September 24, 2018 / 3:57 PM / a month ago

INTERVIEW: Banks can strengthen culture with small steps and executive patience –UK policy director

LONDON/NEWYORK (Thomson Reuters Regulatory Intelligence) - Listening to employees and taking small steps to address their concerns can over time do much to improve an organization’s internal culture, a reality that many in senior management might fail to appreciate, said a director of the UK’s Banking Standards Board.

Workers cross London Bridge, with Tower Bridge seen behind, during the morning rush hour in London September 30, 2011.

In an interview with Regulatory Intelligence, Mikael Down, director of policy and analysis at the BSB, said that when it comes to reforming culture, boards and senior executives can be too eager for results from changes or policies aimed at addressing perceived problems.

“People in senior positions want results very quickly,” said Down. “Sometimes it’s a case of having to be a little bit patient, and take regular feedback and respond to small practical things.”

Down will participate in a Thomson Reuters roundtable discussion on behavioral science and cultural reform in London on October 10. (Those interested in attending may inquire at this email address: lmsevents@tr.com.)

The BSB, an industry-led organization formed in the aftermath of the crisis, offers independent assessments of culture within firms and benchmarking across the UK financial sector.

In its most recent 2017 annual survey{here}, the group found that a prime reason for employees not speaking up when confronted with misconduct, or frustration with business practices, is a sense of futility—the concern that nothing will happen as a result of raising one’s hand – rather than fear of retaliation.

The BSB has found through focus groups that management can often achieve “quick wins” if they listen more closely to employee concerns and acted upon them, Down said. Such concerns were also not always focused on employee behavior, but often related to business practices and how the organization was dealing with customers.

Down pointed to examples where employees would say “there are things in the way we work in my team that are inefficient or frustrating, but every year I raise this and nothing ever happens.”

“That can be a very corrosive and very challenging feature of an organization’s culture,” said Down.

PATIENCE NEEDED IN CULTURAL CHANGE

The BSB, which shares its results with UK bank boards and executive management on a regular basis, also found that senior leaders, who have limited attention given their broad array of responsibilities, tended towards wanting quick results when dealing with cultural issues.

“You don’t have to change everything in one year,” said Down, a former Bank of England official who has participated in numerous international bank culture forums, including those sponsored by the New York Federal Reserve Bank.

“If you want to move things in a particular direction, if you do small things well and do those visibly . . . what it does is send a really powerful message that leadership is listening, and that could change culture over time,” he added.

BEHAVIORAL SCIENCE CAN ASSIST WITH DATA AND INTERVENTIONS

Behavioral science also had an important role to play in assisting management on culture issues by providing information they otherwise wouldn’t have about their organizations. Some large banks, such as RBS in London, have developed behavioral risk teams to help identify “blind spots” within the organization and devise action plans to mitigate perceived risks or behaviors that could lead to larger problems.

“Behavioral science can give senior leaders meaningful and actionable data to help them better understand their organization,” said Down.

“Where you identify things that are undesirable, the lessons from behavioral science can help design a set of interventions that can help change things,” he added.

(Henry Engler is a North American Regulatory Intelligence Editor for Thomson Reuters Regulatory Intelligence. He is a former financial industry compliance consultant and executive, and earlier served as a financial journalist with Reuters. Email Henry at henry.engler@thomsonreuters.com)

This article was produced by Thomson Reuters Regulatory Intelligence and initially posted on Sept 19. Regulatory Intelligence provides a single source for regulatory news, analysis, rules and developments, with global coverage of more than 400 regulators and exchanges. Follow Regulatory Intelligence compliance news on Twitter: @thomsonreuters

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