Hr Practices To Blame For Global Financial Crisis?

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7th April 2009, 08:26am - Views: 681





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NEWS RELEASE





7th April 2009


HR practices to blame for Global

Financial Crisis?


Recent article by change management consultant points the finger at remuneration practices

at financial institutions.



Colin Melbourne, Director at Brisbane-based change management consultants Astor Levin, highlights the role of

remuneration practices at large financial institutions in bringing about the Global Financial Crisis in his article “HR

Practices Played a Part in the Financial Crisis”.


In the article Melbourne summarises the consequences of having numeric target based incentives:


“Let’s face it. It worked for a while... However, like most incentive programs based purely on numeric targets, there

were unintended consequences as employees sought to maximise their own position, sometimes at the expense of their

employer.”


He continues:


“...whether or not the staff were aware of the ramifications, they didn’t bear any of the downside risk if something went

wrong, so it was squarely in their interest to take high risk/reward positions. It was a scenario of win big or lose

nothing.”


Melbourne claims that, while HR practices were not the cause of the calamity, remuneration practices of financial

institutions created a massive incentive for management to maximise bonuses at the risk of profit, ultimately to the

detriment of customers and shareholders.


(ends)


About Astor Levin

Astor Levin Pty Ltd is a Brisbane based human resource and management consultancy firm that provides services to a

range of private and public sector clients throughout Australia.  The team consists of highly qualified consultants with a

mixture of human resource management, business analysis and organisational psychology backgrounds with global

experience.  Their client base ranges from small business to ASX200 companies. 


For a full copy of the Astor Levin report, or to speak to author Colin Melbourne please

contact David Bateson on 07 3901 1055 / 0402 332287.






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