FCA ‘right culture’

Is there a ‘right’ culture in financial services? 

In March 2018* the FCA published a series of essays to stimulate debate on transforming culture in the sector. One of the questions they posed was, given the industry’s diversity, can there be a ‘right’ culture in financial services?

We get asked this a lot in our work auditing and developing organisations’ cultures. More often than not, on paper the culture sounds fine yet the organisation has performance and cultural issues. Get under the skin and we frequently find that the ‘right’ desired culture is not the reality. Making the desired culture into reality, having it live and breathe is proving to be a tough challenge.

What is the ‘right’ culture?

If you asked most people there would probably be a consensus on what makes up the ‘right’ culture:

  • putting customers first and doing the right thing for customers
  • organisational values that are lived and breathed
  • a remuneration policy that recognises and rewards the right behaviours
  • a workforce that collaborates and innovates to bring about the desired outcomes

Most organisations will have some or all the above in their intent and design. Why wouldn’t you – it’s the right thing to do and the benefits are well documented.

“Companies with high employee engagement scores had twice the customer loyalty (repeat purchases, recommendations to friends) than companies with average employee engagement levels.”
Source: Are They Really ‘On the Job’? Pont

Understanding the unwritten rules

One of the main issues we find is that there are the ‘written rules’ – what we should think, do or say.

And then there are the ‘unwritten rules’ AKA how things really get done around here. The underlying beliefs that drive the attitudes and behaviours which are frequently at odds with the stated organisational values, for example:

Values Unwritten rules

Reliable

Don’t upset anyone

Straightforward

Don’t rock the boat or you may be asked to leave

Passionate

Intellect is king

Forward-thinking

Demonstrate that you know the detail

Insightful

Hitting the sales numbers is ultimately all that matters

Understanding the unwritten rules is key to knowing how to change attitudes and behaviours in a way which sticks.

Organisations are made up of people and people are amazingly creative at finding new and creative ways of ‘getting round the system’. This may not be anything sinister and will be driven by the pressures they are under and the need to achieve results. In that sense you could say they are simply being innovative, resourceful and resilient! Qualities in great demand currently.

Over time (sometimes several years) unwritten rules develop. After a while employees (including leaders) become unconscious of them and they become the norm.

Unless the unwritten rules are identified, made visible and explored through dialogue, any new cultural initiatives will get bogged down by the status quo. There needs to be a mindset shift before progress can be made.

Let’s take a look again at those components of a ‘right’ culture, and see how easy it is for the unwritten rules to influence the end goals:

  • Putting customers first: are customers really at the heart or are staff more focused on keeping their boss happy? How easy it for customers to interact with us? Is resolving customer issues valued as a top priority or do internal deadlines actually take precedent? Does everyone across the organisation understand their relation to and impact on the customer?
  • Organisational values living and breathing: which values are truly lived and which are ‘dormant’ and therefore susceptible for becoming an unwritten rule? Do the values work for all stakeholders, from employees to customers? Are they used to help drive decision making?
  • A remuneration policy that recognises and rewards the right behaviours: does it take into account not just ‘hard’ performance measures and more specifically money, but softer behavioural and value-driven measures?
  • A workforce that collaborates and innovates: is innovation really valued or is the unwritten rule more along the lines of ‘don’t put your head above the parapet’? Are staff really empowered to provide great service? Do they understand how to deliver the values in their day to day working lives?

Whether it’s rewarding financial success no matter the impact or means, or employees not feeling they can speak to power when they see behaviour that contradicts the values, unwritten rules can damage the best of intents.

Feeding back to an organisation its unwritten rules can be cathartic.

There may initially be emotions ranging from relief to denial. Clients often say ‘you nailed it’ – they feel seen, warts and all.

This greater awareness leads to acceptance and at that point it is much easier to really make progress in changing the culture. Employees will feel more confident and optimistic that the organisation can transform through knowing what the problems are and crucially knowing that they have been shared with everyone.

However, watch out for the blame game at this point. The temptation to point the finger may be strong, particularly if there has been a blame aspect to the culture so far – old habits die hard. The stance has to be that we now have a collective opportunity to take responsibility and press the reset button – a behavioural amnesty if you like. It takes time to unlearn old habits and ways of being, so a balance of patience, support and momentum needs to be struck by leaders.

The next stage of culture change should follow soon after this to capitalise on the ‘unfreeze’ window that is open. The diagnostic is critical to seeing things for what they are, but it is only the first part of a planned culture development programme. Letting employees know this and involving them in its design really helps build confidence in leadership’s seriousness of intent.

If you want to truly understand what is holding your organisation back from encouraging the ‘right’ culture, then speak to us about a culture audit and start revealing the true potential of your organisation.

*In March 2018 the FCA published a series of essays written by thought leading academics, industry leaders, international regulators and change practitioners. The essays were intended to provide a basis for stimulating further debate on transforming culture in the sector.
The publication provided a wealth of actionable insights to help leaders and practitioners consider how to affect change in their organisations:

  • using behavioural science to guide incentives and cultural change
  • looking beyond the role of leadership in effecting change
  • applying strategic focus to the continuous process for adapting culture
  • fostering environments of trust to encourage openness and learning
  • applying a systems perspective in assessing both internal culture and external influencers

Image: Lauren Peng, unsplash.com

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