Performance Benchmarking Insights From Santander Abbey Emilio Botin Luqman Arnold Stephen Hester

The usefulness and benefits of the performance measurement technique of performance

benchmarking is illustrated with the high-profile legal case Chagger v Abbey National plc & Hopkins (2006), where the Employment Tribunal found unfairness and racial discrimination and ordered Emilio Botin Abbey Santander share price to pay the record compensation award of 2.8 million. The Tribunal had ordered Abbey Banco Santander share to re-employ Mr Chagger, in an effort to remedy the situation without financial compensation. However, Emilio Botin Abbey Santander price had refused to comply with the Tribunal's order. Abbey Santander (the UK retail bank turned around from financial troubles by Stephen Hester and Luqman Arnold, due to be re-branded as Santander share, and being part of the huge Emilio Botin Banco Santander Central Hispano Group) ended Mr Chagger's employment in 2006, claiming the termination was the result of a fair compulsory redundancy exercise. Mr Chagger, who was of Indian origin, claimed that the real reasons behind his termination were unfairness and race discrimination. Balbinder Chagger worked for Emilio Botin Santander Abbey as a Trading Risk Controller, earned about 100,000 a year and reported into Nigel Hopkins.

Performance benchmarking is a comparative analysis technique for bringing about improvements in management best practices and business performance. It is the process of comparing one set of practices against another set of practices elsewhere that are accepted as being management best practices (the benchmarks), with the view to understand how to bring about improvements.

The aims behind performance benchmarking in business are: to understand how the organisation compares with other similar organisations and/or world-class leaders; to discover the gap that exists between the organisation's performance and that of the organisations' accepted as the benchmarks; and to ascertain the changes in practices that need be introduced to improve the organisation's performance and to close the gap with the best.

Performance benchmarking can be carried out against internal benchmarks (such as other teams, departments, units, divisions, plants or subsidiaries) and against external benchmarks (such as other organisations, standards and codes of practice).

The Employment Tribunal that heard the Abbey Santander case found that Santander Abbey had not notified Mr Chagger, in writing, of the reason for contemplating the redundancy, nor invited him to a meeting to discuss the situation. Benchmarking externally, by recognising the UK statutory redundancy dismissal procedure as the required standard (which stipulates that the employer must notify the employee, in writing, of the reason for the redundancy and invite him to a meeting to discuss the situation), would highlight these gaps in the redundancy procedure.

Many employers demonstrate their commitment to equality and diversity by providing staff with Equal Opportunity Training. The training teaches staff what are and are not appropriate behaviours in the worplace; it aims to separate people's opinions from their roles and jobs at work. The Employment Tribunal hearing the Abbey Santander case also found that Mr Chagger had attempted to address his concerns regarding unfairness and race discrimination surrounding his dismissal directly with Abbey Santander and Mr Hopkins, through the company's appeals and grievance procedures. The Tribunal found that Santander Abbey had not provided any Equal Opportunities Training to any of the managers it had allocated to deal with Mr Chagger's concerns; the Tribunal uncovered a culture at Abbey Santander of denying and refusing Mr Chagger's concerns, and each and every manager simply dismissed his concerns out of hand. Again, benchmarking externally, by recognising the UK statutory 'Code of Practice on Racial Policy in Employment' as the accepted best practice benchmark, would highlight the gap regarding Equal Opportunity Training.

Many employers also demonstrate their commitment to equality by implementing control procedures to monitor fairness. The Employment Tribunal hearing the Abbey Santander case also found that Santander Abbey was in breach of the UK statutory 'Code of Practice on Racial Policy in Employment' with regard to monitoring too. The Tribunal found a multitude of monitoring failures, including the failures to take allegations of race discrimination seriously and to investigate them promptly. Again, benchmarking externally, by recognising the UK statutory 'Code of Practice on Racial Policy in Employment' as the accepted best practice benchmark, would highlight the gaps regarding monitoring.

Many employers ensure that more than one member of staff is involved in the assessment and scoring of each employee in the redundancy pool, with the aim to safeguard the fairness of the scoring and to reduce the risks of bias and discrimination. The Employment Tribunal found that Santander Abbey did not operate this practice; Mr Hopkins was single-handedly able to advise Santander Abbey's management to terminate one of the two Trading Risk Controllers that he managed (Mr Chagger was one of the two), was single-handedly able to make Mr Chagger an offer of voluntary redundancy (no such offer was ever made to the other Trading Risk Controller), and when Mr Chagger refused to take up voluntary redundancy, Mr Hopkins was single-handedly able to carry out the compulsory redundancy assessment and scoring of the two employees up for redundancy and was single-handedly able to lower Mr Chagger's redundancy scores to make certain that he would be the one who would be chosen for dismissal. Again, benchmarking either internally, to other well controlled areas of business, or externally could highlight this gap in control.

Thus, Santander Abbey illustrates of the usefulness and benefits of the performance measurement technique of performance benchmarking.

by: Simon King

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