Ralph… what we have here is a failure to communicate
Ralph Norris and the Commonwealth Bank have had a tough week.
Following the decision to raise lending rates by almost double the Reserve Bank’s own rate hike there has been stinging criticism from pretty much every sector of the economy and a bit of personal abuse thrown in for good measure.
Representatives from across the political spectrum have anointed “bank bashing” as Australia’s new national sport and the CBA and Ralph himself are a daily headline for every journalistic medium.
People everywhere are debating the interest rate hike and are split amongst those who see it as simply a commercial reality that had to be faced, and those who view it as yet another example of price gouging from an institution that believes the best kind of helping hand is a firm push.
I’m sure both points of view have merit but I don’t actually have an issue with the rate rise per se. I have an issue with how the rate rise has been handled and specifically I have an issue with Ralph Norris.
Ralph (lovely bloke that I am sure he is) has handled this rate rise with the sort of spectacular incompetence not seen since Meredith Hellicar and the boys at James Hardie decided that The Netherlands was the perfect base for future operations. We all know how well that worked out for them.
Sadly, in his handling of the interest rate rise, Ralph Norris is displaying an ignorance of the human condition which is remarkably similar to that displayed by James Hardie in their handling of the asbestos scandal.
Worse than that, Ralph arguably represents a majority rather than a minority of CEOs in this regard. Let’s remind ourselves quickly of what occurred.
As the Melbourne Cup gets ready to stop the nation on Tuesday the 2nd of November, the board of the Reserve Bank gets together and Glenn Stevens announces a lifting of the official cash rate to 4.75% (a rise of 25 basis points).
On the same day the Commonwealth Bank announce they will be raising their rates by 45 basis points. The CEO of Commonwealth Bank, Ralph Norris, is not in the country. He is away on a week-long visit to tour the CBA’s operations in China and doesn’t return until the 5th of November.
When he does get back and finally fronts up to the public he spends every quotable moment sounding like the wheel is spinning but the hamster is dead.
First he mentions that his trip was long planned and, sadly, unavoidable. The Reserve Bank meeting on the first Tuesday in November wasn’t exactly a surprise to any of us Ralph nor was their decision to raise rates given that they have done that for four Melbourne Cups in a row.
More to the point, the CBA don’t need to wait for the Reserve Bank to raise rates – they can do that whenever they like so why choose to do so at a time when you know the CEO won’t be around to deal with the fallout?
Ralph then talked about how he found the decision difficult and how it has caused him a “fair degree of introspection and angst”.
Unfortunately the timing of the decision makes that statement look suspect at best. The rates were raised the same day as the Reserve Bank decision. In fact, it was done within hours at a time when the CEO wasn’t even in the country.
That means the CBA decision was actually made before the Reserve Bank made theirs and then cynically tacked on to the Reserve Bank decision to give the illusion of cause and effect.
Ralph even said as much: “This is a decision that we had been looking at for a couple of weeks and I came to the conclusion that we really had to make the decision, at the latest, this month.”
So Ralph, if he ever had any angst, went through it some months ago and then wasn’t around as CBA mortgage holders got to experience Ralph’s angst themselves.
He arrives home 3 days after the decision is announced to express his horror at the ‘personalization’ of the reaction to the banks move and to insist that this is a “rational commercial decision”. It is at this point that it becomes obvious Ralph has lost it and doesn’t understand the human condition.
Firstly, Ralph there are no ‘rational commercial decisions’.
It is physically impossible for human beings to separate themselves from their emotions and, as a consequence, all commercial decisions are emotional.
The decision to remove emotion from the decision is, in itself, emotional. That is why you get ‘personalization’ Ralph and that is why you felt angst. These decisions impact peoples lives and for each individual involved the decision will feel as if it were made with them personally in mind.
If, as the CEO of an organisation you attempt to remove emotion from your decisions then people will attribute emotion to you. They will try to guess at what you are feeling and at what motivates your decisions.
That guess will consist of any one of three options:
a) You don’t care
b) You are up to something underhanded or malicious
c) Both ‘a’ and ‘b’
Faced with this, people will respond in one of two ways. They will either disengage completely and walk away from your brand and business, or they will seek to make an example of you in some way to vent their anger and frustration.
You know what I mean… personal abuse, protests, lawsuits, accusations of collusion, perhaps criminal proceedings… is James Hardie ringing a bell for anyone here?
The backlash the Commonwealth Bank is experiencing is not actually the direct result of their decision to raise rates. It is a direct result of Ralph Norris’ failure to explain that decision, acknowledge the feelings of his customers and express his own feelings on the matter.
Having failed so spectacularly in this regard, he then has the gall to accuse those same customers of conspiring to undermine international investment confidence in Australian banks and in the Australian economy in general.
If anyone is guilty of that it is Ralph Norris himself. In his handling of this matter he has displayed the emotional intelligence of a petulant 4 year-old. I don’t know of any international investors who like the idea of a four year-old in charge of a potential investment vehicle.
Ralph has been vocal in his defense of the bank ever since he got back from checking out the expansion plans in China but it is all too little too late.
A sombre CEO announcing a rate rise before the Reserve Bank decision pledging help for customers adversely affected, vowing to support staff through the inevitable backlash and berating the Reserve Bank for not being more courageous instead of leaving rates unchanged over 5 previous meetings may have won more support and certainly would have won more respect.
Ralph might even have looked visionary and vaguely like a leader.
Instead we have the “Ralph come lately” version of leadership pleading with customers not to take out their frustrations on the poor tellers that have to serve them.
He insists that he should be the target for any abuse rather than the poor lowly bank employee who had nothing to do with the decision.
Ahhhh… if only you had been here Ralph but then that was the plan all along wasn’t it?
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