Report reveals too much respect and good news can be damaging
The culture of "good news" and respect at ANZ Bank is holding back healthy debates and speaking up within the organisation, according to a newly released review on its culture.
The bank released last week its Root Cause Analysis Summary which identified the reasons that could have led to shortcomings in ANZ's non-financial risk (NFR) management practices.
"ANZ has a culture of respect that extends into a reluctance to challenge, which can diminish healthy debate and speaking up. ANZ values collaboration, but the involvement of multiple stakeholders can dilute accountability and delay decision-making," the report read.
"ANZ's 'good news' culture can mask problems, diminishing awareness, and preventing ANZ's decision-makers from recognising emerging risks or understanding the full scope of issues."
The report further pointed out that there is complacency, limited self-reflection, and a lack of curiosity within the organisation, which could reduce opportunities for meaningful improvement and development of a holistic enterprise-wide view.
"Some areas of ANZ have displayed limited curiosity or reflection on root causes and organisational weaknesses as well as a tendency to rationalise negative outcomes, in part due to a 'good news' culture focusing on the positives," it said.
These factors are also made worse by insufficient leadership role-modelling of NFR management and clarity on related messaging, according to the review.
"In some areas, a failure to role model significantly influences employees' perception of acceptable behaviour and understanding of what good looks like for NFR management," it said.
"Insufficient leadership role modelling can deteriorate ANZ's culture and risk culture and impacts the way staff approach NFR management."
Shortcomings on NFR practices
The review, carried out by McKinsey, comes after the bank entered a Court Enforceable Undertaking (CEU) with the Australian Prudential Regulation Authority (APRA) in April after the regulator's concerns about its NFR management practices and risk culture.
"The CEU takes effect as a legally binding commitment from ANZ to APRA, and commits ANZ to take specific actions to address risk weaknesses and deficiencies identified by APRA and in the root-cause analysis conducted under the CEU," it said on its website.
APRA has approved ANZ's Root Cause Remediation Plan (RCRP) that outlines its activities to meet the regulator's requirements to uplift NFR management across the organisation.
"Accountability for the delivery and oversight of the RCRP has been assigned to members of ANZ's senior management," it said.
