Horizon Management Group

Would you fly on an airline that provided huge bonuses to pilots based on how many passengers and how much freight they could cram on their aircraft and on how few costs they incur? Not unless you were desperate. We really want those people up the front end of our plane to be hired on their skills and their tendencies to comply with regulations and place safety first.

 

While the full details, and cost, of the National Australia Bank $360 million foreign exchange disaster may never surface, the initial findings make interesting reading. Of particular interest are the comments in the PricewaterhouseCoopers' report blaming a culture of arrogance and non-compliance as a key contributor to the forex losses and the bank's new management promising to weed out "cultural misfits".

 

While we don't know what factors were being considered when the rogue traders were being recruited, they probably weren't recruited for their adherence to rules nor excluded for arrogance. It is quite possible the NAB wanted, as many organisations do, people with ambition, an aggressive approach to doing business and were willing to pay for results. Incentives of up to $265,000 were paid to the traders.

 

This case reinforces the importance of organizations spending time identifying carefully the competencies required for the business to be successful. Rather than just a "wish list" or a series of descriptors for some behaviours, we need to ask the question: will someone who has these competencies succeed in our business and is that what we want? There is an old HR joke about the briefs given for recruitment which often list conflicting attributes: "a real go getter who will quietly do what they are told", "a team player who will work independently." After identifying the desired competencies we can then consider how to recognise and reward people who demonstrate them.

 

Developing the desired competencies to specific behaviours allows planning, recruitment, training, performance management and remuneration to be congruous. This need not be a major exercise and can bring significant benefits to a business as well as provide considerable protection.

 

For an example of a competency developed in this way please go to Free Downloads.