Some organisations struggle to embed their corporate culture and values. For others, their values become a real source of competitive advantage.
Firms whose culture and values are rated highly by employees have one thing in common: they consistently live their values. They ‘walk the talk’ or, to paraphrase Gandhi, “are the change they wish to see in the world”.
In the eyes of any of the major regulators, embedding a positive culture is key to ensuring fair outcomes and fostering the trust of consumers.
“That’s not a radically new idea”, I hear you say? Well, you’d be right there. What is new, however, is the increasing realisation that compliance with regulatory principles – such as the Senior Managers and Certification Regime (SM&CR) – is as much about culture as it is about documenting responsibility maps and abiding by conduct rules.
Some of the most influential organisations in the world have cultures that are consistently highly rated by their employees. Notwithstanding some of the more ‘quirky’ practices adopted by some firms (slides from floor to floor, rooftop meetings, unlimited vacations), digging deeper we can find that what truly makes these companies special is how they live their values. We identified some clear best practice themes:
“Made by us”
The values and mission of the organisation express their uniqueness.
The company’s values and mission are consistently demonstrated across the leadership population.
“A call to action”
Employees contract to join a higher purpose in which people feel they can really make a difference.
“Belief in our people”
There needs to be a clear recognition across the business that it is the firm’s people that set it apart.
Values can be game changers for regulated firms, differentiating them in competitive fields where making a splash can be difficult.
Organisations can differentiate themselves by shunning the “boring and basic” values chosen by the majority of businesses nowadays. Values such as integrity, respect and trust should already be held by all organisations. The most highly rated firms go a step further, with values that encourage their people to push the boundaries, experiment and explore:
- Twitter – “Defend and respect the user’s voice”
- South West Airlines – “Warrior spirit, servant’s heart”
- Google – (Until recently) “Don’t be evil”
- Huntswood – “Driven, dependable, collaborative” (we couldn’t resist adding that in, could we?)
Creating an open culture and fostering dialogue
Some of the world’s biggest businesses, including Google and Facebook, encourage employees to regularly interact with CEOs, founders and other “high-ranking” personnel, with these individuals often taking to the office floor in order to engage with those on the frontline. A truly positive internal culture is one that is customer- and employee-centric and one that sees both these parties as important voices in the Boardroom.
The people within an organisation who can create a bridge between the leaders and the wider organisation are the middle / senior leadership teams. They have access to the heads of the organisation and are in constant communication with their teams, while also being at the level to feel the tangible impacts of the company culture.
The FCA has recently taken a more proactive stance in highlighting mental health within the workplace. In a webinar published in February 2019, the regulator encouraged firms to create a “speak up, listen up” culture within the workplace, in which “psychological safety” is paramount. Employees should be working in an environment in which they feel safe to share ideas and speak up if issues are identified.
Naturally, senior managers will play a large part in fostering this culture. Research cited by the FCA claims that “leaders must acknowledge their status and actively recognise how the power of their words and actions can influence and support an environment of psychological safety and collaboration”. This is where the SM&CR will have tremendous effect.
Are we enabling a positive culture?
The questions leaders at all levels need to ask themselves are:
- What are we doing to encourage the culture we want?
- What do we need to take accountability for?
- What’s being communicated throughout the company and what’s not?
- What behaviours are being rewarded, and are these the right ones?
- How much time is spent “agitating” rather than being productive?
- Do we really have clear and inspiring values? Are they being implemented?
Culture can sometimes feel like something set in stone, especially if those seeking to change it are too-often shot down. If this is something you face within your organisation, you might first need to consider whether there is a different way to make your voice heard. For example, if your feedback is normally negative or judgemental, try to instead suggest ways that the outcome of a decision could be changed, while still being supportive of the overall goal.
Changing a culture is undoubtedly a confusing task and it will take patience. But it is possible. And it is worth it.
Investing in culture in an SM&CR world
The FCA is continuing to address conduct issues arising from failures in internal cultures. All solo-regulated firms will have to comply with the requirements of the SM&CR by the end of this year. The regime aims to see firms across financial services foster a culture where conduct and fair customer outcomes are thought of as tantamount to business success.
The regulator acknowledges that the culture of an organisation is a major determiner of compliance. It expects firms to set extremely high standards for their own actions and those of every employee within the organisation. This approach is the main reason customers, shareholders, business partners and the general public will place their trust in the firm.
Every authorised organisation will need to encourage robust discussion and challenge in relation to the decisions made internally. Employees must feel that they are able to ask questions, offer their own opinions and air views that differ from those of their senior managers.
The regime is a massive step in the right direction towards a world of consistent good governance, secure markets and better customer outcomes. While some have come to see regulation as an added burden, SM&CR’s complex requirements are really opportunities for firms to revisit some aspects of their business and get creative about encouraging a culture, at all levels, that works for the firm, their clients and the marketplace as a whole.