News
New CIPD chief executive says HR has a ‘huge role’ to play in cultural and leadership issues hig
Published on 3rd July 2012 by Gareth Evans
People Management reports that CIPD feel ‘legislation is not the answer’.
More legislation will not solve the problems of “culture and leadership” in the banking sector that have been exposed by the latest rate fixing scandal, the new chief executive of the CIPD Peter Cheese has said.
The debacle forced Barclays chairman Marcus Agius to resign after his bank was fined £290 million for attempts by traders to manipulate the Libor inter-bank lending rate.
Attempts by traders to fix this rate were a serious breach of trust, as it is used by all banks to help set lending rates for mortgage customers, potentially resulting in higher costs for the public.
“The obvious reaction has been to talk of regulation and legislation, prosecutions, and even compensation for those adversely impacted,” Cheese said. “And while there are some gaps to be closed, the real issue that needs to be understood and addressed is that of culture and leadership. No amount of regulation will stop people from behaving unethically if they either don’t see it as that, believe they can get away with it, and particularly where the rewards outweigh the perceived risks.
“Culture is driven not just by what is said, but more importantly how senior people act, and what the organisation allows to become tolerated behaviour.”
He said that HR has “a huge role” in both having the courage to confront cultural failures and in enabling the development of better cultures and behaviours through performance measurement and reward and learning and training programmes.
Tracey McDermott, acting head of enforcement at the Financial Services Authority (FSA), said that Barclays’ traders were open in their attempts to manipulate the Libor rate and that this misconduct is some of the most serious the FSA has ever seen. The bank has started a “root and branch review” of its work practices.
Other banks have been implicated in the rate fixing, with RBS sacking traders suspected of involvement and more household name banks under investigation.
The government has started a review into how lending rates between banks work, while the Serious Fraud Office is considering whether to bring criminal charges against bankers.
Source: People Management