Incentives encouraged risks, NAB chief admits
NATIONAL Australia Bank chief Andrew Thorburn has conceded bonuses that were on offer to staff led to “excessive risk taking” and the “wrong behaviour”.
But Mr Thorburn says he believes the role of big bonuses in motivating staff has widely been overstated.
Speaking at a business event in Melbourne yesterday, Mr Thorburn said workers often looked for more than just money as a motivator.
“People want encouragement. They want progression. They want to know they work for a company which makes a difference,” he said.
“So money is part of it but it is much deeper.”
His comments come as the financial services royal commission continues to expose cases of banks and other finance companies selling products and services inappropriately.
“In a market system we need incentives, (but) they can be seriously overrated in terms of their motivational capability for most of the people working for us,” Mr Thorburn said.
He acknowledged there had been wrongdoing among NAB staff due to bonus schemes.
“I think some of the incentive systems we’ve had have encouraged the wrong behaviour — they have encouraged excess and excessive risk taking and we have not had good enough controls to prevent that,” he said.
“We have to fix that.” Many of the misconduct cases dissected at the royal commission involved staff cross-selling products and services — touting them to people who were coming into branches or calling service centres for other reasons.
Australian lenders have routinely been cross-selling services such as financial advice to banking customers under a model known as “vertical integration”.
That model is now coming under pressure following the misconduct scandals that have engulfed the industry.
NAB late last month changed the criteria for bonuses available to more than 4000 branch and call-centre staff, reducing the emphasis on financial targets.
Yesterday, Mr Thorburn sought to defend his 30,000strong workforce, saying it was a minority of people who did the wrong thing.