It is trite to observe that responsibility for corporate culture resides in Boards and the senior executive and leadership team of organisations. Behaviours and conduct of these most senior representatives necessarily define what is acceptable of employees and of recent times organisations in the banking and finance industry have been subject to public scrutiny and scorn where their behaviours and conduct, at best, fall short of acceptable public standards and at worst are illegal.
The application of PCS' people management quadrants which considers psychological and social imperatives as important as legal and business imperatives, providing for holistic decision making, is designed to minimise the risks of divisive and offensive decisions and behaviours of the type that Australia Post and the Australian Securities and Investments Commission ("ASIC") currently stand accused of.
The discoveries this past week of the payments and gifts these organisations have made is somewhat surprising given the recent findings of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. It is possible that the leaders' misjudging the limits of their authority and public tolerance took into account two of our four quadrants – business and legal, but failed to consider, adequately or at all the psychological and social impacts that these decisions would have. The reaction to these issues amplifies the increasing need for leaders to protect the reputation and value of their organisations by asking not "can" certain things be done but "should" they.
AusPost extravagant gifts
It was revealed during Senate Estimates hearings that four Australia Post senior executives were given Cartier watches in 2018. The gifts were a reward for securing a lucrative commitment from Commonwealth Bank, Westpac and NAB to contribute $100 million a year to fund banking services in post office branches. In justifying the expense of almost $20,000, Holgate said that the watches were given to "a small number of senior people who had put an inordinate amount of work in" to the project.
The success of the Bank@Post progam cannot be denied and indeed in the private sector bonuses are commonly given where performance targets are met and as a means to incentivise performance, albeit these bonuses are more likely to take the form of cash or options. This is the business aspect of the management quadrant taking precedence and to a lesser extent the legal. It is unclear the extent to which the psychological and social impacts were considered, Australia Post's largest shareholder is the Commonwealth of Australia and whilst it may not receive funding from the Government according to Christine Holgate, a legally defensible position (if it is found to be so) does not necessarily exonerate criticism centering on the perception of extravagance particularly during COVID-19 times and in the midst of a recession.
ASIC irregularities
Shortly after the Australia Post scandal broke focus turned to another case of value and cultural misalignment with the ASIC chairman, James Shipton, standing aside from his role pending the outcome of an independent investigation into an expense claim for personal tax advice. Shipton relocated from the US when he was appointed chairman in 2018. It was revealed ASIC paid more than $118,000 for him to receive personal tax advice following his move. This was uncovered by an investigation by the Australian National Audit Office ("ANAO"). There will be an independent investigation into the matter, commissioned by the Federal Government, which is expected to report back by the end of 2020.
The ANAO also uncovered a housing cost payment of $70,000 made to the deputy chair of ASIC, Daniel Crennan, over two years following his relocation from Melbourne to Sydney. The ANAO has recommended an internal review be conducted as the payment may have exceeded the limit set by the Remuneration Tribunal for Crennan's salary. Crennan opted to bring forward his resignation, noting that the review is likely to take some time. Both Shipton and Crennan have agreed to pay back the money. However, as the corporate watchdog, ASIC and its leaders must be above reproach.
PCS quadrants
The Australia Post and ASIC cases are clear examples of how and when the people management quadrants, if applied, may lead to different and more acceptable outcomes for stakeholders. In any decision, but relevantly to our business of providing management consulting and labour and employment law advice, PCS recommends for the adoption of holistic decision making. Leaders should not only consider what a business must do and what it legally can do but it should also focus on the psychology and sociology of the situation by considering – what do people feel and think? How does this look? If all of these questions are asked and answered then there is less likelihood of risk to reputation and careers when decisions are made and implemented by reference to business and legal considerations.
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