Financial services executives should be paid properly for what they do and what they are expected today and rewarded for exceptional performance, according to former Australian Competition and Consumer Commission chairman, Professor Graeme Samuel.
However, speaking on a panel at the Conference of Major Superannuation Funds (CMSF), Samuel made clear he did not believe commissions should be a part of the equation, stating: “I don’t like commissions”.
The CMSF panel was discussing changing cultures within the financial services industry in the wake of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, with the panellists agreeing that corporate culture was set from the top.
Importantly, the panellists – Samuel, Professor Jill Klein and Northern Trust Asset Management president, Shundrawn Thomas – all agreed that companies should not necessarily resort to the employment of outside consultants to address cultural change.
Samuel said that when he was part of the panel addressing issues at the Commonwealth Bank, he was impressed by the “can we, should we” test.
He said that test entailed not only asking whether an organisation could legally do something, but whether those contemplating taking the action would feel either proud or ashamed if their decisions were then reported in the daily newspapers.
Samuel said it followed that if people believed they would not be proud of their actions, they should not proceed down that path.
Comments
Whilst I have a lot of respect for Professor Graeme Samuel, clearly on this issue he doesn't have a clue. Indicating that financial services executives should be paid properly for what they do and rewarded for exceptional performance then rejecting commissions is nonsensical. Call them commissions, bonuses, incentives or whatever, they need to be paid for delivering exceptional performance. In my view to everyone from the cleaner to the CEO. The problem isn't with the commissions or incentives per say se. The problem is in the lazy way that performance metrics are set. If they are set purely against sales with total disregard to customer service, regulatory compliance etc, that is exactly what you will get - sales and nothing else. Goals need to be set using a range of measures and should include gates where appropriate. For example, those in business development should not receive their sales commissions unless they have passed through their compliance and customer satisfaction gates. This stuff isn't rocket science but unfortunately most organisations are too lazy to implement such arrangements. Happy to assist any organisations that need a hand with this.
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