RBS 2008 Annual Report Download - page 4

3RBS Group Annual Report and Accounts 2008
Changing the way we work
To achieve its objectives, the company needs to change not
just the business we do but how we do business. That includes
our governance arrangements. The directors decided that a
restructured Board with fewer members would be better able
to engage in the restructuring process which the company will
undertake. As a result, a number of Non-Executive Directors
resigned from the Board in February 2009. I would like to thank
each of them for their service to the company. In particular, I wish
to acknowledge the contribution of Sir Tom McKillop who chaired
RBS through testing times with great dedication and integrity.
We will appoint a further three Non-Executive Directors in due
course.
Our people
Last year was also a period of great anxiety and uncertainty for
our employees. Despite this, the vast majority of them contributed
to a profitable year for their own businesses and they demonstrated
the commitment that will be needed to return the Group to good
health. Unfortunately, however, the uncertainty is not over and
many of our people will be affected by the steps we must take
to restore RBS to strength. My experience of leading businesses
through periods of significant change has taught me that
people are resilient and work best when they have certainty
over strategic direction, clarity about the role they are being
asked to play and feel engaged in pursuing shared objectives.
We have already begun to provide certainty and clarity over
strategy and management structures. My further commitments
to our people are that we will move as swiftly as possible where
change is required and that we will work to ensure that those
affected by change are the first to know about it.
We must also engage our people with a new employment
proposition which sets incentives that reward them for delivering
sustained and sustainable success.
Aligning remuneration with long-term shareholder value
In recognition of the crisis in global financial services and the
unprecedented losses incurred by the RBS Group in 2008 the
Remuneration Committee of the Board has been working to
bring about fundamental change to the way remuneration works
throughout the Group. There is an obvious need for very
significant change to compensation policies and practice
across the industry and we intend that RBS will be fully
engaged in the necessary process of change.
Our approach has sought to balance the reality of our current
losses at Group level with a need to offer a competitive remun-
eration package for teams and individuals that are performing
well and in a manner that is sustainable in the long-term.
Our customers and communities
Most of our businesses were profitable in 2008. That was
because they met their customers’ needs. A consistent hallmark
of RBS has been the ability to work with our customers and to
provide them with a high quality of service, whether they are
personal or corporate customers, be they in the UK, Ireland, the
USA or across continental Europe and Asia. RBS has frequently
led our peers in service quality league tables.
We are grateful for the support our customers gave us during
2008, when their faith in us might understandably have been
dented, and recognise that our plans will succeed only if we
continue to serve them well.
In every country where RBS operates, we do so within a
wider community. Our activities affect, and are affected by the
customers, governments, suppliers and other stakeholders with
which we interact. On joining the company, it was encouraging
to learn that we provide banking services to more small firms
than any other UK bank and that our flagship money advice
and financial education programme, MoneySense, has been
in place for many years. As an international company, we have
extended MoneySense to Ireland and the US. We support the
causes our staff care about and invest to improve the capacity
of community to generate wealth. These programmes are more
relevant than ever to the challenges that lie ahead.
We recognise that our reputation has been damaged by the
events of the last year. So, too, has the reputation of the banking
industry in countries across the globe. We are determined to
rebuild our reputation, and to demonstrate leadership in the
industry in this respect, partly through our core purpose of
business success, but also by playing a constructive and
responsible role in the communities in which we operate.
The way forward
I am confident that we can, must and will restore the RBS Group
to standalone financial strength. Last year was undeniably tough
and a worsening economic environment means that 2009 will
present significant challenges in all of our markets. The path to
recovery will be neither smooth nor straight. But we build on a
number of strengths: excellent businesses, talented people and,
above all, millions of loyal customers around the world who
recognise the quality of service that we provide. By doing our
best by them, in all of our enduring franchises around the world,
we will take the actions that will deliver once again sustainable
returns for our shareholders.
Philip Hampton
Chairman