The Banking Royal Commission: Did HR technology fail our banks?

The Australian Banking Royal Commission: Did HR technology fail our banks?

With the recent release of the Banking Royal Commission report, questions need to be asked about the role of the CHRO and how HR technology could have been used to spot inappropriate work patterns and behaviours, writes Rob Scott

The release of the Australia Banking Royal Commission’s report has laid bare the pervasive toxic cultures seemingly present in most of our financial institutions. Sadly, it seems we learnt very little from the GFC in 2008. While some senior executives are rightly paying the ultimate price for their direct or indirect approval and support of business practices which rode roughshod over customers and whose “greed mantra” blinded acceptable moral and ethical standards, the elephant in the room is: where was the Chief HR Officer (CHRO) in all of this?

The whole Banking Royal Commission begs the question as to why such behaviour could continue over many years without being called out and exposed at the board and shareholder level. Modern HR practices extend beyond employees and infiltrate the customer and societal fabric, so playing the “It’s not my territory” card by the CHRO is a dereliction of duty.

Even if these behaviours were hidden in operational activity, which the CHRO is not directly involved, it’s highly unlikely that every single employee was supporting obvious wrongdoing or participating in activities contrary to their personal moral and ethical standing.

The role of the CHRO
As a CHRO, you are a strategic influencer at the board level with culture and acceptable people behaviour enshrined in effective HR governance, which, if applied correctly should surface rogue and unscrupulous behaviour. People risk is a CHRO responsibility.

“The elephant in the room is: where was the Chief HR Officer (CHRO) in all of this?”

Many Australian financial institutions called before the Banking Royal Commission are sizable companies with modern HR and talent management software solutions. These are sophisticated tools used to attract, recruit, onboard, exit, assess, performance manage, survey, engage, plan, entice into collaborative information sharing, strategically align, educate and enforce compliance. They also provide analytic outputs, including data-mining capability, which together with other data points should have raised the alarm on damaging people practices.

During 2016-2018, it was very trendy for the banking industry to showcase their people analytic and AI prowess by detecting and predicting employee flight risk. Using hundreds of HR and non-HR data points, this was seen as people analytics at its best.

HR tech and spotting inappropriate behaviour
So, it’s fair to assume there are enough data points which could collectively point to the inappropriate work patterns and behaviours highlighted in the Banking Royal Commission. It seems so obvious for example, that incentivising tellers to ‘sell’ to customers in order to get a bonus and keep their jobs, would lead to inappropriate behaviour. It would be an easy data-science exercise to correlate product sales, actual product usage by clients, performance scores and benefit and compensation data to highlight an underlying problem.

How could there be so many points of failure from an HR perspective, and did HR technology fail the CHRO and the banking leadership called to account before the Banking Royal Commission?

“it’s fair to assume there are enough data points which could collectively point to inappropriate work patterns and behaviours”

Is modern HR software able to do this, I hear you ask. The answer is a definite ‘Yes’. Modern SaaS solutions are filled with capabilities beyond transaction recording and are in fact geared far more towards effective line management, engagement and providing data derived insights. Analytics and AI outputs are pushed heavily from HR software vendors as an essential ingredient for effective strategic people management.

Of course, the effectiveness of your HR technology is linked to how you position it, leverage its capability and clarity on its role as a people data analytics engine. HR technology didn’t fail the banks, a lack of understanding beyond the transactional system, a lack of people technology vision, a low appreciation of people data-science capability and a low level of maturity and trust by the board and executive in the CHRO role are likely underlying root-cause reasons.

3 key insights for the CHRO into modern HR technology

  1. The CHRO is the responsible person at the board level for effective HR governance. In the modern workplace, it’s almost an impossible task to execute this without properly implemented HR technology and analytics systems.
  2. Modern HR systems provide capability way beyond a transactional record. Their real strength is in engagement and analytic outputs which supports business decision making.
  3. CHROs must acknowledge their own perceptions of HR technology and ensure the right vision is developed, supported by the right skills in order to leverage the ability to gain business insights through data analysis.