In hindsight, the moment was always going to arrive; the tipping point where the pursuit of financial outcomes, both at an individual and organisation level, outweighed the ability of some to act in the best interest of their customers. The Banking Royal Commission highlighted how the relentless pursuit of achieving shareholder returns exposed the capability of some organisations to deliver balanced outcomes.
To avoid the ‘agency cost’ problem of executives pursuing their interests at the expense of shareholders, it has become common practice to align both of their interests, including stock option incentives for Senior Executives. But in this scenario, who is looking out for the customers best interests?
The successful Senior Executives of the future must find innovative ways to balance the tension between managing risk, cost and the customer experience to deliver sustainable profitable growth for their organisation. But tension is not always a bad thing; it is what drives us. Theo Steinways once remarked that his grand pianos were made of 243 taut strings producing 40,000 pounds of pressure on an iron frame, from great tension can come great harmony.
An organisation’s right to compete will be determined by its ability to understand interdependencies and the unintended consequences of focusing on one area at the expense of others.
A risk-averse culture can force conformity, stifle creativity, and broad cost-cutting measures that could potentially negatively impact customer experience and staff engagement. Alternatively, focusing solely on the customer at the expense of risks and costs could lead to poor lending practices and unsustainable pricing.
Senior leaders of today must strike the right balance of inculcating a culture that makes risk everyone’s business, a forensic focus on productivity and costs, and a healthy obsession of acting in the best interest of their customer. It is the ability to create harmony between these key elements that will determine the fate of today’s organisations.
About the Author
Steve Kluss is a progressive business consultant that has gained his experience over a 30-year career spanning executive, management and functional leadership roles within banking, financial services and technology industries.
Steve has a proven track record in taking command of a business or a functional area within a business and guiding it towards remarkable success. As a member of the NAC Consulting Team Steve has supported a wide range of organisations in health, retail, finance, neo-banks and government agencies at both state and federal levels.
Steve is passionate about supporting organisations build scalable and efficient business functions that create an environment where people, processes and systems work together seamlessly to deliver consistently great customer experiences.
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