The banking industry as a model for high employee engagement

OK, so the title may have grabbed your attention as you might be thinking (given the recent economic problems we have had) ‘No way!’, so forgive me for the rather leading headline.

However, there is a bank, in the UK that is a model for high employee engagement (in fact there are at least two, see further down in the blog!).

The first bank I want to mention is Handelsbanken, the growing Swedish bank here in the UK.  During the economic downturn Handelsbanken has consistently returned balance sheets that have made European banking regulators purr with delight.

How have they achieved this – well firstly with no sales or market share targets and also with almost zero marketing.   Handelsbanken’s Chief Executive Mr Anders Bouvin says “Our customers don’t feel better because they can read the bank’s name on a football shirt or on the side of a bus.”  How refreshing!

Long-termism and decentralisation

Fundamentally, Handelsbanken is different from other banks – it’s values, for example, long-termism and it has a philosphoy of decentralisation.  More importantly, from an employee engagement perspective, it actually lives these values.

For example, it’s slogan regarding its philosophy is “the branch is the bank”; branch managers are empowered and entrusted to build local customer relationships and prudent lending and investment is based on these one-to-one relationships.  This is in stark contrast to how the majority of banks conduct their business in the UK.

In addition, it’s long-term approach is also lived out.  For example Mr Bouvin persuaded shareholders it was in the long-term interests of the bank to grow organically, using profits, not debt, to fund new branch openings.  He, personally, doesn’t have an annual bonus and has been with the bank for 28 years.

Employees share in the profits but not in the traditional way. If the bank exceeds the average profitability rate of its peers, surplus profits are put into a fund and distributed to all the staff.

Employees then only receive these accumulated benefits when they turn 60, again this encourages long-term thinking and loyalty.

According to Mr Bouvin some long-serving employees are receiving payouts around the £1.4m mark – that is some reward!

Sharing in the success of an organisation and being rewarded fairly and equitably is fundamental to employee engagement and it seems Handelsbanken does this in a way that fits well with its values and philosophy.

Finally, Mr Bouvin argues that the group’s success (£1bn in global after-tax profits for the first nine months of 2013) – is very much down to the belief in the primacy of customer service and localism.  In some respects, a throw back to a by-gone age of banking in the UK!

Customer service

As an aside, I feel it unfair, within this blog, not to give a mention to first direct (part of HSBC).  You are probably well aware that, in terms of customer services, first direct out-performs all other banks in the UK and, more recently (via a report by the Boston Consulting Group) far wider:

“The latest award is from The Boston Consulting Group (BCG), a global management consultancy and one of the world’s leading advisors on business strategy. The award recognises first direct’s “superior ability to attract word-of-mouth recommendation”.

The results were based on a detailed survey of 32,000 consumers, who were questioned on their purchasing habits and their opinions on leading brands across a range of sectors.

In addition to beating all the other UK banks surveyed by BCG, first direct had a higher ‘word-of-mouth’ rating than any bank in the US, Germany, France or Spain.”

I can attest to their customer service, being a customer of first direct – I doubt very much that the level of service they deliver would be this high unless their people were highly engaged.

So, whilst the UK banking industry might still be in the doldrums and not everyone’s favourite – there are two banks that clearly get what employee engagement is all about.

To read more about employee engagement and how we can help your business understand what is driving it, please make contact.