What I examine when a bank changes how it pays and organises people

I design incentive plans by asking what they will make someone do on a busy afternoon, then testing the answer with the people who investigate misconduct. In a bank, the plans that matter most for conduct are often the smallest: branch, contact-centre, collections and mortgage origination plans paying modest amounts to thousands of people. The federal banking agencies have long expected incentive arrangements to balance risk and reward, to be compatible with effective controls and to be overseen by the board. I treat those expectations as design requirements rather than review criteria. At Callowmere every customer-facing plan carries a conduct-risk signature, a description of the behaviour it could encourage and the measure we will use to see whether it does. For senior risk-takers I work with the chief risk officer on deferral, risk modifiers and recovery terms. I do not own the risk judgement. I own making sure it is built in before the plan is issued.

I treat culture in a bank merger as a set of operating decisions rather than a values exercise: who can approve what, how branches are scheduled, how people are paid and promoted, and which titles mean the same thing in both banks. At Kelverdine and Callowmere, a relationship manager carried different lending authority, a branch manager supervised different numbers of people and a team incentive meant something only one bank understood. I map those differences early, decide with business leaders which practice survives and publish the decisions, including those where the acquired bank's way was kept. I also watch the measures that reveal translation problems: escalations from acquired managers, time to fill roles in acquired regions and the themes in exit interviews. Having been on the acquired side in 1999, I pay close attention to what people are told, by whom and in what order.

A bank's board and supervisors depend on the people in its control roles: the chief risk officer, chief audit executive, chief compliance officer, Bank Secrecy Act officer, treasurer and the heads of credit review and model risk. I run succession for those roles on evidence rather than opinion. A successor counts as ready when they have done a substantial part of the job, through acting cover, leading an examination response or presenting to a board committee, and the record says when. I work with the chief audit executive and chief risk officer on rotation rules that develop people without compromising independence. Our risk committee reviews control-role succession and our compensation committee reviews executive succession, and both see the gaps as well as the names. The approach costs money and makes reports look worse for a while. I think boards should prefer that to a confident list nobody has tested.

Banks are changing the work done in branches and operations centres faster than most people plans assume. I work on both sides of that change: consolidating branches with the notice customers, supervisors and employees are owed, and redesigning operations roles as automation removes processing work. I start from the work that will remain and the skills it needs, then decide how much of the change can be met through redeployment, retraining and normal attrition before any reduction. At Callowmere that meant moving 194 operations colleagues into fraud operations, client service and credit administration, and accepting two quarters of delayed savings to do it. In branches it meant a universal-banker model with clearer progression and fewer, better-paid roles. I am careful about the towns involved. An operations centre can be one of the largest employers in its community, and a board approving an automation case should see that alongside the saving.

I have prepared compensation committee materials at two listed banks, from 2011 to 2016 and since 2021, covering executive pay design, peer groups, say-on-pay disclosure, shareholder engagement and the annual risk review of incentive plans. I write for directors who need to see the decision, the alternatives and the objections, and I attach dissenting memos rather than summarising them away. I work alongside the committee's independent consultant without trying to replace that advice; the consultant serves the committee, and management's role is to supply accurate information and a clear recommendation. At Callowmere I helped the committee respond to a 68% say-on-pay vote by changing the long-term plan, extending recovery terms and rewriting the disclosure. I also report to the committee on pay equity analysis, the chief executive pay ratio and how incentive plans below executive level are performing against their conduct measures.