Lloyds to put 3,000 staff on notice, with 1,500 roles at risk

Lloyds Banking Group is preparing to warn thousands of employees that their jobs are at risk under a performance management overhaul, raising fresh fears of large-scale redundancies at Britain’s biggest retail bank.

The Financial Times reported that about 3,000 staff assessed as being in the weakest-performing 5% across the organisation will be told their roles are at risk. Roughly half of them are expected to lose their jobs unless their performance improves. The measure applies to employees from branch staff through to senior directors.

The shake-up comes little more than a year after Lloyds announced 1,600 job cuts in January 2023 as part of a branch restructuring programme.

The policy has drawn comparisons with the “rank and yank” model popularised by former General Electric chief executive Jack Welch, under which workers were ranked annually and the lowest-performing were removed.

According to the FT, Lloyds bosses will use data from a human resources software system to track performance and identify staff deemed to be underperforming. While the bank is not targeting a fixed number of redundancies, the move reflects concerns that too few employees are leaving voluntarily.

Unions reacted sharply. The BTU, which says it represents 17,000 Lloyds staff but is not formally recognised by the bank, accused the lender of seeking to “hound out” workers. “In Lloyds, it will simply become a numbers game and staff will be hounded out of the business. We’ve seen it before,” the union said in a statement.

Accord Union, which represents more than 21,000 employees at Lloyds and TSB, urged the bank to reassure staff that it would uphold established performance management processes.

Lloyds defended the changes as part of efforts to raise standards. “We are striving to embed a high-performance culture in the organisation,” a company spokesperson said. “To achieve this, and in line with wider industry practice, we continuously look for ways to help our colleagues perform at their best.”

The spokesperson acknowledged that “change can be uncomfortable” but insisted the bank was focused on growth and customer service.

The shake-up underscores the scrutiny facing UK banks over their workforce strategies. NatWest and Barclays have both accelerated branch closures and offshoring to reduce costs, while HSBC announced last year it would cut thousands of global roles.

For Lloyds, which employs more than 60,000 people, the changes risk souring relations with employees after a period of relative stability. The lender has said it is investing heavily in digital transformation and technology, including its expanding India hub.

The BTU has long argued that Lloyds’ approach to performance management has been overly rigid and risks demoralising staff. It has called on the bank to abandon forced rankings and return to negotiated performance frameworks.