City HR chiefs are partly to blame for the UK’s banking crisis, industry figures have claimed.
Reckless practices were fuelled by poor people management and a target-driven performance culture that prevented employees from speaking out, experts said.
As the credit crunch escalated last week, the government was forced to inject £37bn of taxpayers’ money into RBS and the merged Lloyds TSB and HBOS bank.
Paul Kearns, director of consultancy PWL, told Personnel Today the RBS debacle was “always on the cards” as the bank had built up too many debts. “Who the hell was giving out loans without the right security? How was this company being managed?” he asked.
“Surely there were a lot of bankers who had been in the industry a long time and knew it wasn’t wise? Maybe there is a culture that RBS would not welcome people asking questions openly – for fear of losing their jobs.”
Kearns pointed out that former chief executive Fred Goodwin – who quit last week – was “not known as a people person [but as] ‘Fred the Shred’.”
Rob MacGregor, national officer for union Unite, said a “huge problem” existed with the employment culture across the financial sector.
This had developed over the past decade due to the aggressive sales culture of the industry, and HR policies had become shaped by the target-and-reward culture.
“The employment practices are very much carrot and stick,” MacGregor told Personnel Today.
Staff who failed to meet goals might not receive bonus payments, or could face disciplinary action that could lead to dismissal, he said.
MacGregor said there were also far stricter sickness policies than ever before, designed to weed out people deemed unfit for the aggressive nature of the business.
“It takes a brave HR professional to push against these practices and point out that some of the problems the finance industry has been experiencing are down to the culture that exists,” he said.
“What needs to change is the culture. HR directors have got to be far more independent and dynamic to encourage that culture of fronting up to businesses about the practices that are going on.”
Both RBS and the City HR Association, formed to promote best practice in the financial services sector, declined to comment.