CommBank increasingly tying pay to customer satisfaction and IT performance

While an increasingly common phrase in management parlance, ‘customer delight’ is, for the Commonwealth Bank, a real concept with hefty financial strings attached for failing to deliver on customer service standards.

Speaking at a recent roundtable in Sydney, the bank’s CIO and group executive enterprise servces, Michael Harte, said that the Commonwealth Bank’s approach to customer satisfaction had seen the creation of a ’40 per cent’ standard across the organisation’s management teams.

The standard sets that 40 per cent of management’s ‘at risk’ pay — which is also judged on performance indicators such as financial and project delivery — is reliant on reaching specific customer satisfaction targets.

“Everyone across the Enterprise Service team is measured by a 40 per cent customer satisfaction KPI — if our customers are not happy with the reliability of a system, ease of use and access, richness of features and function, then our staff will be penalised,” he said.

An example of this approach in action could be seen in the outage of the online banking portal Netbank earlier in the year, which had affected Harte’s pay packet.

“Yes, it affected mine, and it affected a lot of people in this room (Tim Whiteley, executive general manager, Dave Curran executive general manager, Nick Holdsworth executive general manager) and will affect us increasingly as we have failures in software, hardware, the network and failures to deliver reliable and effective service.”

The bank has extended this approach through its supply chain so that partners are being held to the same standard, Harte said. This includes new partners such as Telstra.

“Increasingly we are building deeper relationships with strategic partners such SAP and Acenture, Oracle, IBM and HP,” he said . “Partners are also increasingly involved in our sales and service methodology to become more reliable and responsive.”

Service level agreements (SLAs) tended to punish for non-performance, but the 40 per cent model rewarded partners for performance and involvement in the business, said executive general manager, Nick Holdsworth.

“We are interested in having the [partner’s] account team turn up to work every day and think that 40 per cent of their pay is dependent on how happy they keep the bank and how happy they keep the bank’s customers,” he said.

“It changes the conversation with partners at the time of review from: ‘I’m sorry about that outage, but we still met the SLA,’ to: ‘I’d really like to understand what effect that outage had on customers as it has a direct impact on me’.”

The inadequacies of the SLA model could be born out by a simple statistic, Harte said.

“The lunatic situation… is that you could have a telephony availability statistic of 99.98 per cent availability that still lets the carrier have dead air that loses 6000-8000 calls in a morning,” he said. “That amounts to a lot of very disgruntled, dissatisfied customers. Having [the 40 percent model] changes the way they make decisions and the way they behave as they do work for us.”

To ensure that the new model was working properly, the bank had hired Roy Morgan to independently audit retail customers on their satisfaction and was using Assert and Insight for its business banking and wealth management operations, Harte said.

“Each business has an external measure… they are not an internal arbitrary set of measures,” he said. “The drive for the organisation for the last four years with [CEO Ralph Norris’] leadership has been squarely on the customer.”