If you would like to receive more of news and insights from our team sign up here.
Leaders and senior managers must be personally responsible for setting the cultural norms of their institutions
Speaking at the Monetary Authority of Singapore the Governor of the Bank of England, Mark Carney, highlighted the progress on financial reform which has been made since the recession as well as looking forward to the work which is still to come. He remarked that as a result of a concerted effort across the world the banking system is a very different place from that which went before.
According to Mark Carney the system is now safer, simpler and fairer but he cautions that “Just avoiding the repeat of past failures is not a recipe for success.” With an end-goal of building a financial system that can deliver strong, sustainable and balanced growth for all economies, Mark Carney now calls for future reforms with the end goal of creating a financial system which is founded on diversity, trust and openness.
It is the issue of trust which I would like to highlight here. Mark Carney commented on the importance of trust between institutions, investors and regulators across jurisdictions but he also drew attention to the fundamental importance of trust between the public and the finance system; a trust which has been severely tested and which goes on being tested as successive scandals come to light. So much so that “the succession of scandals mean it is simply untenable now to argue that the problem is one of a few bad apples. The issue is with the barrels in which they are stored.”
Mr Carney went on to say that “Leaders and senior managers must be personally responsible for setting the cultural norms of their institutions. But in some parts of the financial sector the link between seniority and accountability had become blurred and, in some cases, severed.”
This comment encapsulates the problems which beset not just financial institutions but all organisations in which the leadership profess one ideal and live another. It’s not enough to profess customer care if you then target employees with goals which can only be met if the rules are broken. It’s not enough to boast about employee welfare if you then impose a work/life balance which leaves employees exhausted and on the verge of breakdown. And it certainly isn’t enough if the culture and the values which you openly proclaim are mere shadows of the reality of daily life.
What causes the divergence, this disconnect between declared values and reality? Well just as no two organisations are the same, so there is no one single answer. But my experience tells me that there are a few common factors including:
The common factor for these leadership types and more is that these people shouldn’t be in a position of leadership at all but when the organisational culture is such that it accepts toxic practices then it will attract those who fall far short of exemplary leadership. The solution is a complete reappraisal of the culture, moving from one of take what you can get short term profiteering and towards one which embraces the ideals of a culture of care, co-creation and long term growth. As Mark Carney says, financial penalties alone are not sufficient to change cultures. Organisations, and in particular organisational leaders, have to step up to the challenge of building long term trust which is founded on good practices. Only then will confidence truly be restored.