Withholding incentives drive positive culture

Withholding long-term incentives for a period of time is very influential in driving behaviour and culture across organisations, according to a panel.

Speaking at the Association of Superannuation Funds of Australia’s (ASFA’s) conference last week, Rest group executive for corporate services, Gemma Kyle, pointed to another panel session that agreed that withholding remuneration would drive a more positive culture in organisations.

A poll conducted during the panel found that 51% of delegates believed culture was ‘one of the key contributors’ contributing to the issues raised by the Royal Commission, followed by 40% that said ‘largely’, 7% who said it was ‘a contributing factor only’, and 2% that said ‘little’.

Mercer principal – career, Michael Moses, said Mercer research said that over half of respondents in their survey said remuneration was a notable or primary driver of culture.

“If you have an organisation that are focused on certain metrics and people are rewarded for those specific metrics. You shouldn’t be surprised if people are very focused on these metrics,” Moses said.

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Moses pointed to Wells Fargo that had put a metric, and not a strategy, on cross selling which led to employees being paid a lot of meeting targets and being reprimanded for not meeting targets. This led to the opening up of fraudulent accounts.

“When you put a lot of focus on something and put a lot of money behind something and we’ll call it a low wage growth environment then you shouldn’t expect them to act any other way,” he said.

Another poll conducted during the panel found that 48% of delegates believed that ‘culture’ was the most significant driver of behaviour within their superannuation fund. This was followed by 40% who said it was ‘rules, systems, processes and procedures’, 7% who said ‘remuneration and incentives’, and 5% ‘other’.

Kyle noted that successful leaders in organisations needed to be transparent, vulnerable, and trustworthy.

“Leaders need to be vulnerable particularly at the executive and board table to be able to allow for vulnerability because that opens up the space for alternative thinking and differences,” she said.

“You’ve also got to give trust people and you allow your people to experiment, succeed, value and support them or find alternatives for them.”

Also on the panel, Kiel Advisory Group founder and managing director and former special adviser culture at the Australian Prudential and Regulation Authority, Elizabeth Arzadon pointed to the Edgar Schein culture model of the ‘humble leader’.

“Schein contracts humble leadership versus heroic leadership. The latter is one hero leader has all the answers and will guide everyone to the right place,” Arzadon said.

“In today’s complex world the idea that one person knows it all is completely unrealistic. What you need to deal with today’s world is the ability to synthesise multiple points of view, capabilities, concepts, different paradigms, and that requires that kind of leadership that generates trust so that you can listen, hear and synthesise all that knowledge to create a path forward.”