Talent For Change Survey Results Report

2015

mcpartners.co.uk

It takes a particular kind of optimism to look for the positive in the aftermath of the Global Financial Crisis in 2008.

It’s no exaggeration to say that here, in early 2015; the banks are suffering from chronic ‘change fatigue’ as they struggle to keep up with the sheer scale, complexity and pace of change that’s required.

Even now, the evidence suggests that the industry is still at something of a loss to know what actions to take to secure for itself a viable, profitable, responsible future. Mass redundancies, forever shifting strategies and countless restructurings have had a devastating effect on employee morale and indications suggest that there is more to come.

Opinions on the best way forward vary widely and it has to be said that not all of those opinions are based on a full appreciation of the issues. A little clarity would not go amiss.

As observers of the industry from close quarters since 2002, we felt it might be a good time to step back and take stock. Rather than simply stand by and offer yet more opinion from the side-lines, we thought we could make a useful contribution to the debate by conducting a survey into attitudes and beliefs of both internal and external banking change professionals and those parties who support them, not to apportion blame, but to discover what they think could be done to improve the performance of the industry in unprecedented – and uncharted – times.

I’m delighted to be able to present the findings of our survey in this report. There is much cause for optimism within it: the respondents, in senior and middle management roles within the banks and in external consultancies, seemed to warm to the opportunity to offer their opinions in the privacy of the research ‘laboratory’. They gave mature (and occasionally, quite trenchant) assessments of the problems faced by the banks and made constructive recommendations to solve them which we feel make compelling reading.

We hope that you find this report insightful, thought provoking and useful in the continuing task of turning the British banking industry around and returning the banks both to health and to wealth.

Dan MalkaGroup CEO, MC Partners

Foreword

01

02

Foreword 1

Contents 2

1. Introduction 3

2. Executive Summary 5

3. General Change 11

4. Leading Change 19

5. Managing Change 23

6. Resourcing Change 27

7. Organising Change 37

8. Developing Change 41

9. Learning Change 46

Glossary 51

Appendices 52

Authors 53

Contents

03

The banking industry is at a critical juncture as it moves towards increased volumes, lower margins, greater simplicity and more standardisation. The scale, volume, complexity and pace of change taking place in the sector are unprecedented. Many of the large banks are undergoing massive ‘front to back’ regulatory overhaul at the same time as extracting billions of pounds of cost and spend, changing employee behaviours and work practices to win back and retain customer trust and loyalty, reorganising structures to make way for new operating models and redesigning hundreds of processes and systems to be more efficient.

Most banks are suffering from chronic fatigue having been in a state of frenetic change since the Global Financial Crisis (GFC) hit in 2008 and are struggling to energise workforces reeling from mass redundancies, countless restructurings and low morale.

All the indications are that the bow wave of regulatory change and the operations to tidy up and iron out the changes that are being rushed through in its wake will continue for at least another three years. However, some of the bigger transformation efforts are likely to last for 10 years. Of course, forward-thinking banks, that now accept change is not something that happens only periodically, already have their eye on the horizon, contemplating how their organisations can achieve lasting agility in a rapidly evolving digital banking world.

Never before has there been a more urgent need for well-coordinated and well-resourced change in banking.

The truth is that many banks could be better at leading and managing change. For many reasons detailed in this report, banks could handle the pressures far more strategically and systematically, saving themselves endless pain, increased risk exposure and wasted cost while moving faster to sustainable working environments. Banks are still placing personal fiefdoms, bonuses and self-interest over organisational learning and continuous innovation.

Like past and current enterprise-wide moves towards greater customer-centricity, risk management and collaboration, the way banks approach change itself calls for a significant and difficult shift in culture, mindset and behaviour that can only be brought about by an aligned set of leaders who collectively have the ability and courage to make it happen.

Transformational change of this nature is notoriously hard and banks are not alone in their struggles. Research from McKinsey & Company shows that 70% of all (not just transformational) change efforts fail to deliver the benefits expected and desired when the

Introduction1

04

change was started, a figure that hasn’t altered for nearly 30 years. Whatever banks and numerous other organisations have been doing in the past is either not working or not working well enough. When change is successful, it tends to be:

“ … episodic in calmer waters rather than a continuous, ongoing series of strategic adjustments executed quickly in constantly rough conditions.” JOHN KOTTER IN HIS LATEST BOOK ON CHANGE, ‘XLR8’,

HARVARD BUSINESS REVIEW PRESS, 2014

Explanations for why this might be the case abound and include not making the right strategic decisions initially, neglecting to formulate detailed implementation plans, not creating the right environmental conditions for success, failing to raise urgency levels, not communicating effectively and not role modelling the behaviours expected of employees, to name but a few.

While change in banking is undeniably a complex subject involving many factors, ultimately they all involve the need for human beings, typically change leaders, managers and agents with the right knowledge, skill set and experience (capability) in sufficient numbers and organised optimally (capacity).

For that reason, this survey avoids debates about change methodologies and processes, and focuses on how banks can ensure they have the capability and capacity they need to deliver their change agendas.

05

GENERAL CHANGE

A number of banks are facing the problem of not having enough capable senior talent within their ranks in the midst of complex change and this problem is compounded by constraints and inefficiencies in recruiting.

Change as a capability is critically important for banks to run profitable, agile, sustainable enterprises. Failure to reframe their approach to change is likely to result in banks being caught in an exhausting, painful, costly and seemingly endless cycle of work. In addition to not realising some or all of the expected benefits, failure can bring rising costs to ‘re-do’ poorly implemented change or pay fines for missed deadlines, ongoing operational disruption and lasting reputational damage. In time, this will have a significant impact on the banks’ ability to attract talent, grow market share, focus on innovation and stay competitive.

Senior leaders in banks must collectively and radically adjust their attitude to change if they are to successfully future-proof their organisations. This will involve improving how they evaluate and develop their own change leadership and management competence, how they attract, hire, develop and resource for change, how they organise change expertise across their organisations and how they prioritise learning from change successes and failures.

Seeing change differently means recognising and rejecting parts of existing industry hubris, culture and behaviour associated with change, including the mis-characterisation of ‘changing the bank’ as the poor relation to ‘running the bank’.

Leaders inside and outside the industry widely agree that banks generally could be doing a much better job at change to ease the pain they are currently experiencing, especially over the mid- to long-term. 90.9% of respondents to the survey feel that the banking industry’s record in delivering change is either ‘about average’ or below. Only 9.1% think change is being delivered ‘very well’ and none at all feel the industry is delivering ‘exceptionally well’.

Banks are seen to be ‘about average’ at managing change associated with Risk and Regulation and Cost Reduction and ‘poor’ at managing Technology, IT Systems and Data Change.

Executive Summary2

06

LEADING CHANGE

Fewer than 18% of respondents have ‘total or considerable confidence’ in their banks having sufficient numbers of change leaders to deliver developmental, transitional or transformational change successfully.

Fewer than 25% of respondents feel leaders within their banks perform ‘very well’ in any of the change leadership competencies presented in the survey.

The majority of respondents feel that Account Executives and Sponsors in their banks could improve in the following areas:

- Changing mindset and culture to support new business directions

- Creating and sustaining conditions for success (breaking down organisational boundaries that get in the way of change)

- Building organisational capacity for ongoing change and self-renewal

MANAGING CHANGE

The overall story for change management capability is more encouraging than for change leadership. Against a number of key competencies, respondents feel that business change managers and programme managers across the bank perform best at ‘planning, managing and delivering new directions through multiple change initiatives’, with 77% of respondents seeing performance in this competence as ‘about average’ or above.

Business change managers and programme managers could improve in a number of other change management competencies:

- Establishing change communities

- Identifying, sourcing and training resources for change

The change management capacity picture is not as good as the change leadership picture, however – fewer than 15% of all respondents have ‘considerable or total confidence’ in their banks having sufficient numbers of change managers to deliver developmental, transitional or transformational change successfully.

RESOURCING CHANGE

Banks could be more strategic in the way they balance their use of permanent staff, Contractors and Consultants. A significant number of respondents (44%) feel the internal/external balance struck is generally ‘poor’.

When resourcing for change, banks could determine and take into account the type of change more effectively. Only 11% of respondents feel banks determine and take into account the type of change ‘very well’ when resourcing for change, while over 55% score this capability ‘poorly’ or ‘very poorly’.

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Banks could also have a clearer picture of the size and location of their change resources. 44% of respondents feel their bank’s ability to size its change population and know where members of that population reside within the bank is either ‘poor’ or ‘very poor.’

When it comes to hiring change professionals, respondents are generally not satisfied with the banks’ end-to-end resourcing models. 66% are only ‘partially satisfied’ or ‘not satisfied at all’ with the model in their banks. Suggested areas for improvement for Internal Resourcing Teams and Recruitment Process Outsourcers/Managed Service Providers (RPO/MSPs) if used, include:

- Understanding the role and business needs

- Optimising hiring manager interviewing time

- Making hiring decisions by managing a more robust process

- Speeding up time to fill

- Supporting onboarding/integration

Internal Referral Schemes provide banks with the highest level of consistency when hiring high quality permanent staff.

Agencies provide banks with the highest level of consistency when hiring high quality contract staff, although the quality of agencies varies considerably. While complimentary of some, most Sponsors feel that Agencies generally could do a better job in a number of areas. Suggested areas for improvement for Agencies include:

- Increasing diversity of candidates on short list

- Reducing cost of hire

- Supporting onboarding/integration

Small to Mid-size Consultancies are, on balance, seen to be more value-adding than Large Consultancies when partnering with banks to deliver change successfully. Suggested areas for improvement include better management skill set of individuals for Small to Mid-size Consultancies and value for money for Large Consultancies.

ORGANISING CHANGE

66% of all respondents favour a model for organising change in banks that combines distributing change expertise across multiple business units (the Federated Model) and having a global and centralised change management ‘Centre of Excellence’ (the Centralised Model) over a purely Federated Model, a Centralised Model or an Outsourced Model.

‘Line of sight’ across change initiatives at the Business Unit level appears to be fairly clear but could improve at country, regional and group levels.

2. Executive Summary

08

DEVELOPING CHANGE

Identifying, assessing and developing individuals capable of delivering change successfully are seen as critical processes for banks but they score poorly in these areas. Over 94% of respondents think that identifying and assessing individuals capable of delivering successful change is of ‘high or critical importance’ (nearly 54% think it is of ‘critical importance’). Over 42% of respondents think that the banks they work for do ‘poorly’ or ‘very poorly’ in this area.

Over 80% of respondents think developing change professionals is of ‘high or critical importance’ (46% think this is of ‘critical importance’). Nearly 60% of respondents feel the banks they work for develop individuals capable of delivering successful change either ‘poorly’ or ‘very poorly’.

Impediments to identifying, assessing and developing individuals capable of delivering change successfully include:

- Insufficient resources

- ‘Change’ roles seen as different from ‘Business As Usual (BAU)’, ‘run the bank’ roles

- Lack of internal assessment capability

- Lack of internal development capability

- Insufficient time allocated to development planning

- Not enough subject matter expertise

LEARNING CHANGE

Banks are beginning to see the benefits of looking outside their own industry for guidance in delivering change but are still considered to be poor at learning lessons from the past when delivering change. Over 60% feel that the banks they are working for are ‘poor’ or ‘very poor’ at learning from other industries when it comes to change. Asked how well the banks they work for learn lessons from the past about delivering change successfully, a large number of respondents answered ‘poorly’ (44%).

There are a number of valuable solutions that banks can adopt to start delivering change more successfully in the future. Over 50% of respondents consider solutions proposed in the survey to be ‘valuable’, ‘very valuable’ or ‘exceptionally valuable’. The top three solutions are:

1. Change professional development support and advice – education, training, stretch role coaching, etc.

2. Real-time, future-focused change workforce planning

3. Work alongside internal HR teams to improve recruitment of resources

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2. Executive Summary

Key findings and recommendations

Invest for long-term sustainability – build internal capability and capacity in change leadership and change management.1 2

4

3 Focus on critical leadership and change leadership competencies including accountability, decision-making, systems thinking, stakeholder management, communication, resilience, adaptability and emotional intelligence.

5 6 Don’t backfill change leader roles with Consultants or Contractors who have been in the organisation for short periods of time.

7 8Improve strategic workforce planning, obtain a clear picture of the size and location of existing change resources across the bank and carefully determine the type of change contemplated.

9 Have a deliberate strategy for working with Consultants and provide guidelines to staff for their use (i.e. the ratio of Consultants and Contractors to permanents).

Conduct impact and readiness assessments as part of a process to hire for change.

Use systematic talent management processes and practices to ensure the right talent is leading and managing critical change initiatives, i.e. highly networked, influential business leaders who know and understand the business that needs changing and who are capable, experienced change leaders.

Give priority and resources to the evaluation and development of individuals capable of delivering change successfully – either internally or using capable external providers.

Place high potential change leaders into increasingly complex change roles and support them.

10

15Incentivise change success in bonuses.

1211 Improve ‘Line of Sight’ of change initiatives at country, regional and group levels.

Consider organising change resource around a combined Federated and Centralised Model.

13 14Reward and encourage the mastery of complete leadership skill sets including developing people.

Embed change in performance management systems.

10Strengthen and continually monitor the performance of the bank’s end-to-end resourcing model.

19181716 Make

change a valuable career path in banking.

Explore strong learning partnerships with other companies from industries outside of banking.

Monitor and review change initiative successes and failures from the perspectives of multiple stakeholders.

Recognise and embed learning from past change initiatives into banking culture.

11

“ At an organisational level. I can’t think of anywhere that has done large, organisation change well.” SPONSOR

INTRODUCTION

One of the positive effects of the Global Financial Crisis (GFC) has been to expose the need for change in the banking industry more clearly than before. For change to have any lasting beneficial effect, it needs to be addressed at an attitudinal and cultural level: major surgery rather than cosmetic.

Survey participants were asked how well, and how successfully, the banks are delivering change, and in which areas of the banks’ activities, since the GFC; they were asked how well change initiatives have been implemented; and, perhaps most tellingly, to what extent the banks themselves are owning and taking responsibility for the outcomes of these change initiatives.

MANY BANKS ARE STRUGGLING TO KEEP UP WITH THE ‘RELENTLESS’ AMOUNT OF CHANGE

Leaders inside and outside the industry widely agree that banks generally could be doing more to ease the pain they are currently experiencing, especially in the mid-to long-term.

90.9% of respondents rate the banking industry at ‘about average’ or below in delivering change. Only 9.1% think the industry is delivering change ‘very well’; and no respondents feel the industry is delivering change ‘exceptionally well’. 27.3% admit the industry is delivering change ‘poorly’ or ‘very poorly’. This picture is consistent across all the main audience categories, Sponsors, Consultants and Contractors – the very individuals who are responsible, and in many cases accountable, for delivering change in banking.

How well do you think the banking

industry is generally delivering

change since the GFC?

CHART 1

63.6%

23.4%

9.1%

3.9%

VERY POORLYPOORLYABOUT AVERAGEVERY WELL

General Change3

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“ Change is not seen as core competence.” SPONSOR

“ Change is seen as cost cutting, there is enormous suspicion.” SPONSOR

“ Change is something that is done to the business, not something everyone owns.” SPONSOR

“ Changing the bank is seen as the poor cousin to running the bank.” SPONSOR

A common complaint is that there is too much change happening all at once and the consensus is that banks are not proficient when the scale and complexity of change increases:

“ Doing less would be more. We are struggling to keep up with process, system and organisation change – they are all hitting at the same time as cost cutting, trying to outsource, right source, offshore, reduce staff and do ‘business as usual’ whilst hiring new talent.” SPONSOR

Getting an accurate picture of change success in banking is difficult for a number of reasons. ‘Line of Sight’ over initiatives is often limited and outcomes, together with associated costs, are frequently not tracked. Definitions of success often depend on who’s being asked:

“ I’ve just seen the Basel III programme go in, which at the very senior levels was declared a success, but when you talk to the production teams that have to live with it, you hear there are all these problems. Define success? For senior guys, it is being able to declare success and they want to believe it; for the guys on the ground it means something different.” SPONSOR

BANKS ARE FAILING TO DELIVER CHANGE AS SUCCESSFULLY AS THEY COULD, IN LARGE PART DUE TO THEIR CULTURES AND ATTITUDES TO CHANGE

The banking industry’s culture and attitudes to change itself lie at the heart of the issue. Many senior leaders in the profession typically possess ingrained beliefs about change that affect current leadership and employee behaviour. These are probably the biggest barriers to lasting change and sustainability, and are the hardest to dismantle or reshape.

Most organisations resist change and fight hard to preserve the status quo. Banks appear to go further and discredit change as a discipline or capability in its own right:

To the majority of people in the survey, phrases such as ‘change the bank’ and ‘run the bank’ are unhelpful, old-world and divisive. Many feel that in reality, there is no difference between changing a bank and running a bank and the leaders of the business units that need to change must be the same leaders that drive the change. Others argue that while they are different concepts, they nevertheless need to be treated equally and be complementary to one another – ‘there needs to be a partnership between the two’.

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Of course, ‘running the bank’ is vitally important. At a time of considerable economic pressure, leaders in banks, like many other organisations, face the task of changing behaviour but staying profitable at the same time:

“ You’ve got to balance this transition to a new brand of leadership and values while actually making some money otherwise you’ll go out of business.” SPONSOR

That many in the banking profession might still see ‘running the bank’ as more important than ‘changing the bank’ is probably a throwback to another strong cultural dimension – the absolute pre-eminence of individual revenue generation:

“ It is very easy to apportion profit to run a division. You sell products to wealth customers – brilliant, here’s some profit we can attribute to what you do. But, if you change the wealth business, it is not clear what value you bring to the party. So most banks that are responding to cost cutting are not saying, at the same time, change people are very important.” CONSULTANT

This view is especially true if people feel there is no accountability for change success:

Change leadership certainly doesn’t hold the same reverence it does in other industries:

“ Traditional change delivery is seen as a place where you put people who are talented but you don’t know what to do with them; change is still seen as a way to pasteurise people.” CONSULTANT

To some, this old school approach and mindset is slowly changing. It needs to change more quickly if billions of dollars of investment and institutional knowledge are not to be further wasted.

Banking’s naturally risk-averse nature and its cultural legacy of focusing on personal revenue generation, short-termism and treating change with derision has had an impact on the banks’ ability to lead and manage change quickly and effectively, to attract, hire, develop and organise the right expertise for change as well as to learn continuously from previous change successes and failures.

“ … the change function is isolated in an ivory tower somewhere.” CONSULTANT

3. General Change

14

Banks are rated ‘about average’ at managing change associated with Risk, Regulatory Change, Restructuring and Cost Reduction, and Customer Experience; but ‘poorly’ at managing change in Technology and IT Systems and Data.

One major contributing factor to this result is the legacy of systems banks have grown up with and the costs involved in modernising those systems. Many of today’s banks grew through acquisition but failed to fully integrate their architectures and processes:

“ Certainly in terms of systems and infrastructure, it is hard to untangle the legacy and extract costs, because quite often, even though they pull out 80-90% of old stuff, it is quite difficult to totally remove, e.g. back books – it costs more to take out rather than leave it running there, so you end up with a fairly complex change landscape.” CONSULTANT

How well do you think the bank is delivering successful change in the following domains since the GFC?

VERY POORLY POORLY

ABOUT AVERAGE VERY WELL

EXCEPTION- ALLY WELL

DON’T KNOW

RISK3.8% 19.2% 46.2% 24.4% 2.6% 3.8%

REGULATORY2.6% 20.8% 50.6% 19.5% 5.2% 1.3%

TECHNOLOGY AND IT SYSTEMS5.1% 38.5% 38.5% 15.4% 1.3% 1.3%

DATA9.0% 35.9% 39.7% 9.0% 1.3% 5.1%

RESTRUCTURING AND COST REDUCTION* 2.6% 18.2% 44.2% 27.3% 1.3% 6.5%

CUSTOMER EXPERIENCE3.9% 15.6% 41.6% 18.2% 2.6% 18.2%

M&A0.0% 16.7% 25.0% 9.7% 0.0% 48.6%

MOBILE, DIGITAL AND NEW MEDIA4.0% 17.3% 32.0% 17.3% 1.3% 28.0%

TABLE 1

* including rightsizing, offshoring, near-shoring, outsourcing, shared services, etc.

Q

15

RISK AND REGULATION

The change agenda in banking is clearly being dominated by regulatory change. To many Sponsors, Consultants and Contractors, the amount, scope, pace and non-negotiable nature of regulatory change has been, and continues to be, ‘relentless’ and to some, ‘overly intrusive’.

Different banks would appear to be taking different approaches to this pressure, with some banks ‘deliberately leaving things to the last minute because they believe, if they get into trouble, the regulator is so unclear itself, it will not have the right answer’ while others ‘are much more proactive’ and ‘fearful of non-compliance’.

Banks know that all the regulators such as the Fed, ECB, PRN, MAS, HKA, share information with each other now ‘so if one [regulator] finds an issue they all know.’

Banks are responding by increasing the size of departments, such as operations and risk, to cope with the amount of change and frequently hire from outside to do this.

For many, the main issue is simply how to prioritise and ‘keep the regulators at bay’. Several Sponsors said that the sheer volume of change going through is also having an impact on the bank’s ability to 1) step back and think strategically and 2) implement overdue internal changes to improve. This, they say, has meant they are actually slower to implement regulatory changes and have less control. The difference between making the business compliant and improving the business is summed up as follows:

“ I do think there has been a lot of inefficient change done and that has generated run costs which will need to be unwound in the future. So what do I mean by that? You have five pieces of regulation that come in during the year; five different programmes have been kicked off to produce five different solutions. If you had more time to think and plan and had a better quality of change implementers in the organisation, you’d probably have 1-2 solutions that address all five pieces of legislation. Part of that is driven by the inefficiency of the regulators themselves who are putting an extreme pressure on the banks to get things done in a certain period of time and part of it is about the quality of governance in those organisations.” CONSULTANT

The view that the regulators themselves are partly to blame is also fairly widespread:

The regulators, it would seem, need to be mindful of how much change they are asking banks to make if they want those changes to do what they are designed to do, as well as actually have an overall positive impact on the sector and economy.

“ … rarely do they know or have little regard for the infrastructure and resource constraints the banks are under.” CONSULTANT

3. General Change

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TECHNOLOGY AND IT SYSTEMS

Technology and IT systems have something of a split personality in banking depending on where you reside.

According to some Sponsors, technology is still seen as a business panacea, a cure for any problem or issue, a hangover from the days when banks ‘could throw money at infrastructure.’ One Sponsor said this was the approach in his bank before it ‘realised it was too big for this, 4 to 5 years ago.’

Consultants and Sponsors comment that an over-reliance on IT still exists in parts of banks today and manifests itself in, for example, business people failing to consider and make necessary changes to business processes before asking IT to lay down new technology. As one said, ‘You can’t put an Oracle D ledger onto a badly designed process and expect it to fit all processes.’ From that perspective, IT shouldn’t always be blamed for failures; the business also needs to take some responsibility.

SEEING CHANGE AS AN IT PROBLEM

According to others, the business ‘hates’ IT and sees change as an ‘IT problem’. As one Consultant says, ‘even if the business case is clear and there is a sponsor and middle management, the programme is seen by business people as IT change.’ In some banks, this might be because people supporting the change are technology individuals who don’t always know the business and who use technology-orientated change methodologies and standards that are not always relevant to, or needed for, business change. In others, the IT operating model is simply too expensive and unsustainable, ‘requiring nearly every single project to have IT support’.

A typical dilemma often faced by banks is:

“ You have a boss moving front-end development/capability but you have the challenge of hooking it into the back-end systems. Quite often the data is not clean, it is not in one place, there are multiple interfaces, and there is a lot of data scrubbing.” SPONSOR

IMPROVING THE RELATIONSHIP BETWEEN TECHNOLOGY AND THE BUSINESS

One Consultant said banks ‘really need to think about how the business and technology parts of the business interact.’ For a start, he suggests that capital spending on IT projects needs to move from ‘large spikes’ to a ‘more continuous spend.’

DATA

Data change will increasingly pose a big challenge for banks in the future. Both the regulators and the industry are driving the demand for looking at data in a different way:

“ Banks have huge repositories of data sitting in legacy systems but, currently, it is too expensive to pull that data out into data solutions and have it available for an agile front-end to use in an analytical way like Yahoo or Amazon.” SPONSOR

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3. General Change

RESTRUCTURING AND COST REDUCTION

Almost all the banks are doing strategic cost reviews to reduce their cost bases:

“ More recently, banks have gone from regulatory compliance and fixing controls, to realising they are spending lots of money and not making enough money, therefore have a major return on equity issue. So, on the tail end of a large regulatory change programme, we are thinking about cost efficiencies and trying to do that at the same time as being compliant.” CONSULTANT

The tension between managing compliance and cost is, in some banks, leading to ‘real pressure between accountants who are trying to stop people spending money and those people who could go to jail if they do not get things done and fulfil their regulatory commitments.’ One example that illustrates this is:

“ I have headcount approval for 30 but I’ve tried to hire 10 people from various places but [accountants] have stopped that happening. I’m now six months behind. I need to go to the Fed in Sept for reg approval but can’t do it now without going external. Even if people unblock the ‘permanent’ pipes, it takes 5-6 months to get them in, so I am bringing in the consultants tomorrow.” SPONSOR

For a number of people, the major challenge to the banking industry is now managing the cost base – and managing the cost base is harder than managing growth:

“ In my view, driving growth is a little bit easier because you are creating new things, you just punch them in, people are more tolerant about overruns because there is a bigger prize at the end of it. When you have a cost agenda, it is harder because there is more legacy to deal with, more complexity of systems and processes and data that aren’t well integrated. Trying to standardise that and drive cost out across the whole organisation is challenging.” SPONSOR

Another factor is the lack of significant investment in change capability. Banks are not making sufficient money to make big investments and, according to one Sponsor in Risk and Finance, ‘there is very little funding to look at things more strategically.’

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THE IMPACT OF CHANGE FAILURE IS HUGE

Change initiatives that fail or only partially succeed typically have an impact on many areas of a bank – legal/regulatory, finance, technology, operations, and reputation, to name but a few. In addition to not allowing the business to realise anticipated benefits on time, if at all, failed initiatives frequently waste enormous amounts of capital, cause significant disruption to operations and can seriously affect a bank’s standing in the market. Regulatory change failures result in much more than a diminished reputation; they can lead directly to share price falls as a result of big fines, cost of capital rises and negatively impacted cost:income ratios.

Cost and time overruns on change programmes or initiatives ultimately mean less resource for banks to innovate and prepare, after long-term, disruptive threats posed by new entrants, companies such as Google, Amazon, Apple and emerging protocols such as Bitcoin.

SUMMARY

The survey findings indicate a low level of confidence in the ability of the banks to embrace and effect change at the all-important level of attitude and culture. Without major improvement here, any further change initiatives run the risk of only succeeding superficially, if at all.

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“ If I think of the big programmes that went wrong, the major reason was down to leadership.” SPONSOR

INTRODUCTION

While the Global Financial Crisis (GFC) revealed attitudinal and cultural deficiencies in the banks towards the need for change, it also exposed the lack of leadership qualities essential to effect the changes necessary for the future health of the industry. The latter can be seen as a direct consequence of the former: without changes to both, it is difficult to see how change can be delivered successfully.

Survey participants were asked both about the quality of the banks’ performance in leading change and also whether they felt there were sufficient numbers of change leaders with the right skills, in the right place within their organisation.

THERE IS LITTLE CONFIDENCE THAT BANKS HAVE SUFFICIENT NUMBERS OF CHANGE LEADERS TO DELIVER CHANGE SUCCESSFULLY

Leadership is essential for delivering change. Across the board, Sponsors, Consultants, Contractors and RPO/MSP employees feel that banks do not have enough ‘really skilled’ change leaders. Fewer than 18% of respondents have ‘considerable’ or ‘total confidence’ in their banks having sufficient numbers of change leaders to deliver any type of change successfully. 52% of respondents have ‘little confidence’ or ‘no confidence’ in their bank’s ability to deliver transitional and/or transformational change with the numbers of change leaders available:

In some cases, project or programme managers are expected to be change leaders when they do not possess the skills or experience to fulfil such a role:

“ Project managers often lack leadership. They develop in a certain way, with change methodologies, gantt charts, presentations, etc., but often they lack a sense of belonging. Their tenure and livelihood is based on the project timeline so they don’t make as much of an effort to integrate. In short, project managers don’t feel they own the accountability, and if they think like this, they won’t go the extra mile.” SPONSOR

Leading Change4

“ … the guy that is responsible for the change on the steering group is normally a successful business person but not a change leader.” SPONSOR

“ Banks need a massive evolution. Leaders in banks are pretty terrible at behaviour change, communication plans and winning hearts and minds.” CONSULTANT

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ACCOUNT EXECUTIVES AND SPONSORS IN BANKS COULD IMPROVE IN A NUMBER OF CHANGE LEADERSHIP COMPETENCIES

Survey participants were asked how Account Executives and Sponsors generally performed against a number of change leadership criteria.

While the majority of respondents feel that Account Executives and Sponsors perform ‘about average’ in some competencies, they perform less well in the three most critical, change-specific areas: 1) the ability to change the mindset and culture in supporting new business directions 2) the ability to break down organisational boundaries and to create and sustain conditions for success and 3) the ability to build capacity within the organisation for ongoing change and self-renewal.

These three related areas require a deep knowledge of both change leadership and organisation theory, and the practical ability to apply that knowledge in specific circumstances.

How well do Account Executives and Sponsors across the Bank:

VERY POORLY POORLY

ABOUT AVERAGE VERY WELL

EXCEPTION- ALLY WELL

DON’T KNOW

TAKE RESPONSIBILITY AND OWNERSHIP FOR THE OUTCOMES OF CHANGE (POSITIVE OR NEGATIVE)

5.7% 21.4% 45.7% 20.0% 4.3% 2.9%

CHANGE MIND-SET AND CULTURE TO SUPPORT NEW BUSINESS DIRECTIONS

4.3% 34.8% 36.2% 21.7% 0.0% 2.9%

ROLE MODEL BEHAVIOURS THAT ARE CONSISTENT WITH AND SUPPORT THE DESIRED STATE

5.8% 23.2% 46.4% 23.2% 0.0% 1.4%

CATALYSE PEOPLE’S COMMITMENT AND HIGHEST CONTRIBUTION TO THE CHANGE THROUGH INSPIRATION AND MOTIVATION

5.8% 27.5% 43.5% 17.4% 2.9% 2.9%

CREATE AND SUSTAIN CONDITIONS FOR SUCCESS FOR THE CHANGE. BREAK DOWN ORGANISATIONAL BOUNDARIES THAT GET IN THE WAY OF CHANGE

8.7% 47.8% 23.2% 15.9% 1.4% 2.9%

BUILD ORGANISATIONAL CAPACITY FOR ONGOING CHANGE AND SELF-RENEWAL

7.2% 39.1% 37.7% 11.6% 0.0% 4.3%

HAVE A LONG-TERM STRATEGIC FOCUS

8.7% 23.2% 42.0% 15.9% 2.9% 7.2%

TABLE 2

Q

21

ABILITY TO CHANGE MINDSET AND CULTURE TO SUPPORT NEW BUSINESS DIRECTIONS

Knowing and being conversant with specific issues within the business, understanding the drivers of change and the culture, having the ability to form networks and gain influence with business leaders are all key roles. Successful programmes at one bank were compared with unsuccessful programmes at another:

Banks often fall into the trap of pulling in business people without the necessary change skills into change roles:

“ … often what happens is you have good business leaders going in to run complex change but they don’t know how to run change… or you get good change leaders going in to run complex change agendas but they don’t understand the business.” SPONSOR

Banks have suffered in the past because they have prioritised subject matter expertise over real change capability:

BREAKING DOWN BOUNDARIES, CREATING AND SUSTAINING CONDITIONS FOR SUCCESS

Change leadership needs to deal with different functions and different people across the bank; expectations need to be managed – between Business and IT for example; change leaders need to network and influence, often without positional authority, internally and externally – with the regulators for example; they need to solicit important information from others; they need to raise urgency levels amongst their staff; they need to communicate the new vision, and the impact of large programmes; they need to provide clear direction often when there is uncertainty or ambiguity; they need to lead by example; they need to develop a strong, united team that works well together; they need to adapt to different environments and cultures.

BUILDING CAPACITY FOR CHANGE AND SELF-RENEWAL

Perhaps the most common leadership competencies in building capacity for change involve refined people skills – the ability to manage internal politics, the interests of stakeholders, and internal resistance to change, through effective communication and emotional intelligence. Being able to see ‘the big picture’, the ‘front to back’, is also seen as a significant leadership competence in delivering change.

Successful change leaders are seen as sharing similar attitudinal characteristics in reliability, credibility, resilience, patience and proactivity. They also take a long-term view of the world and are motivated ‘beyond money’ to see programmes through to completion.

4. Leading Change

“ … getting business people involved in programmes in the early stages… Knowing they need to both implement and work with the change meant there was greater impetus around time and scope.” SPONSOR

“ … subject matter experts with high thinking skills, for example, analysing and interpreting regulations, often don’t make good change professionals who need to lead and inspire.” SPONSOR

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SUMMARY

The survey findings suggest that the shortcoming of change leadership, both qualitatively and quantitatively, is well recognised: while this awareness can be regarded as a positive, it is also something of a plea. The opinion of all the survey respondents is that investment by the banks in people with proven change leadership skills, in sufficient numbers, would have beneficial results.

“ There just isn’t the leadership or the bandwidth.” SPONSOR

The overall state of the banks’ change leadership scorecard is not one that would be likely to excite a senior executive or board member demanding above average performance in a critical discipline. Fewer than 25% of respondents feel leaders, within the banks surveyed, perform ‘very well’ in any of the competencies and fewer than 5% feel they perform ‘exceptionally well’.

It’s clear that if banks have leaders who themselves do not possess the right type of capabilities to deliver change, they will have insufficient numbers of change leaders in their ranks to deliver their complex change agendas successfully.

Recommendations

Get business people involved in change initiatives early but don’t make the mistake of ‘pulling’ business people without the necessary change skills.

Effective change leaders know and understand the business that needs changing and because they have a personal interest in seeing the change deliver benefits to their business quickly and effectively, also tend to work harder to make it happen.

Don’t ‘backfill’ change leader roles with Consultants or Contractors who have been in the organisation for short periods of time.

For the reasons mentioned above, Consultants and Contractors who have not been in the organisation long enough to know the business they are meant to change do not make effective change leaders.

1 32Evaluate, educate and develop leaders to become change leaders.

Ensure change leadership competencies form part of senior leadership competency models; use these competencies to assess leaders rigorously and frequently; research and embed ‘best in class’ change leadership education into L&D curricula.

54 6Encourage and develop systems thinking and operating.

The ability to see ‘the big picture’ is seen as very important in delivering change.

Demand and reward individual accountability and decision-making.

Ensure ‘management by steering committee’ does not end up diluting accountability.

Place value on people skills.

The most important leadership competencies involve refined people skills, the ability to manage internal politics, stakeholders and resistance through effective communication, adaptability, resilience and emotional intelligence.

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“ All programmes need good project managers, PMOs and Programme Directors.” SPONSOR

INTRODUCTION

Aside from the banks’ capability for leading change, there remains the important issue of managing change: are there change managers of sufficient quality in the industry to implement change initiatives and are there enough of them?

This section of the survey addresses this issue. Participants were asked to give a ranking for their bank against a number of change management competencies and were also asked whether they felt confident that change managers were in place in sufficient numbers to deliver developmental, transitional and transformational change.

OVERALL, THE PICTURE FOR CHANGE MANAGEMENT CAPABILITY IN BANKS IS ENCOURAGING BUT THERE IS STILL ROOM FOR IMPROVEMENT

When asked about the performance of business change managers and programme managers across the bank against a number of key competencies, the respondents give some cause for encouragement.

Performance in planning, managing and delivering new directions in multiple change initiatives is seen as ‘about average’ or above by 77% of respondents. Owning the budget and managing overall cost is not far behind with over 70% seeing performance as ‘about average’ or above, and with 7.7% describing it as ‘exceptional’, the highest rating for all change leadership and change management competencies. Creating and overseeing the building of change infrastructure and mechanisms to support change is also rated relatively favourably.

Sponsors and Contractors are generally more positive about change management capability than Consultants.

Managing Change5

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THERE IS ROOM FOR IMPROVEMENT IN 1) ESTABLISHING CHANGE COMMUNITIES 2) IDENTIFYING, SOURCING AND TRAINING RESOURCES FOR CHANGE 3) ENSURING THE CHANGE IS ALIGNED AND INTEGRATED WITH ALL INTERDEPENDENT SYSTEMS AND PROCESSES AND 4) HAVING A LONG-TERM PROGRAM DELIVERY FOCUS DEFINING ROADMAPS AND INTERIM DELIVERABLES

Competency in these four areas could be improved considerably. Fewer than 30% of respondents feel Business Change Managers or Programme Managers within the banks perform ‘very well’ in these competencies and yet they are important activities for assuring change success.

How well do Business Change Managers and Program Managers across the Bank:

VERY POORLY POORLY

ABOUT AVERAGE VERY WELL

EXCEPTION- ALLY WELL

DON’T KNOW

PLAN, MANAGE AND DELIVER NEW DIRECTIONS THROUGH MULTIPLE CHANGE INITIATIVES OR ‘PORTFOLIOS OF CHANGE’ 4.5% 13.6% 51.5% 22.7% 3.0% 4.5%

ESTABLISH CHANGE COMMUNITIES

1.5% 35.4% 38.5% 16.9% 1.5% 6.2%

IDENTIFY, SOURCE AND TRAIN RESOURCES FOR CHANGE – E.G. DEFINE COMPETENCIES, CAREER PATHS, ETC. FOR CHANGE PROFESSIONALS

7.7% 46.2% 26.2% 12.3% 3.1% 4.6%

CREATE AND OVERSEE THE BUILDING OF CHANGE INFRASTRUCTURE AND MECHANISMS TO SUPPORT THE CHANGE 9.4% 28.1% 40.6% 15.6% 1.6% 4.7%

OWN THE BUDGET AND MANAGE OVERALL COST

3.1% 21.5% 41.5% 21.5% 7.7% 4.6%

ENSURE THAT THE CHANGE IS ALIGNED AND INTEGRATED WITH ALL INTERDEPENDENT SYSTEMS AND PROCESSES 14.1% 25.0% 40.6% 14.1% 0.0% 6.3%

HAVE A LONG-TERM PROGRAM DELIVERY FOCUS DEFINING ROADMAPS AND INTERIM DELIVERABLES 15.4% 26.2% 32.3% 18.5% 3.1% 4.6%

TABLE 3

Q

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If these managers are not proficient in establishing change communities it becomes harder to identify and source change professionals, learn from past change successes and failures and get information and feedback on programme delivery and outcomes, etc.

If they are not performing well when it comes to identifying, sourcing and training resources for change, there is a real risk that incapable or inexperienced people are asked to lead, manage or participate in programmes, which increases the risk of failure or cost/time overruns. Failure to train resources means the workforce will not be fully equipped to lead and manage change in the future, perpetuating the bank’s reliance on Consultants and Contractors.

THERE IS LITTLE CONFIDENCE THAT BANKS HAVE SUFFICIENT NUMBERS OF CHANGE MANAGERS TO SUCCESSFULLY DELIVER CHANGE IN KEY AREAS

Respondents generally, and Consultants in particular, feel that banks do not have enough change managers to be able to deliver different types of change successfully.

5. Managing Change

Fewer than 15% of all respondents have ‘considerable confidence’ – and none at all have ‘total confidence’ – in developmental, transitional or transformational change being delivered successfully by change managers in the bank.

Some interviewees spoke highly of specific programme successes in the past describing them as ‘brilliantly managed’ and ‘run very well, with the right levels of programme rigour and discipline around costs.’

Others were less complimentary.

Another Sponsor spoke of a shortage of Senior Programme Managers with the right level of experience. All agreed that banks don’t have enough permanent staff to fill project manager, PMO and programme director roles and regularly use Consultants and Contractors to fill the gaps.

NO CONFIDENCE

LITTLE CONFIDENCE

SOME CONFIDENCE

CONSIDERABLE CONFIDENCE

TOTAL CONFIDENCE

DON'T KNOW

DEVELOPMENTAL CHANGE 4.7% 25.0% 50.0% 14.1% 0.0% 6.3%

TRANSITIONAL CHANGE 4.7% 34.4% 40.6% 14.1% 0.0% 6.3%

TRANSFORMATIONAL CHANGE 15.6% 34.4% 39.1% 4.7% 0.0% 6.3%

TABLE 4

Q How confident are you that the Bank has sufficient numbers of capable Change Managers in the organisation to be able to successfully deliver the following types of change?

“ ... there are enough people with generic skills in programme management but there are not enough change managers.” CONSULTANT

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SUMMARY

The survey findings paint a somewhat encouraging picture of the performance of change managers and indicate useful areas for improvement. However, it is felt once again that there are too few change managers to be able to deliver change successfully – particularly in transformational change, the most difficult, but arguably the most pressing of the three areas of change.

Recommendations

Evaluate, educate and develop leaders to become change managers

Include change management competencies in senior leadership competency models and assess leaders against these criteria rigorously and frequently.

Establish change communities

Change communities are critical for learning from past change successes and failures, as well as getting information and feedback on programme delivery and outcomes across the bank.

1 32Identify, source and train resources for change

Change managers play a key role in preventing incapable or inexperienced people from leading, managing or participating in programmes, and increasing the risk of failure or cost/time overruns.

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“ Banks are horrendous at managing the supply and demand of resources.” CONSULTANT

INTRODUCTION

Change professionals in the banking industry can come from a number of sources; but how well do they perform in the opinion of Sponsors, Contractors and employees of Recruitment Process Outsourcers (RPOs) and/or Managed Service Providers (MSPs)?

This section examines in detail the perceived performance of both internal resourcing teams and external providers, such as Agencies and Consultancies, in the way they provide support to banks pursuing multiple change agendas.

BANKS COULD BE MUCH MORE STRATEGIC IN THE WAY THEY BALANCE THEIR USE OF PERMANENT STAFF, CONTRACTORS AND CONSULTANTS

Banks use Consultants and Contractors for numerous reasons. Consultants bring a different approach, new thinking and subject matter expertise to the table. They are widely seen to be strong at strategy and design but weaker at implementing and embedding change. Contractors are seen as cheap resource for specific skills or to fulfil seasonal needs. Both Consultants and Contractors are used to backfill for capability gaps, including those created by permanent staff fully utilised on other programmes.

Much change resourcing is done on a short-term contract (i.e. not permanent) basis and this offers advantages and disadvantages. It can provide flexibility and reduce costs but it can also lead to real problems when those recruited into important change positions are inexperienced or don’t know the bank well enough.

How well banks are doing with getting the internal/external balance right varies widely from bank to bank. Many different kinds of permanent/Consultant/Contractor permutations are being tried out and the overall picture is mixed:

Many banks do not appear to take a strategic view of resourcing. While they may have some level of governance that attempts to determine what level of change expertise exists ‘in-house’, Sponsors admit this process is overly subjective and ‘flawed’:

“ … if there is a process, it is not one that engages on any level with talent acquisition at the right time.” SPONSOR

Resourcing Change6

“ One bank I know is being monopolised by McKinsey while others don’t like Consultants at all.” SPONSOR

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The impact of not being strategic can be negative:

“ … I think the right resource is not identified for the right roles because the decisions are being made by the wrong people and, by the time we get there, it is too late. I think that has a huge, huge impact on the industry and that hasn’t changed since I have been in it [14 years].” RPO/MSP EMPLOYEE

Inconsistent accountability for hiring budgets and ‘quirky accounting rules’ are partly to blame in allowing hiring managers to treat Consultants and Contractors as ‘temporary’ or ‘off account’ costs rather than fixed headcount costs. Other reasons include the unspoken ability to transfer accountability for programme failure to Contractors or Consultants or simply not having the time to manage people.

The main issue Sponsors have with Contractors is their motivation:

There is a perceived risk that Contractors will ‘walk when they get another offer’. They may have a vested interest in making projects last as long as they can. Sponsors are also weary of Contractor ‘musical chairs’ – a situation where Contractors move from bank to bank and attempt to ‘transpose their experience’. Greater sensitivity to current operating environments and cultures from some Contractors would be welcomed.

“ … making money rather than seeing projects through to completion.” SPONSOR

How well does the Bank determine

and take into account the type

of change* when resourcing for

change?

*i.e. Developmental, Transitional,

Transformational Change.

CHART 2

33.3%

44.4%

11.1%

11.1%

VERY POORLYPOORLYABOUT AVERAGEVERY WELL

Examples abound in the back corridors of banks and Consultancies of huge programme failures caused by the use and abuse of bank-consultancy relationships (on both sides). One Sponsor recalls a time when ‘hiring Consultants was like an addictive drug for the bank’. Of course, many consulting programmes add tremendous value to banks but to effectively plan, sequence, implement and ultimately embed large-scale programmes, banks also need capable, tenured Sponsors inside the organisation, involved very early on in the design process.

WHEN RESOURCING FOR CHANGE, BANKS COULD DETERMINE AND TAKE INTO ACCOUNT THE TYPE OF CHANGE MORE EFFECTIVELY...

Respondents clearly feel that the banks they work for could improve in this area. Only 11% feel banks determine and take into account the type of change ‘very well’ when resourcing for change, while over 55% categorise this capability ‘poorly’ or ‘very poorly’.

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66% of respondents are either ‘partially satisfied’ or ‘not satisfied at all’ with the bank’s model. A typical description for how the end-to-end resourcing system performed was ‘a bit hit and miss.’ This view is broadly shared across Sponsors, Consultants, Contractors and RPO/MSP employees:

A number of banks have too little senior talent in their organisations in the midst of complex change and this problem is compounded by constraints and inefficiencies in recruiting.

Attracting and hiring suitable candidates into permanent change roles is difficult. Hiring Managers ideally want people to ‘just slot in’ but they rarely do. For most Sponsors, failure is a result of people not having the right skill sets, motivation and attitude. Pay is also a factor:

6. Resourcing Change

… AND HAVE A CLEARER PICTURE OF THE SIZE AND LOCATION OF THEIR CHANGE RESOURCES

Central to any workforce planning strategy is knowing where, how much and what type of resource exists in the organisation at any given point of time. When asked whether banks have a clear picture of their change resources, the majority of Sponsors answered ‘about average’; 44% of respondents feel the bank’s ability to size its change population and know where members of that population reside is either ‘poor’ or ‘very poor.’

WHEN IT COMES TO HIRING CHANGE PROFESSIONALS, SPONSORS ARE GENERALLY NOT SATISFIED WITH THEIR BANK’S END-TO-END RESOURCING MODEL “ I’m not sure how effective

banks are at hiring change professionals. It is not standardised. What you tend to have is a large, disparate set of Contractors doing different things who are not joined up and who are not that great.” CONTRACTOR

How satisfied are you with the Bank’s

end-to-end resourcing model for

hiring change professionals?

CHART 3

27.8%

33.3%

33.3%

5.6%

NOT SATISFIED AT ALLPARTIALLY SATISFIEDMODERATELY SATISFIEDVERY SATISFIED

“ … banks have little or no appetite for paying top dollar for high quality, permanent change staff.” SPONSOR

CHANGE PROFESSIONALS HIRED FROM OUTSIDE THE BANK ARE NOT VIEWED AS EFFECTIVE

The majority of Sponsors see change leaders hired from outside the bank since the GFC as ‘about average’ or less in delivering developmental change (77%), transitional change (88%) and transformational change (88%). Very few Sponsors (less than 6%) believe change leaders hired from outside the bank since the GFC are ‘highly effective’. Similar figures are recorded for change managers.

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On closer analysis, however, this response is likely to be due to banking culture and the prevailing attitude to change. Hiring change professionals – leaders and managers – from outside the industry can be beneficial, or even vital, in order to break the cultural mould. What then becomes important, is how well the end-to-end resourcing system tests:

- their expertise and experience in changing cultures and leading change

- their resilience, adaptability and ability to learn new topics, environments and, potentially, industries. For these individuals, banks also need to ensure their integration supports and insulates them from being ‘organ-rejected’ by the bank’s culture.

WHAT CHANNELS DO BANKS USE TO HIRE CHANGE PROFESSIONALS?

Sponsors use a variety of channels to hire permanent and contract staff including Agencies, Internal Referral Schemes and ‘Direct Sourcing’ through Internal Resourcing teams and associated RPOs/MSPs.

Consultancies, split here into Large and Small to Mid-size, are predominantly used on a time and materials basis (69%). Small to Mid-size consultancies are used equally on an ‘outsource for solution outcome’ and ‘time and materials’ basis.

75% of Sponsors say their bank uses Agencies for hiring change professionals. 93% of them say their bank uses Consultancies to support them with change.

For hiring permanent staff, banks use their Internal Resourcing Team and RPO/MSP (if used) ‘frequently’ and internal referral schemes ‘sometimes’. Sponsors are split around how frequently they use Agencies for permanent staff; with 30% saying their banks use Agencies ‘very frequently’ while another 30% say Agencies are used ‘sometimes’.

For hiring contract staff, the picture is even more mixed. Some banks would appear to use their Internal Resourcing Team and RPO/MSP (if used) ‘very frequently’ (40%) while others use it rarely (27%). Some banks use Agencies ‘very frequently’ (40%) while others use them rarely (33%). Most banks use internal referral schemes for contract staff either ‘rarely’ or ‘not at all’ (60%).

NOT EFFECTIVE AT ALL

MINIMALLY EFFECTIVE

ABOUT AVERAGE

MOSTLY EFFECTIVE

HIGHLY EFFECTIVE

DON'T KNOW

DEVELOPMENTAL CHANGE 11.1% 22.2% 44.4% 11.1% 5.6% 5.6%

TRANSITIONAL CHANGE 5.9% 23.5% 58.8% 0.0% 5.9% 5.9%

TRANSFORMATIONAL CHANGE 5.9% 35.3% 47.1% 0.0% 5.9% 5.9%

TABLE 5

Q How effective would you say Change Leaders hired from outside the Bank since the GFC have generally been in successfully delivering the following types of change?

31

6. Resourcing Change

What is probably happening here is that some banks use Agencies predominantly for hiring contract staff and others use their own Internal Resourcing Team and RPO/MSP.

ATTITUDES TO DIFFERENT HIRING CHANNELS

SPONSORS ON AGENCIES

The majority of Sponsors rate Agencies ‘about average’ when hiring change professionals in most dimensions. Strengths include: 1) understanding the work environment/culture 2) quality of role profile 3) number of candidates presented on short list 4) optimal information for decision-making 5) management of robust process for decision-making and 6) quality of external hire (based on retention and performance after 1 year). Weaknesses include: 1) diversity of candidates on short list 2) cost of hire and 3) supporting onboarding/integration.

While complimentary of some Agencies, most Sponsors felt they could do a better job:

“ … they don’t screen candidates at all – it is down to the people doing recruitment.” SPONSOR

NOT AT ALL RARELY SOMETIMES FREQUENTLY

VERY FREQUENTLY

DON'T KNOW

AGENCY - FOR PERMANENT STAFF6.3% 25.0% 31.3% 6.3% 31.3% 0.0%

AGENCY - FOR CONTRACT STAFF0.0% 33.3% 6.7% 20.0% 40.0% 0.0%

INTERNAL REFERRAL SCHEME - FOR PERMANENT STAFF 0.0% 33.3% 53.3% 6.7% 0.0% 6.7%

INTERNAL REFERRAL SCHEME - FOR CONTRACT STAFF 26.7% 33.3% 20.0% 6.7% 0.0% 13.3%

INTERNAL RESOURCING TEAM AND RPO/MSP (DIRECT SOURCING) - FOR PERMANENT STAFF

13.3% 6.7% 13.3% 40.0% 26.7% 0.0%

INTERNAL RESOURCING TEAM AND RPO/MSP (DIRECT SOURCING) - FOR CONTRACT STAFF

6.7% 26.7% 13.3% 13.3% 40.0% 0.0%

LARGE CONSULTANCY 0.0% 13.3% 60.0% 20.0% 6.7% 0.0%

SMALL TO MID-SIZE CONSULTANCY 6.7% 26.7% 53.3% 6.7% 6.7% 0.0%

TABLE 6

Q How often does the Bank use the following channels to support it with resourcing for change?

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Compared to RPOs/MSPs, however, Agencies are widely seen to be better:

“ … the agencies, although they can’t do my job, at least they make an effort to try to understand what a business analyst in a risk team looks and smells like.” SPONSOR

Sponsors say they would like to see Agencies improve in the following areas:

- Have a better understanding of the role and change required

- Have regular catch-ups and Agency performance reviews

- Have a business proposition based on quality but complemented with a more competitive price

- Improve the ‘hit rate’ – reduce the number of poor CVs and candidates through the door and/or provide a first level check on candidates rather than be ‘CV pushers’

- Spend more time understanding what differentiators are needed to generate a high quality shortlist

- Have a greater understanding of a candidate’s skills and experience

- Identify better the strong candidates from the average and the weak

- Provide a faster turnaround time on CVs

CONTRACTORS ON AGENCIES

A majority of Contractors rate Agencies ‘highly’ in creating accurate profiles and respecting their time with interviews and ‘medium’ in a number of other dimensions such as explanation of role, explanation of process and interview process (rigour and completeness).

Contractors say they would like to see Agencies improve in the following areas:

Better candidate service pre-hire

- Have a clearer understanding of the business and role responsibilities

- Provide more information on the culture, team morale, team dynamic and what it is like to work for the client before starting

Better candidate service post-hire

- Make contact once on-boarded and communicate at regular intervals throughout the assignment

- Move from sales agent mentality to a long term career partner mentality; help Contractors develop and stay marketable by providing updates on competencies required of change professionals; provide information about other change opportunities; manage contract renewals, rate rises, provide feedback on performance, etc.

- Move from resource providers to resource enablers

“ I want to see different profiles recommended to me and explained; everyone thinks the same way.” SPONSOR

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6. Resourcing Change

Develop a Consultant change IT hub

- Create a change knowledge management system and network to support Consultants – mailings, group discussions, talks by regulation experts, etc.

- Provide support and help in resolving HR issues

- Establish workflows to track recruiting, invoicing and bill payment

SPONSORS ON INTERNAL RESOURCING TEAMS AND RPOS/MSPS

As with Agencies, the majority of Sponsors rate their Internal Resourcing Team and RPO/MSP (if used) ‘about average’ in many dimensions. Strengths include: 1) understanding the work environment/culture 2) quality of role profile 3) screening and assessment of internal and external candidates 4) providing optimal information for decision-making and 5) Quality of External Hire (based on retention and performance after 1 year).

Possible areas of development include: 1) understanding the role and business needs 2) optimising Hiring Manager interviewing time 3) managing a robust process for making hiring decisions 4) improving time to fill and 5) supporting on-boarding/integration.

The Sponsors are divided about the service they receive from their internal resourcing teams. Some are complimentary, praising, in particular, partnership approaches and help with screening:

Others said they were not getting the service they needed or the service was inconsistent:

“ … I have mixed views. I think it could be a lot better. Some of it is too centrally controlled and therefore it is difficult for them to understand what is really required; some of it is very process-driven rather than understanding my needs.” SPONSOR

Sponsors say they would also like to see their Internal Resourcing Team and RPO/MSP (if used) improve in the following ways:

- Have a better understanding of the function, role and fit and optimise the time spent on each role

- Improve quality of staff

- Improve time to fill

- Be more flexible and less wedded to process

“ I’m happy with the permanent and contract staff we have hired. The resourcing team is experienced and has good, talented people.” SPONSOR

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CONTRACTORS ON INTERNAL RESOURCING TEAMS AND RPO/MSPS

Contractors would like to see the Internal Resourcing Team and RPO/MSP (if used) improve in the following areas:

Better hiring process

- Be more clear on the hiring process and progress

- Have less admin

- Publish specific information about roles

- Remove resourcing service providers and bring the function in-house; be more involved in direct recruitment rather than entirely relying on agencies

- Agree on an SLA for processing and on-boarding. Ensure timebound delivery and renewal of contracts; workflow to track recruiting, timesheets and bill payments

- Keep an eye on the resource pool across multiple portfolios and identify those coming on the bench – borrow learning from the consulting world

Better on-boarding

- On-boarding processes running efficiently

- Better knowledge of roles and teams

Greater contact throughout assignments

- More communication, information and feedback at regular intervals throughout the assignment

- Provide solutions and help resolve issues instead of just handing them over to the Contractor

CONSULTANCIES

Small to Mid-size consultancies, on balance, are seen to be more value-adding than Large Consultancies when partnering with banks to deliver change successfully.

As with the Agencies and Internal Resourcing Teams, the majority of Sponsors rate Consultancies ‘about average’ in many dimensions and the differences in the results outside this category reveal specific strengths and possible areas of development.

LARGE CONSULTANCIES

Sponsors feel Large Consultancies perform ‘very well’ or ‘exceptionally well’ in the following areas: 1) Individuals agreed at the outset are individuals delivering the work 2) Technical ability (data analysis, facilitation, etc.) 3) Subject matter expertise (e.g. risk compliance) 4) Banking/FS expertise of individuals supplied 5) Management skill set of individuals supplied and 6) Change expertise of individuals supplied.

On the other hand, Sponsors rate Large Consultancies ‘poorly’ or ‘very poorly’ when it comes to Value for Money.

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6. Resourcing Change

SMALL TO MID-SIZE CONSULTANCIES

Sponsors feel Small to Mid-size Consultancies perform ‘very well’ or ‘exceptionally well’ in the following areas: 1) Individuals agreed at the outset are individuals delivering the work 2) Technical ability (data analysis, facilitation etc.) 3) Subject matter expertise (e.g. risk compliance) 4) Banking/FS expertise of individuals supplied and 5) Overall Quality of Outcome. However, the management skill set of individuals supplied is rated as ‘poorly’.

Sponsors would like to see Consultancies supporting banks with change improving in the following areas:

Do more to bring about change

- Have more people with full end-to-end delivery experience (“I want change professionals not generic Consultants. There is a big difference”)

- Offer a service to embed and implement the change as an extension of a project, in partnership with people on the ground

Continually look at ways to add value

- Provide briefings on industry needs; develop more thought leadership

- Consider ways to optimise spend (e.g. drive down blended rate over time to reflect tenure, maturity and vendor experience on site)

- Continue to move towards ‘value-based’ consulting (“there is not genuine performance management of the programme. It’s done on a very subjective performance assessment”)

Select better, more suitable Consultants for the role

- Think about fit and who the best person is for the job, not the best person for the [consultancy] firm

- Ensure Consultants are based at the client and work the duration of the project

Improve ways of working

- Work with the bank (avoid ‘being an island’ and only dealing with more senior stakeholders for sell-on opportunities)

SUMMARY

It is apparent from the views expressed by the survey participants that banks struggle to find the right balance between the use of internal and external resourcing, and also between permanent and temporary staffing. Many felt that their bank is not taking a sufficiently strategic view of resourcing change and that it was failing to match particular individuals to particular tasks.

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Recommendations

Strengthen and evaluate the performance of the bank’s end-to-end resourcing model.

Monitor the performance of Agencies and Consultancies as well as the Internal Hiring Team.

Have a deliberate strategy for working with Consultants and provide guidelines to staff for their use (i.e. the ratio of Consultants/Contractors to permanents).

13

24

Know the number, quality, and specific change expertise of all staff involved in change. Base this on the type of change and impact and readiness assessments. Use reliable assessment tools to validate.

In addition to checking subject matter expertise (e.g. risk or regulation) and programme management capability (e.g. Prince 2), take care to check individuals have successfully led, managed or been involved with delivering change initiatives before, and ideally on initiatives of a comparable type, scope and complexity (e.g. where there was diminished resources or fierce political conflict).

When hiring change leaders from outside the banking industry conduct additional tests.

Evaluate a) their expertise and experience in changing cultures b) their resilience, adaptability and ability to learn new topics and environments quickly and c) their ability to network and influence within the bank. Ensure their integration supports learning and, as far as is possible, insulates them from being ‘organ-rejected’ by the bank’s culture.

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“ Each programme requires a bespoke approach, yet executives are always looking for a single, most effective approach. This always fails.” SPONSOR

INTRODUCTION

Banks are at many different stages of organising themselves for change: some are seeking to adapt old models, some are introducing new models altogether and some are blending old and new. Survey participants were asked to express their views about the kind of structure they preferred for organising change and to offer an opinion on how well communication takes place between Group, Region, Country and Business Unit levels.

A COMBINED FEDERATED AND CENTRALISED MODEL IS SEEN AS THE MOST EFFECTIVE WAY OF ORGANISING CHANGE IN BANKS

Determining which is the best way to organise for change is a topical problem currently under discussion in a number of banks.

No clear solution has been reached yet, however, with many either starting to explore new models or evolving old models that have been deemed ineffective.

There are a number of considerations that banks need to be aware of when organising for change. These include:

- How the bank should source and distribute change resource across the bank

- How the bank should monitor and control change efforts across the bank, especially in line with group strategy

- How the bank should standardise and/or customise change methodologies, approaches, etc. across the bank

Not all banks should be treated in the same way:

“ … If the bank is a pure play investment bank, there is less case for centralisation. However, if the bank is in investment, retail, wealth, etc. there is a clear argument for a group strategy and portfolio management function for instituting good standards and a common language front-to-back.” CONSULTANT

Organising Change7

“ … many of the problems we see are based on the current model.” CONSULTANT

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Many arguments were put forward for a change management function at group-level including:

- aligning change with group strategy

- being able to understand all the changes that are going on across the group at any one point in time (key programmes, key milestones, progress)

- being able to see the change organisation (screened individuals, skills, capabilities, performance assessments, etc.)

- controlling programmes tightly (how programmes are set up, structured, etc.)

- creating a single language of change (i.e. standard templates, processes, etc.)

- having a pool of general resource to draw on

- having a pool of 50-60 senior change leaders who can learn from each other

Advocates of centralisation point to large programme successes where programmes have been tightly controlled from the centre, whereas programmes ‘working for a single division’ without central CEO or CFO control can often be rejected by other divisions.

Equally, there were many arguments against a change management function at group-level and in favour of a more federated model:

- centralised change can be slow and ‘monoline’ compared to change that is federated

- single centres of change excellence tend to be ‘full of change managers who are parachuted in without understanding the business they are meant to change’

- having one change (often tech-oriented) methodology oversimplifies matters and can often be completely irrelevant

- change functions with specialist knowledge and expertise need to be aligned to the business, not to some ‘amorphous change function’ that substitutes specialist expertise with general programme management (so, for example, investment banking needs investment banking change skills’)

To many, having a federated model doesn’t preclude having a common set of standards and an integrated view. Indeed, many mentioned ‘hub and spoke’ type organisations combining the advantages of both centralised and federated models working fairly well.

There was unequivocal support among 66% of respondents in favour of a model for organising change that combines distributing change expertise across multiple business units (the ‘Federated Model’) and having a global and centralised change management ‘Centre of Excellence’ (the ‘Centralised Model’), over a purely Federated, Centralised or Outsourced Model.

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7. Organising Change

TWO-WAY COMMUNICATION AT ALL LEVELS BEYOND STAKEHOLDERS AND SPONSORS IS CRITICAL

When asked what considerations should be taken into account when organising change delivery across the bank, many responded that 1) continuous, clear, transparent, consistent, two-way communication at all levels, beyond stakeholders and sponsors, and 2) engagement and commitment to the change both by those influencing the change and those affected by the change, were key.

In terms of what needs to be communicated, respondents were vocal, citing:

vision, strategy (including strategic architecture), change readiness, ‘what good looks like’, objectives, stakeholder needs/defined requirements, benefits (including cost and effort savings), ‘what’s in it for me?’, constraints, impact analyses, joint planning of project activities, system and process dependencies, priorities, realistic expectations, roles, responsibilities, accountabilities, tracked results (business and change), conflicts.

LINE OF SIGHT ACROSS CHANGE INITIATIVES COULD IMPROVE AT COUNTRY, REGIONAL AND GROUP LEVELS

Respondents were specifically asked how clearly they feel different levels within the bank have ‘line of sight’ across all change initiatives. The majority of respondents said that, at Group, Region, Country and Business Unit level, the ‘line of sight’ across all change initiatives is ‘somewhat clear’ (approximately 50%).

Which model do you think is most

successful for organising change

in the Bank?

CHART 4

65.6%

18%

8.2%3.3% 4.9%

DISTRIBUTED CHANGE EXPERTISE ACROSS MULTIPLE BUSINESS UNITS (FEDERATED MODEL)A GLOBAL AND CENTRALISED CHANGE MANAGEMENT ‘CENTRE OF EXCELLENCE’ (CENTRALISED MODEL)COMBINATION OF BOTH FEDERATED MODEL & CENTRALISED MODELOUTSOURCEDOTHER

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In all cases other than at Business Unit level, a number of respondents feel the ‘line of sight’ is ‘not clear’ (approximately 20%) or ‘don’t know’ (13-20%), indicating there could be further improvement at Group, Regional and Country level.

Other considerations that respondents felt should be taken into account when organising change delivery include:

- Building capability

- Retaining knowledge

- Working across silos, collaborating across functions

- Co-locating teams

- ‘Ring-fencing’ teams into programmes

- Tone at the top, quality of leadership/sponsorship

- Accountability of executives

- Aligning organisation and process before aligning technology architectures

There is some disagreement among respondents about the need for ‘standardisation of change’ across the bank:

SUMMARY

There was unequivocal support among the survey participants for a combined ‘spoke and hub’ organisational structure – distributing change expertise across multiple Business Units (the Federated Model) combined with a global and centralised change management Centre of Excellence (the Centralised Model). In general, ‘line of sight’ was regarded as satisfactory at Business Unit level, but needed to be improved at Group, Region and Country levels.

“ Change is far too complex in the modern world in terms of process, people, systems and infrastructure to apply a single or small selection of approaches and methods.” CONSULTANT

Recommendations

Consider organising change resource around a combined Federated and Centralised Model.

Improve ‘line of sight’ of change initiatives at Country, Regional and Group levels.1 2

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“ … assessing and developing change professionals specifically would help 100%.” SPONSOR

INTRODUCTION

It might seem to be stating the obvious that it is critically important for banks to identify, assess and develop individuals capable of delivering change successfully and the participants agreed almost unanimously with this statement.

However, when asked how well banks actually deliver in these areas, the participants expressed the view with similar unanimity that they score poorly, in one of the most clear cut conclusions in this survey.

Developing Change8

How important do you think it is for the Bank to identify and assess individuals capable of delivering successful change?

CHART 5

53.7%40.7%

1.9% 3.7%

NO IMPORTANCEMEDIUM IMPORTANCEHIGH IMPORTANCECRITICAL IMPORTANCE

BANKS SCORE POORLY IN THE CRITICAL AREAS OF IDENTIFYING, ASSESSING AND DEVELOPING INDIVIDUALS CAPABLE OF DELIVERING CHANGE SUCCESSFULLY

Over 94% of respondents think that identifying and assessing individuals capable of delivering successful change is either of ‘high importance’ or ‘critical importance’ to banks (nearly 54% think it is critical). Contractors, in particular, stress the critical nature of accurately identifying and assessing change professionals while Sponsors and Consultants are fairly equally split between scoring ‘high importance’ and ‘critical importance’.

But when asked how well (i.e. how reliably and regularly) the bank actually identifies and assesses individuals capable of delivering successful change, only 7.4% of respondents feel the bank does ‘very well’. Over 42% of respondents think the banks they work for do ‘poorly’ or ‘very poorly’ in this area. Again, the Consultants take a more negative view, the majority scoring banks ‘poorly’ or below, while the majority of Sponsors describe it as ‘about average.’

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“ Everyone is a CV. No one cares if the person is excellent or poor. No one cares if the person is great at delivery or poor. It’s simply pot luck and who sells themselves best.” SPONSOR

“ [There is] a lack of career planning and execution to develop empowered and accountable leaders who have relevant line, change, professional services/dedicated change and personal competencies.” SPONSOR

The three greatest impediments to identifying and assessing individuals capable of delivering successful change are seen to be:

1. Insufficient Resources (64.8%)

2. ‘Change’ roles seen as different from ‘Business As Usual’, ‘Run the Bank’ roles (64.8%)

3. Lack of internal assessment capability (57.4%)

In addition to current assessment outputs not being seen as valuable for development, other impediments to banks identifying and assessing individuals better are broken down into the broad categories of ‘leadership’ and ‘process’:

Leadership

- a failure of leadership to identify, mentor and reward (on the job) promising candidates

- a lack of knowledge and understanding around change

- a lack of willingness to prioritise spend on decent change talent

- managers supporting ‘friends’ rather than appointing appropriate resource

- a lack of systems thinking when it comes to change (i.e. ‘only looking at things through myopic lenses e.g. 4-5 regulatory programmes all run separately’)

- insufficient power to roll out change at lower levels (due to insufficient understanding of support staff)

- a lack of accountability for hiring success:

Process

- Insufficient reliable data

- wrong assessment criteria (criteria skewed towards rewarding people who run and deliver straightforward projects)

- too many low quality people on the market who make it hard for Agencies and banks to find good resources

On the subject of developing individuals who are capable of delivering successful change, the picture is virtually the same. Over 80% of respondents think developing change professionals is either of ‘high importance’ or ‘critical importance’ (46% think it is critical). Both Contractors and Consultants stress criticality while Sponsors are roughly split between ‘high importance’ and ‘critical importance.’

There is consistency amongst all audience groups that banks are poor at developing individuals capable of delivering successful change. Nearly 60% of respondents feel the banks they work for develop individuals capable of delivering successful change either ‘poorly’ (56%) or ‘very poorly’ (4%):

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8. Developing Change

The three greatest impediments to banks developing individuals capable of delivering successful change are seen to be:

1. Lack of internal development capability

2. Insufficient time allocated to development planning

3. Not enough subject matter expertise

Other factors that prevent banks from being more effective in this area include insufficient resources and change roles being treated as less important than BAU, ‘running the bank’ roles.

Respondents feel that a lack of confidence in the impact of development interventions (e.g. education, coaching, stretch assignments, new roles) also plays a role:

If Contractors are needed, how much should banks demand that they can ‘hit the ground running’?

BANKS SHOULD INVEST IN GROWING THEIR OWN PEOPLE TO LEAD CHANGE

If banks are serious about sustainability, they must focus much more on leadership assessment and development and invest in talent infrastructure and capability, systematically and continuously over time.

CURRENT LEADERSHIP DEVELOPMENT IS TOO GENERIC

Sponsors agree that putting in place standard leadership development programmes is a step in the right direction, but not enough:

“ The key is the ability to deliver complex change. You can have the best people leaders and the best business subject matter experts out there, but these guys often don’t know how to deal with things when the s**t hits the fan on a big programme – then you are going to be stuffed – so, I think it kind of goes somewhat hand in hand, a good senior leader would come with some base qualities (people leadership and business leadership skills), but then focus on understanding and assessing what change leadership skills and capabilities they have.” CONSULTANT

“ … change staff are often Contractors and there are often bureaucratic rules in the organisation about training Contractors.”

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“ … You can’t have a senior programme leader that is going to run a programme with 300-400 people, managing a budget of $100m plus a year that doesn’t have good leadership skills. They have to deal with senior stakeholders upward, they have to deal with their team, they will have externals in there supporting them and you can’t do that with a one-dimensional leader.” CONSULTANT

Organisations that practise systematic leadership development see change as a skill in its own right and treat change leadership as an evolution of standard leadership. Each step up the ladder comes about through enhanced knowledge, skill and personal experience.

Frequently this expertise is derived from a combination of formal education, being coached in how to navigate and drive change and on-the-job experience. Unfortunately, in many banking institutions:

“ … there does not appear to be enough senior, collective understanding around organisation change or indeed talent development to see how investing in this sort of development might make a difference.” SPONSOR

“ I don’t know whether developing change leaders gets talked about, I only see what happens in practice. We typically hire from outside and haven’t got the pipeline.” SPONSOR

“ … there is an overfocus on content knowledge over people skills and development from the start – ‘developing people’ is not part of the L&D curriculum.” SPONSOR

Asked why banks are so poor at developing leaders, respondents said that banks are very complex organisations with multiple Business Units that don’t complement each other:

Arguably, they would have a better chance of understanding different parts of the business if they invested in a systematic programme of rotation based on leadership and manager assessment from the grassroots up.

“ … they have partial overlaps and funding links but that is about it.” SPONSOR

“ … leaders don’t fully understand each part of the business.” SPONSOR

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8. Developing Change

SUMMARY

Survey participants expressed a clear view that change leadership and management needs to become embedded in the career path for people in banking and that suitable training, mentoring and reward structures should be put in place to encourage it.

Recommendations

Hire, develop and promote leaders based on change capability assessment.

Make change an integral part of the L&D curriculum.1

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2468

Provide rigorous development around change (education, experiential, coaching/mentoring).

Reward and encourage the mastery of complete leadership skill sets including developing people.

Incentivise change success in bonuses.

Place high potential change leaders into increasingly complex change roles and support them.

Embed change as a discipline in performance management systems.

Make change a valuable career path in banking.

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INTRODUCTION

There are two principle sources for the banking industry to learn from in developing strategies for change: from the past, with the Global Financial Crisis still fresh in the mind, and from other industries.

Reading between the lines of the survey, it is clear that many of the participants were expressing a certain amount of frustration at their bank’s unwillingness to look for lessons from either source: a rather blinkered attitude seems to prevail in the industry, particularly when there are valuable models in other industry sectors that the banks could adapt and adopt.

BANKS HAVE BEEN SLOW TO LOOK OUTSIDE THEIR OWN INDUSTRY FOR GUIDANCE IN DELIVERING CHANGE AND ARE STILL CONSIDERED TO BE POOR AT LEARNING LESSONS FROM THE PAST

Learning Change9“ How banks are

innovating around change, learning the failures of the past is a major shortcoming.” CONSULTANT

How well does the Bank learn

lessons about delivering change

successfully from the past?

CHART 6

37%44.4%

7.4%9.3%1.9%

VERY POORLYPOORLYABOUT AVERAGEVERY WELLDON’T KNOW

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When asked how well the banks learn lessons about delivering change successfully by learning from the past, nearly half of respondents (44%) answered ‘poorly’.

Banks are starting to learn that change often turns out to be more complex than first expected and that it is constant:

“ Change is not something you need on a Tuesday in May and then not again for two more years. There is always something to change and banks could radically reduce their reliance on external providers and their costs by creating some sort of change excellence within themselves. I think it will take a huge mind shift to do it.” CONSULTANT

Banks could start this process by placing greater emphasis on recording successes and failures, as they do in other industry sectors – Construction, for example.

How well does the Bank

learn about delivering change

successfully from other

industries?

CHART 7

24.1%

42.6%

22.2%

5.6%3.7%1.9%

VERY POORLYPOORLYABOUT AVERAGEVERY WELLEXCEPTIONALLY WELLDON’T KNOW

LOOKING BEYOND THE BANK

Many banks are starting to look outside of Financial Services to other industries for guidance and support in driving through change in their organisations. But survey respondents are not seeing this as having a major impact. Over 60% feel that the banks they are working for are ‘poor’ or ‘very poor’ at learning from other industries when it comes to change.

Banks can and should learn from other industries and specifically companies that are considered systematic, long term, and sustainable within those industries.Companies that are not ruined by short term needs, show predictable, orderly results, have a strong focus on the supply chain, know their customers, deal with large volumes of data, have experience in rolling out new products year after year, grow leaders methodically, etc.

9. Learning Change

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These industry sectors might include:

- Telecommunications

- Media

- Construction

- Pharmaceuticals

- Oil and gas

- FMCG

- Technology

- Social media companies

- Retail

“ Every year, Apple releases a product that is better than the last year. The price point for that product is the same each year. There is no reason why banks can’t be run the same way. Each year, you need to ask people to make the product 10% cheaper and better whether that be through automation, taking cost out, driving efficiencies, etc. It needs to be part of the mindset.” CONSULTANT

BRINGING NEW PEOPLE IN FROM OUTSIDE THE INDUSTRY

New people and new blood could enable banks to change. The Lean Six Sigma methodology that the manufacturing industry has been using for 20-30 years has only recently become adopted in banking. Banks are very slow to learn from other industries generally. However, what can’t be under-estimated is:

THERE ARE A NUMBER OF VALUABLE SOLUTIONS THAT BANKS CAN ADOPT TO DELIVER CHANGE MORE SUCCESSFULLY IN THE FUTURE

Respondents were asked about potential solutions that could help banks to deliver change more successfully in the future.

Over 50% of respondents consider the proposed solutions to be either ‘valuable’, ‘very valuable’ or ‘exceptionally valuable’. The top three solutions are:

1. Change Professional Development support and advice – education, training, stretch role coaching, etc.

2. Real-time, future-focused change workforce planning

3. Work alongside internal HR teams to improve recruitment of resources

“ … a lot of banks are not greenfield sites, they are brownfield, nasty and you need to have a very good understanding of that estate before you start making decisions.” CONSULTANT

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9. Learning Change

A number of these solutions work together. It is nearly impossible to do effective development without assessment: so some form of evaluation or assessment capability would be useful to identify individual, team or unit strengths and areas of development.

If standardised, this could also allow Sponsors, internal HR teams and Agencies to scrutinise and compare internal and external capability using reliable past results as a guide; thereby offering greater transparency around resource quality and price. This capability could also form the backbone of change professional audits which, while not the most popular solution voted for by survey participants, would also greatly assist change workforce planning.

NOT VALUABLE

SOMEWHAT VALUABLE VALUABLE

VERY VALUABLE

EXCEPTIONALLY VALUABLE

BETTER CATEGORISATION OF RESOURCES TO HELP FILL ROLES FASTER

5.8% 30.8% 36.5% 25.0% 1.9%

PARTNERSHIPS BETWEEN CONTRACTORS AND CONSULTANCIES TO PROVIDE HYBRID RESOURCING OF CONSULTANTS AND CONTRACTORS AS A PACKAGE; PUTTING IN CONTRACTOR/CONSULTANT TEAMS

13.5% 25.0% 30.8% 21.2% 9.6%

WORK ALONGSIDE INTERNAL HR TEAMS TO IMPROVE RECRUITMENT OF RESOURCES

9.8% 23.5% 35.3% 23.5% 7.8%

INTERNAL CHANGE PROFESSIONAL TALENT AUDITS (TO DETERMINE SIZE AND MAKEUP OF CHANGE POPULATION)

9.8% 29.4% 35.3% 23.5% 2.0%

STANDARDISED CHANGE PROFESSIONAL EVALUATION TOOLS AND REPORTS (INTERNAL AND EXTERNAL)

9.8% 39.2% 29.4% 17.6% 3.9%

CHANGE PROFESSIONAL DEVELOPMENT SUPPORT AND ADVICE – EDUCATION, TRAINING, STRETCH ROLE COACHING, ETC.

1.9% 19.2% 34.6% 32.7% 11.5%

CHANGE PROFESSIONAL ACCREDITATION AND PRICING BASED ON ‘KNOWN’ WINS

7.8% 37.3% 25.5% 23.5% 5.9%

REAL-TIME, FUTURE-FOCUSED CHANGE WORKFORCE PLANNING 4.1% 22.4% 28.6% 30.6% 14.3%

TABLE 7

Q How valuable do you think the following solutions could be to Banks to help them deliver change more successfully in the future?

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SUMMARY

Banks need to do more to see themselves not as isolated from other industries, but more as part of the modern business world: the benefit of hindsight can help them to avoid repeating the mistakes of the past, while the benefit of foresight might see them emulating successes in other industries, even to the extent of bringing in talent from outside, particularly from customer-centred businesses.

Recommendations

Monitor and review change initiative successes and failures from the perspectives of multiple stakeholders.

Explore learning partnerships with other companies from industries outside of banking that:

- Are not unduly beholden to short term results

- Show predictable, orderly results

- Have a strong focus on the supply chain and ‘knowing the customer’

- Deal with large volumes of data

- Manage large amounts of regulatory change

- Have experience in rolling out new products year after year

- Grow leaders methodically

1 2

Glossary

AGENCY

An organisation that matches employers to employees.

CHANGE

The survey refers to three types of change (taken from ‘The Change Leader’s Roadmap: How to Navigate Your Organization’s Transformation’ by Anderson and Ackerman, Pfeiffer, 2010):

- Developmental Change: change for making improvements in specific areas such as skills, knowledge or performance; training and communication are main levers. Examples include minor regulatory changes, pricing changes, product developments

- Transitional Change: change for fixing a problem; focus frequently on structure, technology and work practices but not culture; desired end state defined. Examples include restructuring, implementing an ERP or CRM system

- Transformational Change: change for survival; breakthrough required to pursue new opportunities; overhaul of strategies, structures, systems, processes, technologies, work practices and culture behaviours and mindsets. Destination often emerges through trial and error. Examples include enterprise-wide drive towards a culture of customer-centricity

CHANGE DELIVERY

Change ‘delivered successfully’: broad acceptance that the initiative delivered all critical, expected outcomes (i.e. delivered on quality) and, where programmatic in nature, was completed to schedule and within expected cost parameters (i.e. on time, on budget). An organisational track record of sustainability and agility through turbulent times is indicative of continuous change delivered successfully.

CHANGE DISCIPLINES AND CHANGE ROLES

Change leadership or leading change: typically exercised by Sponsors and change leaders who:

- Create change strategy that integrates people, process and content needs, including how to change mind-set and culture to support new business directions

- Use conscious process thinking to design the change as a full stream process

- Ensure that the change is aligned and integrated with all interdependent systems and processes

- Catalyse people’s commitment and highest contribution to the change – inspire and motivate

- Create and sustain conditions for success for the change, especially the continuous generation of new information

- Build organisational capacity for ongoing change and self-renewal

- Have a long-term, strategic focus

CHANGE MANAGEMENT, PROGRAMME MANAGEMENT OR MANAGING CHANGE

Typically exercised by business change managers and programme managers who:

- Plan and manage the implementation of new directions through multiple change initiatives

- Account for people dynamics in change, mostly overcoming resistance

- Create and oversee change infrastructures and resources to support the change

- Align HR systems to support business change

- Manage overall cost

- Plan and expedite dependencies

- Have a short-term, programme implementation focus

CHANGE PROJECT MANAGEMENT

Typically exercised by PMOs and project managers who:

- Deliver against time and cost

- Manage finance and risk

- Control scope

- Plan and resource

- Have a short-term project implementation focus

CONSULTANCY

Large Consultancy – management or leadership consultancy with over 1000 consultants in firm, e.g. Big 4.

Mid-size Consultancy – management or leadership consultancy with 100-1000 consultants in firm.

Small Consultancy – management or leadership consultancy with below 100 consultants in firm, e.g. Hybrid.

KEY PLAYERS

Change Professionals – collectively Sponsors, business change managers, programme managers, project managers, business analysts, and subject matter experts.

End-to-End Resourcing Model – the way the bank’s Internal Resourcing Team works with its external providers such as Agencies, RPO/MSPs and Consultancies to provide the bank change professionals from within or outside the bank.

High Quality Individuals – value-adding, motivated individuals who possess the rights skills and capabilities for the role and who fit suitably with their line manager and team and organization.

Internal Resourcing Team – the bank’s HR capability including its RPO/MSPs if present.

Managed Service Provider (MSP) – an external provider that manages and assumes responsibility for providing a defined set of services to banks either proactively or as the MSP (not the client) determines that services are needed.

Recruitment Process Outsourcer (RPO) – an external provider that acts as the bank’s internal recruitment function for a proportion or all of its jobs. RPO providers manage the entire recruiting/hiring process from job profiling through the onboarding of the new hire, including staff, technology, method and reporting.

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Appendices

SURVEY DESIGN

To get a broad view of change capability and capacity in banks, the survey focuses on the major, global banks operating in the UK and solicits the views of people inside and outside those banks, including those involved in resourcing and hiring change talent, people with responsibility for leading and delivering change and those who support them. The target audience segments into the following four categories:

1. Bank employees with hiring responsibility – Sponsor/programme manager/business change manager/PMO/project managers

2. RPO/MSP employees

3. Contractors

4. Consultants

Data was collected via two methods: an online survey and face-to-face/telephone interviews, both designed in collaboration with individuals from the four categories.

Answers from Sponsors and Contractors relate to those banks the Sponsors and Contractors are currently working in. Answers from RPO/MSP employees and Consultants relate to those banks that are current clients of the RPO/MSP employees and Consultants.

The audience groups that drew the greatest response from the survey are 1) Contractors (38% of responses) 2) Bank employees with hiring responsibility (30%) and 3) Consultants (25%).

Given this breakdown, the analysis conducted and presented in this report is largely based on the responses from these three categories. Where relevant and useful from a comparative perspective, we have also drawn on the results from the RPO/MSP employee category (5%) and supplemented with interview data from all categories.

DEMOGRAPHICS

Just over half of the Sponsors who took part in the survey disclosed where they sit within the bank, their corporate level and their tenure. The majority of this group are Directors (46%) residing either at Group level or Business Unit level, have been employed at their bank for 5-10 years and have been working in the banking industry for more than 15 years.

Two-thirds of Contractors who took part in the survey disclosed their corporate level, their number of years as Contractor and their longest tenure at a banking client. Contractors occupy a variety of positions from Manager to VP. The majority of Contractors had 1-5 years experience as a Contractor and their longest tenure at a banking client was also 1-5 years.

On the consultancy side, over 75% of Consultants disclosed their current role, the size of the firm they work for, the number of years’ experience they had as a Consultant and their longest tenure at a banking client. Consultants who took part in this survey are mostly Directors (40%) and Partners/Managing Partners (33%) who work for large firms with above 1000 Consultants (47%) and smaller firms with below 100 Consultants (40%). There is a nearly even split of experience with most working as a Consultant for 5-10 years (33.3%), 10-15 years (33.3%) and more than 15 years (26%). The majority say that their longest tenure at a banking client is 1-5 years (60%) and the rest say that their longest tenure has been 5-10 years (40%).

Interviews were conducted with senior sponsors (VP to C-suite), senior Consultants (Partner to Managing Partner), Account Executives at RPO/MSP organisations and experienced, long tenure Contractors (10+ years contracting or consulting).

REFERENCES

Ackerman L Anderson and Anderson D, 2010 ‘The Change Leader’s Roadmap: How to Navigate Your Organization’s Transformation’, 2nd edn., Pfeiffer.

Keller, S and Aiken, 2008 C ‘The Inconvenient Truth about Change’, McKinsey & Company.

Kotter J, 2014 ‘Accelerate XLR8’, Harvard Business Review Press.

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NICK WATLING

Accomplished strategic talent expert with full lifecycle experience driving organisational, cultural and behavioural change in prominent ASX-, NYSE- and FTSE- 50 companies. Over a decade supporting Boards, CEOs, CHROs and other senior leaders realise business outcomes from innovative, high-impact solutions as part of restructurings, integrations and new operations.

Recently led the development of 22 of Westpac’s highest potential executives (at CEO -1, -2 and -3 levels); integral in employee engagement rising to its highest level of 87% with 42% of leadership roles held by women and the bank being voted ‘most sustainable company in the world’.

Previously enjoyed leading internal and client teams within a global leadership advisory organisation, overseeing engagements spanning: succession development, board / CEO evaluation, talent management strategies and team and leadership development.

Published author on subjects including ‘Leadership in Crisis: Challenges and Opportunities’, a white paper on how CEOs led through the Global Financial Crisis, and ‘Bridging the Gap’, a white paper on effective talent management in law firms.

Authors

MC PARTNERS

MC Partners is a leading provider of specialist recruitment services across global markets. We were established in 2002, focusing on the recruitment of Change and Transformation professionals and due to our success in this area we have now expanded to cover Technology, Risk Management, Quantitative Analytics & Compliance. Through our synergism and innovative approach we are able to attract the best clientele and talent in the market.

MC Partners invest in long term relationships with both our clients and candidates. We focus on becoming a strategic partner and our team of specialist consultants are experts in their chosen fields. We have access to a network of highly skilled professionals and our proactive headhunting approach ensures we are able to achieve the best results for candidates and clients alike.

If you would like to find out more about MC Partners or have any questions regarding this survey report, please contacts us on +44 (0)207 014 1000 or info@mcpartners.co.uk.

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MC Partners LondonE info@mcpartners.co.ukT +44 (0)20 7014 1000 3rd Floor Cowcross Studios 30 – 31 Cowcross Street London EC1M 6DQ

MC Partners New YorkE info@mcpartners.co.ukT +1 646 741 5200 136 Madison AvenueNew YorkNY 10016 USA

Copyright © MC Partners Ltd 2015. All rights reserved. MC Partners Ltd and its agents have used their best

efforts in collecting the information published in this report. MC Partners Ltd does not assume, and hereby

disclaims, any liability for any loss or damage caused by errors or omissions in this report, whether such errors

or omissions result from negligence, accident or other causes.