Malaysian financial institutions should consider integrating professionalism into remuneration plans.
According to a new report released by the Asian Institute of Finance (AIF) entitled “Best Practices in Remuneration and Incentives across the Financial Services Industry in Malaysia”, professional standards and ethics are seen as being much less important than other factors such as improving profitability and rewarding competence when it comes to corporate remuneration packages.
Despite the fact that it would certainly enhance long term customer satisfaction, the AIF report findings suggest that the main challenge to integrating professionalism in remuneration and incentives plans is the difficulty in identifying the metrics for professionalism and ethical conduct. The fact that the feasibility of integration and securing management support were not perceived as a challenge would suggest there is a need to foster an environment of professionalism and public trust in the financial services industry in Malaysia.
The research was carried out by conducting focus groups discussions with HR executives from selected organisations across Malaysia’s financial services sector. Only senior management executives directly involved in remuneration and incentive policies were invited to participate in the study.
Dr Raymond Madden, Chief Executive Officer of AIF, said “remuneration and incentives practices based purely on sales and profits may induce unethical employee behaviour and organisations need to take professional competency and ethics into consideration when determining individual discretionary bonuses and incentives programmes. Such a move, taken along with important industry-wide initiatives to raise standards of professionalism, such as the Financial Services Professional Board’s recently launched Code of Ethics for the financial services sector in Malaysia, would help in restoring public trust in our industry.”
“Not including, explicitly and clearly, expectations on consistent professional and ethical behaviour as a hurdle prior to qualifying for rewards sadly confirms an inability to learn from mistakes,” stated Puan Nora Manaf, Group Human Capital Chief Officer, Maybank. While Dato’ Haji Mohd Redza Shah Abdul Wahid, Chief Executive Officer of Bank Muamalat, commented that AIF had published “an excellent report that the industry can use for good governance and benchmarking.”