Brian Hartzer knew it was over the second he picked up his phone. Last Monday, as CEO of Westpac, Hartzer had called his senior executives into a room for the we-can-survive-this-speech, an attempt to rally the troops after the money laundering scandal of the past few days. The front page of this morning’s Australian newspaper contains the contents of that conversation word-for-word.
With quotes like “It’s not a major issue so we don’t need to over cook this” and “this is not an Enron or Lehman Brothers”, it doesn’t read well. Hartzer’s resignation, announced this morning, was a fait accompli, if it wasn’t already.
Every man for himself
Yet there is something more alarming about this than the contents of Hartzer’s speech. There was someone sitting in that room yesterday, in a time of crisis for the bank, who saw an opportunity to knife their boss in the back and took it.
Hartzer probably wasn’t surprised. Every man for himself is the culture that thrives at Australia’s domestic banks, and Hartzer probably did his own fair share of knifing to make his way to the top.
No easy fix
This culture is causing a lot of problems. Not just at Westpac. Across the whole Australian banking sector. It is not possible to design systems and processes that detect every piece of misbehaviour in an organisation of tens of thousands of employees. Your only hope is to build an organisation where the employees want the best for the company and its customers.
That’s clearly not what we have in our banks.
I’m not suggesting for a second that this is an easy problem to fix. These are giant institutions, the culture is well entrenched and the senior layers of management are stacked with people who thrived under the current system.
But recognising that there is an entrenched problem is surely the first step. Hartzer clearly had to go. So does Lindsay Maxsted. This is the same chairman who had this to say to the AFR’s Boss Magazine back in 2016:
“What’s this about a royal commission or there’s a huge problem in banks? There’s no culture problem in banks”
After everything that has happened over the past three years, he still doesn’t get it.
Time for some outside thinking
Most importantly, their replacements need to be outsiders. Hoping that someone who has been part of the establishment can fix it is like expecting Lance Armstrong to change the culture of doping in cycling.
Thousands of good people work for Australia’s banks. I know quite a few of them personally. Until they see significant change at the top, though, they will remain sceptical, dispirited and frustrated. And that’s an environment where the scandals will keep on coming.
Yes there are many good people who work in banks. Much better than I. Under my stress I've lashed out at one and all. Apologies to those in the firing line. I'm a mere mortal.
Alternatively, Steve, you promote an insider and get the external management consultants in for 12-18 months. Same result in any case.
The people who started this culture were outsiders.Untill the people who have benefited over the years from the corrupt culture are held to account, justice will not be done.
Good article Steve. For years now, the boardroom culture has been to put the needs of the shareholders above the needs of the customers. When will they learn that, if you keep the customers happy first, the bottom line will increase and shareholder happiness will follow?
"either you adapt to the culture, or the culture spits you out the other side" - sadly I don't think an outsider can change it. The only example I know of is BP post Deepwater Horizon where literally hundreds of management went and a complete overhaul from the ground up (or so I'm told). There's no indication that Westpac or any of the banks are about to embark on this.
"Values" is the issue here. Values only mean something when they drive behaviour 'even when it hurts'. Only an external appointment with determined values can fix the Westpac problem. But first you need a Board/Chairman with a recognition that existing values are not appropriate for the organisation. Steve is correct in identifying that Lindsay Maxsted must go, and probably several others at the top table.
Chad and Paul - look at the repercussions from CBA’s AML issues and you get an indication of “who should go”. Likewise with the NAB FX options disaster in 2004.
Perhaps there needs to be criminal proceedings and imprisonment of individuals for a change