Lloyds Banking Group is set to implement an overhaul of its staff performance management, potentially impacting thousands of employees, reported the Financial Times (FT), citing sources.  

The initiative, aimed at improving efficiency and reducing costs, involves assessing the performance of its 63,000-strong workforce, with the lowest 5% facing possible dismissal if they fail to meet improvement targets. 

The restructuring plan, which was discussed at a recent executive committee meeting, places about 3,000 employees at risk.  

According to sources familiar with the situation, approximately half of these individuals could ultimately lose their jobs.  

The move is part of CEO Charlie Nunn’s broader strategy to cut costs and diversify the bank’s income streams. 

Lloyds leadership, including Nunn, will utilise data from the HR software Workday to track employee performance and address low turnover rates.  

It aims to foster a high-performance culture by identifying and managing underperformers more effectively. 

In a statement, Lloyds emphasised it was “transforming” its business and “striving to embed a high-performance culture”.  

“In line with wider industry practice, we continuously look for ways to help our colleagues perform at their best. We know change can be uncomfortable, but we are excited about the opportunities ahead as we propel forward to achieve our growth ambitions and delivering exceptional customer experiences,” the bank was quoted by the FT as saying. 

The bank has begun instructing managers to evaluate staff performance, with underperformers placed on structured support programmes akin to performance-improvement plans.  

These programmes involve coaching and, if necessary, dismissal for those who do not meet the required standards. 

Sharon Doherty, Lloyds’ chief people and places officer, highlighted the necessity of increasing turnover among the least performing employees.  

Currently, the bank’s annual turnover rate stands at a mere 5%, significantly lower than the historical average of around 15%.  

Doherty noted that high-performing organisations typically review their bottom 5% of employees, with about half leaving as a result, a practice Lloyds intends to adopt. 

In addition to these workforce changes, earlier this year, Lloyds announced plans to close 136 branches across the UK between May 2025 and March 2026.  

The decision reflects a shift towards digital banking, as evidenced by a substantial drop in in-branch transactions and increased use of the bank’s mobile app.  

Transactions at affected branches have decreased by 48% over the past five years, with 10 million fewer visits reported in 2024 compared to the previous year.