In a recent speech at the Personal Investment Management and Financial Advice Association Wealth of Diversity Conference in London, Andrew Bailey, Chief Executive of the FCA, focused on how fostering a culture of diversity and inclusion within your organisation can contribute to better outcomes and a more sustainable future for the financial services industry.
Mr Bailey highlighted that the regulator looks at four drivers of behaviour when it comes to identifying culture at work:
- A firm’s purpose
- Approach to rewarding and managing people
- Governance arrangements
It’s a very constructive starting point and highlights the ways in which organisations and their leadership teams focus on their culture and what this means to their employees, their customers and their stakeholders. Whilst the regulator is not there to be prescriptive around how financial services firms define and measure culture, the four drivers that have been identified give some clues into where they will focus their attentions, particularly under the Senior Managers & Certification Regime through the Conduct Rules.
Can you honestly state that your firm has a purpose and a culture that sets an example within the financial services market? Do you best serve your customers’ interests or are you an organisation that puts profits before service? Defining your purpose is not an easy thing to do and then you have to look at how your purpose becomes embedded throughout the firm; this is where leadership is so integral.
A positive and forward-thinking culture is open and allows staff to have a voice and be able to speak-up and contribute. It requires support from the top down where leaders set examples of good behaviours and leadership teams work collectively to embed those behaviours throughout the organisation.
Where SM&CR will change things is that it will now hold individuals to account more and reduce groupthink. It will no longer be acceptable to sit back and say that you turned a blind eye to bad behaviour because of weak culture and governance.
It’s time to start defining your purpose and to make a list of the behaviours that will deliver a positive culture at work and a list of those that simply do not fit anymore. Here are some examples to get you started – which ones would you want to keep, and which ones would you want to expel from your organisation?
- Diversity and inclusion
- Open communication
- Profits before service
- Leading by example
- Ethical behaviour
- Silo building
- Excessive absenteeism
- Community engagement
- Work/ life balance
- Aggressive leadership
- Transformational leadership
- Clock watching
- Individual favouritism
The FCA will want to see that your culture protects the interests of your customers and the way in which you operate. Ultimately, your employees and your customers will judge whether you are getting it right, so make sure you listen to them.