Making Sales at the Expense of Reputation is a No – No

Now this is interesting.

Commonwealth Bank CEO Ian Narev’s annual performance review was a difficult one this year. He got a zero on his 2017 scorecard and lost 100% of his short-term bonus of $2.73 million.

Yet, the head of Australia’s biggest company scored well on financial targets, having just posted a record cash net profit of almost $10 billion, but the Board rated him zero when it came to reputational risk.

The board of directors thought the financial results were strong but the damage to trust and risk “significant”.

“The board recognises the significant damage caused to the group’s trust and reputation as a result of risk matters, most notably the recent civil penalty proceedings.

Source: Here’s Ian Narev’s brutal performance review giving him a 0 for reputation risk management | Business Insider

Takeway Lessons:

  1. Many Boards are concerned about Trust and Reputation and they should be.
  2. It is essential that a balanced stakeholder view is taken when achieving goals. This reminded me of a furniture retail company where some branch managers achieved financial targets set, but messed up customer service objectives as they could not always get the product to the clients at the desired times.
  3. Compliance is one the three top reasons why Reputation Risk occur and the penalty underscores this yet again.
  4. Leaders should read this post of mine –Executives Need to Learn a New Style of Decisionmaking. In this post I put forward a model of decision-making in which I suggest that every decision that an organisation must make has four broad sets of implications i.e. operational, financial, legal and reputation.