct’ should be jailed. The report states that, “too many bankers, especially at the most senior levels, have operated in an environment with insufficient personal responsibility and that ‘senior executives were aware that they would not be punished for what they could not see and promptly donned the blindfolds’.

Other recommendations included splitting up RBS into ‘good’ and ‘bad’ banks before going ahead with privatisation, a shake-up of the current approval regime for bankers, a radical overall of bankers’ bonuses and a full-time chairman being put in place in banks to ensure the tough scrutiny of executive managers. The recommendations have been welcomed by the Treasury.

 

 

Making bankers responsible and liable for their actions and the introduction of new standards for bankers will help to change banking, but are these reforms enough?  Will they radically change the culture within banks and eradicate ‘reckless’ behaviour? I would argue that banks also need to  tackle the root causes of these problems and that this can only be done through identifying and then managing individuals whose behaviour could be deemed reckless, risky and unacceptable.

To achieve this, a clear understanding is needed of how people behave when performing their jobs and the decisions they are likely to make in certain scenarios.   The majority of recent scandals and banking failures have occurred as a result of human error or rogue behaviour so it is critical that banks fully understand their people and their behaviour in order to reduce risks. The many high profile cases over the years, such as the HSBC money laundering case and the libor rate fixing demonstrate what can go wrong if adequate controls are not put in place to regularly assess behaviour.

This is a complex problem – it is not enough for organisations to simply assess the competency of their employees, they need to understand how they behave on a daily basis and their attitude towards risk. An effective way of doing this is by measuring a combination of employee competence, knowledge and confidence to reveal what people know, how they use their knowledge and how they act in certain situations by introducing regular employee assessments.

 

 

By assessing competency and confidence together, companies can spot ‘risky’ individuals – people with low knowledge and high confidence as well as those with high knowledge but low confidence, who might not make the right decisions under pressure.   These kind of assessments enable managers to gain complete insight into how individuals are performing, their weaknesses and knowledge gaps and the decisions they are likely to make. The results will help identify star performers as well as weak links – individuals who might need more training or who are actually not fit to practice.

Banks need to have procedures in place to test employee knowledge, skills, confidence and attitude and its important as the banking culture is changing that these procedures are implemented now. If managers in banks don’t know where their employee skills and knowledge gaps lie, how can they be sure they are eliminating risk and won’t be hit by other scandals?

If employee assessments were used throughout the employee life cycle – banks would not only make better recruitment decisions but minimise risk and improve their compliance and the performance of employees. Banks need to do this now alongside the other recommendations as highlighted by the Parliamentary Commission to ensure that banks restore their reputation and work well in the future.