Lloyds Banking Group is preparing to notify approximately 3,000 employees that their jobs are at risk due to underperformance, as part of a significant management restructuring led by CEO Charlie Nunn. This initiative entails a systematic performance ranking of the bank’s workforce, which includes 63,000 employees, with about 5% expected to be placed on performance improvement plans indicating potential job loss if necessary improvements are not made. It is anticipated that around 1,500 individuals might ultimately face dismissal.
Executives have turned to HR software to track staff progress, focusing on addressing what they perceive as low turnover rates among underperforming employees. Historically, Lloyds has experienced a lower attrition rate than the industry average, with less than 5% of its workforce leaving the company annually, compared to a 15% historical average.
This strategic shift comes as Nunn approaches the final year of a five-year plan aimed at diversifying income streams, transitioning more customers to digital banking, and simplifying operations within the organization. A spokesperson for Lloyds emphasized that the job cuts are part of a broader effort to foster a high-performance culture within the organization. The spokesperson indicated that the company is committed to building skilled teams capable of delivering exceptional customer outcomes and acknowledged the discomfort that change can bring.
Ged Nichols, general secretary of the Accord union representing Lloyds employees, noted that the union has yet to receive reports of managers being instructed to rank staff performance. He mentioned an increased emphasis on performance management this year, with more structured support plans introduced to assist employees struggling to meet their objectives. Nichols reaffirmed the union’s commitment to supporting members throughout this transition and urged the bank to ensure integrity in its performance management processes, including the rights for employees to receive union support.
Lloyds, which encompasses the Halifax and Bank of Scotland brands, has a history of conducting significant job cuts, a trend that appears to be rising under Nunn’s leadership. Earlier announcements in January revealed plans to eliminate 1,600 roles from its branch network, coming on the heels of a decision to cut 3,000 positions across the organization, including those in middle management. Although Lloyds stated that it was creating thousands of new roles as part of its shift toward digital banking and asset management, concerns about potential site closures and further job cuts linger as the bank has started allowing customers to use any of its branches, regardless of their banking affiliation.
In tandem with these internal changes, Nunn is also preparing the bank for a substantial compensation payout related to the car finance commission scandal, which has been an ongoing issue since 2007. Lloyds has already set aside £1.2 billion to address potential claims arising from this controversy.
Following these developments, Lloyds shares experienced a nearly 1% increase on Thursday morning, indicating a positive market response to the announcement of management changes, which were first reported by the Financial Times.
