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Are financial services organisations committed to cultural change?

Author: Ian Arbuthnott

We have all seen the posters. We have all heard the presentations. But how far does the desire to embed a new, ethical way of working in banking really reach? Senior figures in both government and the regulators believe that the time is long overdue to re-establish behavioural norms. The industry cannot simply wait for its own culture to change.

Despite what we hear in strategy presentations, there is still a suspicion that the values and standards being created across the industry are purely a PR exercise. A huge chasm exists between corporate values and standards and the actual behaviours still demonstrated today in the front-line.Financial Conduct Authority

The firms’ key challenge is to drive a significant change in behaviour. Cultural change is the single, most difficult facet of management being faced by the [Financial Services] industry todayFinancial Conduct Authority

Despite the words and advertising campaigns about putting the needs of the customer first, delivering exceptional service and making sure that mis-selling will never happen again, customers are still wary of FS organisations. Across the industry there is still a widespread lack of customer trust and confidence which needs to be won back. Enforcing a low-risk, compliant culture would go some way to winning this trust back, but the burden in doing so should not simply reside within risk and compliance functions. This change in culture should also become integral amongst front-end, customer-facing employees.

Trust can be viewed as a multi-dimensional system that includes an organisation’s perceived capability to act out its declared intentions, as well as the perceived likelihood that the organisation will do what it has set out to do. Both capability and the latter component, an issue of benevolence, have been at fault in the financial services industry in recent times. But, despite tighter regulation and tighter governance, the issue of benevolence has seen little redress. In order to improve perceived benevolence, the issue of organisational culture must be faced head-on.

There may also exist a lack of understanding around organisational culture. A quick look to wikipedia reveals culture as ‘an integrated system of learned behaviour patterns which are characteristic of the members of a society.’ In the organisation, culture is the collective behaviour of the people within it, and the meaning that is attached to those behaviours.

We take from this that reputation and trust will only be restored through the actions they see, which are in turn governed by culture. Customers must notice a tangible improvement in the service they receive, the products they are given and the way in which they are treated by bank employees. Culture must change and to do this behaviours must change.

But are organisations dedicated to this change? There are a number of simple, key questions that you can ask yourself to ascertain your organisation’s commitment to the task. These questions are concerned with how organisations approach the issue of staff behaviours. How do they reward positive behaviour, and how do they manage out the negative?

  • Have you ever managed an employee out of the business for not exhibiting the correct behaviours, even if they deliver significant financial performance?
  • Do you promote individuals based on behavioural characteristics?
  • Can all employees clearly articulate a set of action-orientated business principles that guide behaviour?
  • Do manager’s look for and measure employee behaviour in accordance with a well-defined set of such principles?
  • Do your KPIs measure customer impact and cultural elements, as well as the ‘usual’ operational and functional measures?
  • Do you receive regular coaching, support and feedback on how you are behaving?

If the answers to the above questions are mostly negative, then it is likely that either cultural change is not high on your organisation's agenda, or that it is not being managed in an effective way.

In order to change culture, we must find a way to measure it before we try to shape it. But we at Unipart are often witness to a lack of understanding in organisations when it comes to the issues of measuring cultural change, and of how cultural change can be implemented and managed within the organisation. In our next blog in this series on financial services culture we will look at how business principles, the often-unwritten rules of culture, can be used to measure and shape organisational culture.

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