Posted: 27th June 2013

Newsletter readers asked for Huntswood’s comment on how firms can practically bring culture change to life in the heavily regulated FS environment.

All too often incidents of mis-selling, breakdowns in trust and poor practices have arisen because directors and managers have felt disconnected and unaware of what was really going on in certain areas of the business. In our industry now, one of the answers is that “culture change” is required to change this in the future. But is this just a buzz word or is there a practical way of achieving culture change?

As Clive Adamson, director of supervision at the FCA points out, the focus for many firms “has been on ensuring compliance with a set of rules rather than doing the right thing for customers. Looked at this way, the responsibility for ensuring the right outcomes for customers resides with everyone at the firm, led by senior management, and not something delegated to compliance or control functions.

The challenge for many firms is that culture is hard to change and requires dedicated and persistent focus over a number of years in order to embed different approaches and ways of behaving.”

In our experience, “culture change” is not intangible and a term simply to be banded around. We know, from all our work, in practice, which levers to pull in major financial services firms to move towards, realise and live the right culture.

We work with senior teams across UK financial services to address culture change. In so doing, we get employees at every level involved in the change to bring about a real shift in culture. Central to our work is redefining the firm’s vision and values, reviewing processes and recruitment, systems and procedures and seeking ideas from all parts of the company. We then support the firm to act on the best ideas and bring them to fruition.

Throughout our engagements with firms, senior teams and their managers involve, motivate and communicate with their people using the “head, heart and hands” principle:

Head: “I understand what we’re aiming to do”

Heart: “I’m excited by what I hear. I want to be part of this”

Hands: “Give me the tools and support to do the job”

Looking back at firms that have embraced this ethic, the members of the senior management know what they want to collectively achieve. Then they empower and develop employees along the way to achieve that. They perform regular temperature checks and cascade briefings to confirm that staff feel more engaged and ultimately better equipped to look after customers in the way customers want to be treated. (We have volumes of effective strategies on how to find out how your customers want to be treated, but that is for another article.)

This approach is welcomed by the regulator. As Clive Adamson says, it takes years to change and embed a different culture, involving employees at the outset is the first step in making it happen. Of course, simply delegating culture change to one business unit is not an effective approach. In our experience, “setting the tone from the top” is one of those levers which has a direct impact on achieving long-term success in culture, or any, change.

Employees look to the CEO and her or his executive team for direction and consultation, communication and involvement. This high level involvement is vital if the business is serious about taking its people with it. Employee engagement therefore is the second vital ingredient to culture change. That is because those working at the ‘sharp end’ – talking to customers, using systems, experiencing complaints – are usually far more in touch with what really goes on in the business. They are willing to share ideas for improvement, if only they were asked.

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