Lloyds Banking Group is embarking on a significant overhaul of its staff performance management system, a move that could potentially affect thousands of employees, according to a report by the Financial Times (FT). The initiative is part of a broader strategy from CEO Charlie Nunn aimed at enhancing efficiency and diversifying income streams within the bank.
The plan includes a comprehensive performance assessment for Lloyds’ workforce of 63,000 employees, with the bottom 5% facing potential dismissal if they do not meet specific improvement targets. So far, discussions during a recent executive committee meeting indicate that approximately 3,000 positions may be at risk, with estimates suggesting that around half of these employees could ultimately lose their jobs.
Nunn’s strategy is not merely about cost-cutting; it also seeks to instill a high-performance culture within the organization. To this end, Lloyds leadership plans to leverage data from the HR software Workday to monitor employee performance and address the notably low turnover rates currently plaguing the bank.
Lloyds has articulated its commitment to transforming its business, stating they aspire to embed a high-performance culture. The bank emphasized that while change can be uncomfortable, there are significant opportunities ahead that align with their growth ambitions and dedication to exceptional customer experiences.
Managers have begun receiving instructions to evaluate staff performance, with underperformers entering structured support programs that resemble traditional performance-improvement plans. These programs will provide coaching, and for those failing to meet the required standards, dismissal is a possibility.
Sharon Doherty, the chief people and places officer at Lloyds, highlighted the importance of increasing turnover among lower-performing employees. The bank’s current annual turnover rate sits at a low 5%, starkly contrasting with an historical average of around 15%. Doherty pointed out that high-performing organizations often review their bottom 5% of employees, with about half departing as a result, a practice that Lloyds aims to adopt.
In addition to the workforce changes, Lloyds has also announced plans to close 136 branches across the UK between May 2025 and March 2026. This decision reflects a broader industry trend towards digital banking, as evidenced by a marked decline in in-branch transactions. Notably, transactions at the branches slated for closure have plummeted by 48% over the last five years, with a staggering 10 million fewer visits recorded in 2024 compared to the previous year.
Overall, these developments signal a major restructuring within Lloyds Banking Group as it seeks to adapt to changing market conditions and improve overall performance.
