Why championing culture will benefit customers

On 7^th March 2016, the Senior Managers and Certification Regime will come into force, introducing specific responsibilities and conduct rules with the aim of raising standards in banking. The corresponding framework has been broken down by the FCA into three key areas; senior managers (focusing on key individuals and roles that could pose a risk to staff and customers), certification (requiring certification from firms to the FCA that individuals are meeting expected levels of standard) and conduct (ensuring that these standards are applying to all staff within the firm).

Institutions which fail to prepare and train individuals appropriately to meet new standards could face punitive measures should misconduct arise. With this in mind, and given the timeframes involved, many organisations are concerned over the perceived levels of work that need to be done before March next year.

In order to embrace and best prepare for the regulations, we’d advise organisations to consider the following:

1. Driving clarity and alignment from the Executive Committee

In the absence of a ‘common standard’ between organisations, it’s imperative that the Executive Committee (ExCo) agrees and has clarity on what the organisation’s approach is, including the core components needed to achieve compliance. Many firms are now looking to their peers for guidance and to establish a common approach, something particularly true of overseas banks with a UK presence, which have the same level of accountability as UK peers but lack the resources to take a truly strategic approach to implementation.

While keeping an eye on peers is advisable, organisations need think about how far they want to implement the framework, and how deeply organisational culture needs to change. The ExCo should consider spending time as a team agreeing a high level plan of action, how this should be executed and what the communications strategy to stakeholders should look like.

2. Developing clear lines of responsibility and structure

To be competitive, organisations need to be agile. They all have ambitious targets and structural fluidity is imperative to enable the reallocation of resources to meet these. Nevertheless, the framework wants greater sight of who has responsibility for which business processes, meaning that organisations have a tough balance to strike between flexibility and accountability.

Organisations wanting to meet the basic requirements of the framework can do so. However, this presents a good opportunity for ambitious businesses to tie up loose ends and create an integrated model for structure, accountability and culture, which is far more sustainable.

3. How leadership communicates the change

The financial services sector has a legacy culture which invites enthusiasm for products and data, but the new framework asks leaders to get serious about culture, values and behaviour. At the same time, the relatively loose structure of the framework places a greater reliance on managers’ judgement to implement it as far as they feel necessary.

For leaders to behave appropriately, it is imperative businesses support them to in their roles and help ensure they exhibit the right behaviours. Again, this can be a complex balancing act, since leaders will need to communicate what is expected from others while keeping in mind the commercial and strategic goals of the organisation and actively managing the fear of doing something wrong, which may be increased by the regulation. This additional pressure – and the possible reduction in activity as a result – has been a major criticism of the regime, and one which has still not been fully dealt with.

Investing in leadership and communication also sends a signal that the organisation is taking change seriously and that this starts at the top. This clear statement of intent will encourage others in the organisation to follow suit.

4. Assessing their people to ensure fit

Organisations should also make the connection between the types of roles and accountabilities expected of employees and their expected standards of behaviour. Without this understanding, they will struggle to get the right people in place, those who will uphold the regulation and desired business values.

Organisations can fall down in trying to define one correct employee personality type for their businesses. Nevertheless, businesses depend on a number of different functions working effectively, and organisations need to bear in mind that different roles will suit different people. Some roles will allow for some deviation, while others require strict direction.

5. Rewarding the right behaviours

Organisations should look to audit reward to see how desired behaviour and current conduct measure up to each other in light of current mechanisms. Looking at all the levels of reward will really embed the spirit of the new legislation – past just tick box compliance.

Organisations should also consider the link between reward and the types of people that are attracted to the industry. Many people are attracted to the industry because it pays a lot of money. Therefore having a clear total reward position is just as important as ensuring people are screened for suitability at the point of recruitment.

6. Identifying, measuring and changing culture

There is a measurement culture within FS sector organisations which they need to apply to culture.

Organisations need to agree metrics to assess current culture so that they can see the steps that need to be taken to achieve their desired or target culture. Fundamentally, culture eats strategy for breakfast. If organisations foster a culture of freedom and creativity, employees will find a way of operating productively within the framework.

Why culture correlates with customer experience

Finally, organisations can spend an infinite amount on marketing and branding, before obliterating this positive impression by providing a bad customer or even employee experience. While the new regime may focus on changing the culture within FS organisations, businesses should remember that this is with the over-arching aim of improving the customer experience. The key question for organisations to consider is whether they want to simply comply and tick the box or truly be value and customer led. One route is easy, one is difficult. In my opinion, when it comes to future survival or even success, one will survive and one will not.