The King is Dead, Long Live David Murray.

Well, that’s the mantra around the Commonwealth Bank as the new CEO, Ralph Norris, methodically and quite brutally tears apart the bank David Murray (the $28 million man) built over 14 or so years as CEO.

His management reshuffle yesterday was the latest step. Next week comes the complete dismantling of the Murray edifice of outsourcing, cost cutting, slash and burning staff numbers, upsetting and monstering staff, all with the aim of boosting returns and not worrying about the impact on customers.

The management reshuffle saw Murray favourite, Michael Katz quit the bank: either squeezed out by being given a job he didn’t want, or just told there was no room for the Murray supporter.

Stuart Grimshaw, another Murray favourite however was promoted to the underperforming premium banking business which was run by Mr Katz.

Grimshaw put himself forward as a contender for Murray’s job but at 44, has time on his side to replace Norris, if he can revitalise the premium banking business. Grimshaw rode the share market boom in wealth management very nicely.

Hugh Harley, another Murray favourite (he worked in Murray’s CEO office area), has been winkled out of retail banking and sent to strategic development. Normally a backwater, but who knows these days.

Harley was an implementer of Murray’s slash and burn techniques in retail services and will not be missed by surviving executives and staff.

Norris has already identified two areas of weakness the bank allowed to happen under Murray’s leadership (without actually naming the former CEO). These were low levels of customer satisfaction and more low morale levels in customer service areas, like retail.

The other was the bank’s underperformance in handling the small and medium business banking area where Westpac and the ANZ have developed good products and reputations.

A third area that will become apparent next week in Norris’s new strategy is the reversal of the mad rush by Murray and his managers to outsource every possible service.

There’s the technology outsourcing deal with EDS that is going to be wrapped up and IT will be brought in-house to give the CBA more control over its back end and to end poor quality service and try and improve the bank’s processes.

The EDS contract was one of David Murray’s big moves but has failed to deliver the savings and service levels expected. The move to push more operations work, processing etc to India and other low cost countries will be ended.

Poor staff morale will be taken seriously. Staff training in retail in particular will be stepped up and the rewards for good service will be paid monthly rather than at the end of the year and used like a stick to beat line employees.

But the bank will continue with the outsourcing of its cheque processing to Fiserv(all banks use this group now).

Consolidation of back office operations work in Melbourne (its cheaper than Sydney), disposal of surplus buildings in Sydney, Brisbane and other cities where back office work has been cut and more job losses through natural attrition, will be revealed.

The loss of the Ezi banking business with Woolworths could see between 150 and 200 jobs made redundant. The CBA is considering whether to move these people (based in Melbourne) to other jobs or make them redundant.

Peter Fray

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