Do you work in a team or an office or branch where a group of colleagues seem to be the boss’s best friend? The ones whom your line manager praises the most, socialises with the most and confides in the most. Perhaps, they are the ones whose mistakes are never as serious as yours.
For all its obvious managerial inappropriateness, favouritism is alive and well in Lloyds Banking Group and is set to play a key role in how bonuses are distributed at the end of the year. In an age when algorithms are being developed to take the bias out of recruiting new staff for example, line managers still persist in looking after people who are more like them, or – worse – who like them most. That applies to all walks of business life be it pay, bonuses or promotions. We’ve all seen it in action a thousand times.
The most often cited piece of research on favouritism was a Georgetown University study from 2011. Whilst that study focused on promotions the same underlying issues are at pay when it comes to bonuses. The vast majority of senior business executives surveyed (92%) said that they had seen favouritism at play including in their own companies (84%). But while nearly all see favouritism as widespread, only 23% were willing to admit they have practised it themselves.
The removal of performance rating early this year has meant that the Bank has had to come up with a new way of distributing bonuses under the Group Performance Share Scheme. For the lowest two grades Lloyds is proposing a profit share approach of 5%, with line managers being given the ability to increase that to 10% for exceptional performance.
For grades C & above, line managers will have complete discretion to award bonuses between 0 – 30% for their direct reports. The ‘on-target’ percentages and matrices will be removed. The new bonus scheme is not transparent and nor is it fair. By removing ‘on-target’ awards for each grade, the bank has thrown the baby out with the bathwater. The new scheme is essentially a free for all and favouritism is going to be key in determining the bonuses staff are paid. If your line manager likes you then you are going to get bigger bonuses than those staff who are on the outside. If you work in a team of 10 and 7 are based in Manchester with the line manager and 3 are in London, who’s going to get most of the bonus pot? The 3 in London? We think not.
Seeking to manage favouritism and unconscious bias out of the new system can’t be done behind closed doors, which is what the bank is proposing. Any problems will just get swept under the carpet. The only way proper transparency can be achieved is by publishing all bonus payments. It will be a shock to the system at first but it will lead to better decisions and will be fairer.
TSB Bows To Pressure On Severance Terms
TSB has bowed to pressure from the union and confirmed in its new Job Security Policy that the heritage Lloyds Bank enhanced severance terms are contractual and there is no expiration date for staff who TUPE’d across in 2014. That’s important because TSB is going to be significantly smaller over the next few years and that is inevitably going to result in more redundancies. As we have said previously, if there was any ambiguity on the legal status of the severance terms, TSB could simply say in any legal dispute that the terms are non-contractual and the member of staff is not entitled to the enhanced severance terms. So, if nothing else that puts an end to the pantomime every few years when the HR approved unions say they have managed to negotiate an extension to the severance terms for another three years. In the case of ex Lloyds staff, no extension is required, not that it was in the first place. TSB has only confirmed what we understood all along. However, for heritage HBOS staff, TSB confirmed that their enhanced severance terms are not contractual and that they will finish at the end of 2020. TSB could then look to put those staff on the basic severance terms in order to save money.
Lloyds could save a lot of heartache by making the same declaration.
Members with any questions can contact the Union’s Advice Team on 01234 262868.