The Dominion Post
Kiwi’s hard-sell lesson to Aussie banks
In this extract from her new book, Australian investigative journalist Adele Ferguson traces the impact of a key Kiwi player on the Aussie banking scene.
Ralph Norris succeeded David Murray as chief executive at the Commonwealth Bank of Australia in 2005 [after leading New Zealand’s ASB to record profits using the Cohen Brown method of incentivising bank staff to ‘‘cross-sell’’ products to customers].
Like Murray, Norris was a ‘true believer’ in the Cohen Brown sales model, and wasted no time in what he described as ‘‘reinvigorating’’ it.
The New Zealand-born Norris had been the managing director and CEO of CBA’s New Zealand subsidiary ASB Bank from 1991 to 2001, during which time the company had expanded its footprint across New Zealand and grown ‘its profitability sixfold and increased market share by 60 per cent’.
Norris attributed part of his success to the Cohen Brown model, which he introduced to the bank in 1994.
He liked to point out that ASB’s level of crossselling was more than double CBA’s.
One of his first moves as CEO of CBA was to hire Cohen Brown to review service levels and sales.
‘‘We are not achieving the customer service levels that we had anticipated,’’ he told the media and investors in his first month after taking the top job. ‘‘I’m taking that very seriously.’’
In other words, not enough products were being cross-sold to customers, largely because staff hadn’t fully embraced Cohen Brown, [which Murray had introduced to the bank in 1995, a year after Norris had brought it to ASB].
When releasing a record half-year profit in February 2006, Norris again spoke about Cohen Brown, telling analysts and the media that the Cohen Brown mantra was ‘‘not so much about sales targets [but] about actually being able to satisfactorily meet the needs of our customers through stronger needs analysis’’.
He noted that CBA’s share of business lending had fallen by one-third in the previous decade, due to an inability to ‘‘initiate customer leads’’, along with some other issues relating to the centralisation of loan approvals.
To change that, everyone at CBA needed to embrace the Cohen Brown method.
When Norris released a new blueprint for CBA on 31 March 2006, he claimed the changes would deliver profitable market-share growth, productivity improvements and higher dividends.
As NAB [which adopted Cohen Brown in the mid1990s] and CBA further absorbed the Cohen Brown mindset, they adopted its concept of ‘‘Onebankism’’, which aimed to break down traditional silos within banks.
Under Onebankism, bank tellers and other bank employees were required to refer customers to other parts of the business, such as private banking, business banking, financial planning or life insurance.
At CBA, the CEO and top executives were front and centre of this new approach and Cohen Brown reported that it ‘‘moved quickly down and out through the ranks, gathering energy and sweeping
The Cohen Brown mantra is ‘‘not so much about sales targets [but] about actually being able to satisfactorily meet the needs of our customers through stronger needs analysis’’.
Sir Ralph Norris in February 2006
the entire organization into its reach’’.
Bank staff had to attend meetings each morning and give a commitment to the group to achieve their targets.
A ‘‘debrief’’ meeting was held each afternoon. Some former CBA employees later reported that when staff didn’t achieve their targets they were belittled in front of colleagues. One bank employee says managers patrolled the work area like stormtroopers to make sure staff were pushing products to customers at every opportunity.
Some bank staff felt the training was a form of brainwashing.
By 2007, the feedback from CBA staff in Financial
Services Union surveys was alarming
Only 15 per cent thought management had realistic expectations about targets.
A massive 80 per cent didn’t believe they could reasonably expect to achieve their targets.
When asked if their work-life balance suffered because of targets, 75 per cent either agreed or strongly agreed.
The question ‘‘I don’t feel pressured to make inappropriate sales to try and meet my targets’’ produced a result of 33 per cent disagreeing and 32 per cent strongly disagreeing, which was higher than the average across all banks.
Even more worrying was the response to a question about whether ‘targets bring out the best in me’ – 83 per cent of respondents disagreed. Furthermore, 26 per cent of those surveyed admitted they were aware of inappropriate lending practices being undertaken to achieve targets.
I first came across the impact of Cohen Brown in 2013 when I wrote a series of articles about the aggressive sales at CBA. The series triggered hundreds of responses from CBA staff.
Many described it as a cult-like sales technique that placed staff under intolerable pressure and resulted in serious mistakes.
One former employee who’d left CBA in the early 2000s recalled branch staff going home and leaving the strong room open because they were too engrossed in their end-of-day sales debrief meeting.
‘‘Tellers’ errors went through the roof,’’ he said. ‘‘A quick and accurate balance of the cash at the end of the day was for years the standard tellers aspired to. Now it was about how many new business referrals you got and whether you got your target for the day, forget about balancing the cash; cash was left out at night, customers’ deposits were lost and nobody cared. It was all about the tellers getting referrals and meeting targets. Tellers who failed to reach their referral targets were managed out of the bank.’’
Some CBA staff suffered nervous breakdowns and some started taking anti-depressant medication.
The Cohen Brown method featured so heavily in
CBA’s strategy during Norris’s reign that I decided to contact the company’s co-founder and CEO, Marty Cohen, in late 2018.
I wanted to talk to him about the Cohen Brown method, including a patent filed in 2006 titled, ‘‘Systems and methods for computerised interactive training’’, which contains an example of a telephone script that physiologically conditions staff to respond in a certain way.
The patent talks about supplying a positive tone and visualisation when the right answer is achieved and a negative tone and visualisation when the answer is wrong.
‘‘A positive tone is generated and/or a text acknowledgement appears, indicating that the correct phrase was identified by the trainee,’’ the patent says. ‘‘Then a ‘negative tone’ is played, and a graphic and/or text message is provided, indicating that the answer was incorrect.’’
The user is scored ‘‘based in part on the number of errors and/or opportunities that the user identified and optionally on the user’s response to the question’’.
In an email exchange, Cohen told me he is no longer using this type of ‘‘methodology’’, but he doesn’t think there is anything wrong with the practice of ‘‘negative reinforcement’’.
‘‘Any director or choreographer in the performing arts clearly tells the performers when they have done it right or they have done it wrong,’’ he said. ‘‘If people are not aware of their incorrect behaviours, etc, then they cannot possibly change them because they don’t know that the behaviours are indeed problematic.’’
Cohen believes the insurance and financial planning malfeasance that occurred at CBA had nothing to do with Cohen Brown.
‘‘The bottom line is that I stand by my comments to you that Cohen Brown had absolutely nothing to do with the egregious financial activities that occurred at CBA or any other bank in Australia,’’ he said. ‘‘It is the duty of bankers to CREATE AWARENESS of opportunities. This has nothing to do with product pushing … instead it is simply about creating awareness.’’
Cohen asserts that his company has been ‘‘erroneously besmirched in the Australian press, where it was stated that we created ‘aggressive sales cultures’. We have never used the word ‘aggressive’ in any of our literature or presentations because we absolutely do not believe in being aggressive with customers. We believe in helping customers and caring about customers by first understanding their needs before offering solutions.’’
Whatever the case, an aggressive sales culture and an army of financial planners and bank tellers who were pushed to cross-sell products created perfect conditions for conflicts of interest and misconduct to fester.
As long as the sharemarket boomed, inappropriate advice went undetected. But during downturns, such as the dot com bust and the global financial crisis (GFC), flawed business models and dodgy advice would be exposed.
[CBA whistleblower] Jeff Morris was inducted as a CBA financial adviser [in 2008]. What he encountered was the sales- and profit-focused culture that had flourished under David Murray and Ralph Norris.
Monday mornings would begin with a sales meeting and watching CBA television appearances featuring chief executive Ralph Norris or some other senior executive extolling planners to ramp up sales figures.
As Morris recalled, ‘‘The poor branch manager would have to go through this terrible American sales process as to how we were going to shoot the lights out on some sales target or other.’’
Practice managers, whose job was to manage the financial planners, would ask the planners for details of their past week’s sales and their next week’s pipeline of business.
At the weekly meetings certain products were identified for the planners to flog. Sometimes it was life insurance, sometimes managed funds or some other CBA financial product. Financial planners were hired on small base salaries with the lure of being able to earn hundreds of thousands of dollars a year in fees, bonuses and commissions.
Each month a league ladder was emailed to all the financial planners, at branch, state and regional levels, with their rankings listed from highest to lowest.
These rankings were based on revenue written and showed how each planner fared against their target and against each other.
Planners who didn’t meet their targets had to submit to management a ‘Diary Review for Appointments’ with an explanation of why they had failed to meet the targets and how they proposed to do better next time.
Those who hit their targets celebrated at places like Otto, an Italian restaurant in Sydney’s harbourside Woolloomooloo, before moving on to a seedy strip joint in Kings Cross; in Melbourne such celebrations often ended at Spearmint Rhino, a strip joint in Melbourne’s King Street.
It was a pressure-cooker environment where probity and ethics fell by the wayside.