APRA's report on CBA highlights problems with leaders not 'walking the walk' on values

Yoshikazu Tsuno/AFP/Getty Images
  • A staff survey as part of the APRA inquiry in the Commonwealth found a blind eye was sometimes turned to indiscretions by leaders.
  • There was also a sense of “learned helplessness” among staff.
  • The culture allowed for a lack of accountability.

Senior executives at the Commonwealth did not consistently practice what they preached when it comes to behaviour, according to the inquiry by APRA into the bank’s governance, culture and accountability.

A survey of staff at the bank, with 6,000 responses, found that leaders had been observed to communicate the importance of values but not necessarily act in the same way themselves.

“Although it is difficult to achieve perfect alignment between words and action, the gap at CBA signalled that following this ‘walk’, rather than the ‘talk’, was acceptable,” says APRA’s report from the inquiry.

The Commonwealth Bank has been hit with an additional $1 billion capital requirement following the review. The report says the bank’s pursuit of success “dulled the senses of the institution”, particularly in relation to the management of non-financial risks.

The inquiry also found a number of prominent cultural themes: “A widespread sense of complacency, a reactive stance in dealing with risks, being insular and not learning from experiences and mistakes, and an overly collegial and collaborative working environment which lessened the opportunity for constructive criticism, timely decision-making and a focus on outcomes.”

More than 350 respondents in the staff survey expressed a negative view of leadership, often alluding to not walking the talk.

One staff member wrote: “Whilst leaders espouse the values, there are clear examples of leaders’ behavioural indiscretions which have had a blind eye turned to them.”

A report by the Ethics Centre to the bank in 2014 noted that CBA referred to their values “when it (was) convenient”.

Outside the senior executive levels there was declining confidence that reporting inappropriate behaviour at the bank would be listened to.

The staff survey asked: If I reported misconduct or other risk issues through a confidential channel, I am confident I would be protected.

“The degree of confidence with this comment declined in proportion to the seniority of the staff responding,” says the report.

“Some 95% of those at EGM (senior executive) level agreed with the comment, declining to 68% of middle management.

“On this basis, there is still work to be done to achieve the original goal of making staff confident that any report of inappropriate behaviour comes without adverse consequences.”

Accountability also emerged in the staff survey as an issue.

“Weak accountability was also identified in this inquiry through the staff survey and emerged as a theme in interviews of CBA leaders,” the report said.

Sub-optimal solutions

Common responses included: “If you ask what accountability means you get different answers.”

The report says there are a number of drivers behind CBA’s struggles with accountability including a lack of constructive challenge throughout the senior management levels and the board of directors.

The survey also revealed complacency in the form of externalising responsibility.

The report says staff regularly referred to perceived complexity and bureaucracy at he bank.

Common refrains of “it’s big and complicated”, or “it’s not always easy” were often given during focus group discussions during the inquiry.

“These provide a seemingly socially acceptable (at least within CBA) explanation for the implementation of sub-optimal solutions, for mistakes being made or for issues not being addressed in a timely manner,” the report says.

“Staff also used these refrains to rationalise and accept perceived inaction on the part of leaders.

“These behaviours are coupled with expressions of frustration and a sense of ‘learned helplessness’, as reported in the survey.

“In particular, risk issues were often seen to remain unresolved by staff, reinforcing a sense of helplessness.”

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