ANZ has announced wide ranging reforms to its remuneration structure with the biggest change to remove individual bonuses for many of its employees.
The changes announced this week have replaced individual bonuses with an incentive based on the overall performance of the ANZ Group.
These changes do not apply to ANZ’s executive committee which include chief executive Shayne Elliott, whose remuneration is structured in line with regulatory requirements.
Starting from October, the only variable remuneration most employees will receive will be in the form of a group performance dividend, based on the bank’s performance from a risk, financial, customer, people and reputation perspective.
Mr Elliott said the royal commission had shone a light on the negative impact that individual bonuses within a bank can have on customer outcomes.
“We are taking action to rebalance the way we pay people so that variable remuneration is a smaller part of our people’s take-home pay with these reduced bonuses to be determined by the overall performance of the bank,” he said.
Following the royal commission final report ANZ pledged to implement 16 initiatives to improve how it dealt with its customers.
Many of those initiatives dealt with its service of retail, Indigenous and rural customers but also included two on remuneration.
At the time ANZ said it would redesign how it managed and rewarded its staff to focus on the interests of its customers and this latest announcement is the culmination of that work.
A small percentage of senior people will have a portion of “at-risk” pay as their roles have an increased ability to impact ANZ’s performance.
However, that pay will still be determined by business unit and individual performance and will comprise a small proportion of total compensations with appropriate deferrals in place.
“We remain committed to reinforcing a high-performance culture and believe these changes will improve collaboration across the group while also giving employees greater clarity, ultimately benefiting customers, shareholders and the broader community,” Mr Elliott said.
The changes were welcomed by the Finance Sector Union of Australia whose national secretary Julia Angrisano said it was a step in the right direction.
“The FSU was actively promoting the need to overhaul pay and conditions for frontline staff and management during the recent banking royal commission and we welcome the ANZ’s move to reform the conflicted remuneration model at the bank and its toxic sales culture,” she said.
Ms Angrisano said putting sales targets before the customers was at the core of ANZ’s problems and this announcement addresses the issue.
“The royal commission identified the need for major changes in remuneration models in the financial services sector and it is hoped the changes at ANZ will be a positive step forward for the bank and its staff,” she said.