Monthly Archives: November 2014

Changing banking culture in 4 tangible steps

This past week five banks – HSBC, Royal Bank of Scotland, Swiss bank UBS and US banks JP Morgan Chase and Citibank – have been collectively fined £2bn by regulators in the UK and USA for traders’ attempts to manipulate foreign exchange rates. It is also expected Barclays will be fined in a separate investigation which is currently ongoing.

The UK’s Financial Conduct Authority (FCA) and US regulator, Commodity Futures Trading Commission (CFTC) issued the fines.

These fines come after a year-long investigation into claims that the foreign exchange market, where banks and other financial firms buy and sell currencies between one another, was being rigged.

Martin Wheatley from the FCA said the banks have “let down public trust” and “the individuals themselves will face consequences.”

 

It’s also been reported that several senior traders at the banks have been put on leave as the Serious Fraud Office prepares potential criminal charges against those behind the scheme.

This news comes after a long list of banking scandals and fines over the past couple of years. Perhaps what is shocking however, is that despite the uproar over the part banks played in the financial crisis and the fallout that has meant much closer scrutiny and governance –little seems to be stopping bankers behaving in similar risky ways as before the financial crisis.

 

An interview with former chancellor of the exchequer, MP Alistair Darling in 2011 by the BBC[i], three years after the financial crisis highlighted Mr Darling’s “absolute astonishment” he felt when he asked Britain’s largest banks to account for the risks contained in their businesses – and they were unable to come up with a coherent answer. The reporter hits the nail on the head when he says “this total lack of knowledge – couple with the hubris of profit-taking built on lax credit – went to the heart of the financial crisis.”

Banks seem to still remain in the dark as to where their People Risk and reputational risk lies.

There is a clear lack of transparency about how certain individuals behave or are likely to behave, seemingly allowing ‘rogue’ bankers to get away with partaking in activities which may be deemed acceptable by the long lasting banking culture, but are not correct nor morale and lead to mistakes ostensibly intentional or not.

This culture within banks is what is allowing such behaviour to continue to go unchecked and realistically, nothing will change unless the sector makes steps towards ridding itself of its so called ‘toxic culture’ of greed, excessive risk taking and bad decision making.

Moving forward

Steps can be made right now, the sector would benefit from having measures in place that provide them a level of visibility across their organisation and transparency of the exhibited behaviours and likely behaviours, the existing culture, the likeliness of individuals following process and whether a process itself is no longer correct.

Within the industry itself, there have been steps to improve banking standards and tighten up governance with increased regulation. The Banking Standards Review Council (BSRC) was also established this year and received the full backing of Mark Carney, governor of the Bank of England.

 

The BSRC aims to improve banking standards by identifying and encouraging good practice in learning, development and leadership, with a particular focus on behaviour and ethics. However with the global complexity of the banking sector this is expected to take years.

The FCA and PRA have also commissioned consultation papers for ‘accountability’ in banking, proposing senior managers must take further responsibility of their actions, but questions are being raised about how this can be implemented.

 

For things to change and for banks to win back consumer trust and repair damaged reputations all banks and bankers must first be open to change and make that clear. They must be determined to review and change their culture for the better and to gain a much better understanding of how their employees think, act and behave at work.

But first they must define for themselves what a better culture looks like, what behaviours they would like their staff to exhibit, what ‘correct’ process and procedure looks like and gaining buy-in across all levels of the organisation. What we don’t want to see now is banks becoming too risk averse, which we have seen in parts throughout the year, as risk plays a role in all business decisions and quite prominently in the banking industry, we need to establish a balance.

 

Steps banks can take right now:

1. Invest in a cultural survey which provides a ‘baseline’ of the current cultural norms and understand how individuals truly behave, conform to processes and understand their roles.

2. Review existing training, comms, processes to review if, how and where they match cultural aspirations.

3. Audit training and comms to understand why despite continual training, review, and refreshers, ‘it’s not sticking’, even if inroads to embedding a new culture have been identified and implemented.

4. Evaluate these findings and map interventions to each individual’s specific needs which help the senior management team and executives add a level of transparency and visibility around what their people know and understand and how they are likely to behave so they can PRE-EMPT problems such as this one arising in future.

 

Only with this knowledge and transparency will banks be able to make lasting changes to their working culture, find a balance between risk aversion and excessive risk taking and, become institutions we can be proud of.

 

[i] http://www.bbc.co.uk/news/business-29982178

Empowering Managers in the Health and Social Care Sector

What’s the problem?

Across the health and social care sector, just like the rest of UK industry, we have a problem. Our managers are under qualified and under trained. A recent cross-industry CMI survey indicates that 71% (150,000) UK managers are either given inadequate or no training at all, especially in the earlier stages of their role.

 

The cause (Cross Industry Data):

1. Only 4 days training are provided to managers each year

2. Employees are not trained prior to being appointed as managers

3. 34% of UK managers feel their employer could provide better training

4. 37% of UK managers feel current training is poor or non-existent

5. Employee engagement is directly linked to the number of training days provided

6. Poor engagement is effecting efficiency

7. A culture of short-termism is being implemented throughout various organisations and industries

8. Four-fifths of workers do not think their managers set a good moral example for employees

9. A fifth of those employees are unaware of any organisational values to start with

10. Managers feel as if they have ‘fallen’ into their roles.

 

Pressure is mounting across the board from the regulators, the executive, central government and of course the public. It’s therefore no wonder organisations are putting increased urgency on providing adequate, efficient and relevant training at all tiers of management, whilst trying to gain the most return for their investments in L&D.

 

How could you solve it?

Cognisco has partnered with CMI to produce Management *KNOW which sets out to tackle the issue for all UK managers in both the public and private sectors. The assessment, focuses on competencies that all managers should have and use, regardless of the industry they work in. We have developed the diagnostic tools in line with National Occupational Standards (NOS) in relation to key management competencies, with an approach CMI considers to be good management practice.

 

Our unique approach to employee assessment uncovers what an individual actually understands about how, when and why they should apply the knowledge (or training) they have been given (if they have been trained) in practical day-to-day terms.

 

Traditional methods of assessment and training can mean that even those who score highly on post-training assessments may well apply their recently acquired knowledge incorrectly when faced with a real life situation, indicating they have failed to transfer what they have learned in a workshop environment to the workplace.

 

Since 1998 and countless thousands of assessments, Cognsico are able to evidence that on average up to 30% of any workforce will unwittingly have a low enough level of understanding to present a risk, 20% will prove to be already highly competent and confident and should become your exemplars and the remaining 50% will require a mix of coaching and interventions.

 

What are the benefits?

-Rapidly and cost effectively uncover the urgent Learning & Development priorities within your management team.

– Focus Learning and Development spend where it’s really needed.

– Increase the efficiency and effectiveness of your existing training and learning resources.

– Uncover the previously unknown organisational strengths and areas for improvement within your management teams.

– Build a culture of transparency, openness to escalate problems and boost overall employee engagement.

– Identify training requirements and targeted interventions to guide managers to particular training that they actually need.

– Drive up management capability.

 

How do we do that?

Cognisco specialises in linking behaviour, attitude and knowledge together through a scenario based, situational judgement multi-response assessment. These assessments not only pinpoint what an individual does or does not understand, but measures their confidence within that situation which gives a good indication of how they are likely to act, work and behave.

It also identifies the “unconscious incompetent” – those who believe they are doing the right thing, when in fact the reverse could be true as well as those who are highly competent but may hesitate to act when called on to do so.

Each scenario is linked to a knowledge goal. Managers can then be directed to specific and relevant information or learning resources to help address the specific gap in their knowledge and understanding.

The data provide a concise training needs analysis, which means you can more accurately plan and budget for further training and development, which is now based on empirical evidence of the precise needs of each manager and the management team. It also provides a platform or framework for coaching and empowers individuals to self-develop. By using the Cognisco approach, organisations can uncover the true trends in management knowledge, understanding and confidence across the 15 topics all managers should be able to execute.

 

Our expert Occupational Psychologist consultants will work with you to:

– Rapidly and comprehensively assess your managers

– Provide your Senior Management Team with a results and recommendations report

Feed back and Coach your managers in a one to one session to help them understand how to address any gaps or weaknesses

Re-Assess your managers at an agreed time to evidence improvement

– Provide a results and recommendations round up presentation to enable you to plan for the future.

 

Where to start?

Most organisations will start with a pilot programme and based on the success to look to roll it out more widely. We’d be happy to discuss the best approach and option to suit your needs.

 

What are the costs?

We charge a fee per manager assessed and coached and another fee for providing the senior management reports and recommendations. We are sensitive to the budgetary pressures across the sector and have designed our approach and costs accordingly. We will be happy to provide you with a quotation on request.

Supporting Information:

You can find further details of Management *KNOW here: Management *KNOW: Perform & Engage

Who to contact?

Owen Ashby

Programme Lead

T: 01234 757520

M: 07955 605352

E: oashby@cognisco.com

Amanda Green

Principal Consultant

T: 01234 756080

M: 07525 911229

E: agreen@cognisco.com

3 profound root causes that derailed Tesco

After inflating accounts by over £260 million, and wiping more than £2.5 billion off its market value, the once darling of the high street, Tesco, is facing its worst crisis in its near on 100 year history.

Tesco has taken the necessary precautions you would expect, in agreeing that Chairman Sir Richard Broadbent should step down, suspending eight of their senior executive team, and identifying a ‘refresh’ programme on various activities, including the ongoing plan to hire over 20,000 new employees. Part of an attempt to express to shareholders that they are moving forward and making the appropriate changes perhaps? However, by doing this, they are no closer to uncovering the root causes of what instigated this in the first place and might be papering over some fairly deep cracks.

Ultimately, Tesco has been damaged by its culture, but this has evolved out of three very profound root causes.

 

1. The way we do things around here

Culture is not a light and fluffy concept existing only in the minds of the HR department, it is a living and breathing entity filtered throughout the entire company each and every day, via the way individuals behave, act and work. Culture is the driving force behind behaviour, which beats process every time. It is the approach and tolerance senior management have towards risk taking. In Tesco’s case ‘Creative Accounting’, which seeps its way down throughout the organisation, impacting all levels of management and frontline staff, and ultimately impacting customer service, brand reputation, share price and company value.

A crisis such as this one, manifests itself over a prolonged period, overlooked and unchecked by persons responsible, driving what may be believed as the ‘right’ behaviours throughout the organisation, when in fact, they are not. With key individuals overlooking the importance of embedding a culture of transparency, openness and honesty, integrity to suppliers and with the intention of delivering the best possible consumer experience, something Tesco has struggled to do.

Behind closed doors, Tesco need to be aware this is not a case of simply suspending staff and investing vast amounts into new ones, but how they manage this transition, evaluate and identify the root causes of what took this scenario beyond control. In this instance it is also about how Tesco define the new culture, get it embedded throughout the organisation and how execs and senior management exemplify it as second nature. This will then lead to better onboarding of new staff and getting them embedded into this culture.

 

2. Who am I

The emergence of the likes of Aldi & Lidl have slowly chipped away at Tesco by offering cheaper, honest alternatives and added value, with Waitrose at the other end of the scale who continue to drive a more exclusive retail experience for shoppers. Meanwhile, Tesco has lost its identity, in what seemed to be an attempt to be the retailer for everyman, a position which is now unclear and inapt.

In the end, Tesco, like all other retailers in their space, rely on consumer loyalty and trust. And when mistakes from individuals occur due to making the wrong decision, not behaving in the appropriate manner and or simply misunderstanding an aspect of their roles, breaking rules of fully optimized processes, which not occur just once, but multiple times over a prolonged period, send shockwaves through a company, damaging brand reputation and rocking its customer base.

Being able to identify and report on these exhibited behaviours, likely behaviours, current knowledge, understanding and confidence in decision making is therefore crucial.

Seemingly a very clear wake up call, if Tesco continue to be seen as a company that wants to ‘take over’, use somewhat shrewd tactics and flex their muscle in the various ways they do business, means long term sustainability will be increasingly difficult.

So…

The Tesco brand, like all others, is an output of the culture within. The conduct that has been deemed ‘acceptable’ for some time now has diminished the brand and consumers’ perception. Individuals within the firm must take responsibility for their actions and these long-lasting behaviours they have embedded throughout the organisation.

This, fundamentally, is a classic case of People Risk.

 

3. Human Behaviour and People Risk

Understanding the human behaviour behind decision making, measuring how individuals perform and understand their roles is a crucial challenge in mitigating similar issues going forward for Tesco. As human behaviour plays a significant role on the impact of brand reputation, consumer loyalty and share price.

Human behaviour is another output from the culture within the organisation, and sometimes individuals deviate from the expected norms that are put in place by the organisation. At other times there are behaviours that are deemed acceptable in the first place, yet after analysis, are in fact incorrect because the processes that are driving the behaviour need reviewing, along with why this was embedded in the first place.

What Tesco would have benefited from was to have an understanding of how individuals were likely to behave in a variety of situations. If they could have only identified the knowledge and skills gaps of their staff, the root cause, the potential risks could have been identified across the organisation before they became problems as significant as this one and in doing so, reduced their exposure to reputational risks.

 

What should Tesco do next?

Tesco can start making progress right away by asking themselves some basic questions such as “who are my customers?”, “what sort of employees do we want to employ?”, “what sort of organisational culture do we want to espouse?”, “are we listening to our staff on what could change?”.

Once they have answered these questions, and quite a few more, they need to start to create some interventions to embed the new vision of the organisation they want to be.  Starting from the top they need to demonstrate change by leading by example in that “this is how we do things around here”. They then need to filter these messages and interventions throughout the organisation.

But how do you know everyone has got the message? How do Tesco know everyone is behaving in the way the company wants them to?  Well, they need to measure it by gaining a picture of what employees across the organisation are thinking and how they are acting.  By measuring their level of understanding, their likely behaviour in different scenarios and how confident they are in making decisions, you will start to get a flavour of who has adopted the right behaviours and understanding of how to put these behaviours in place.

This will enable Tesco to then offer more targeted interventions to help people change and understand what is acceptable now in new world of Tesco. It’s about encouragement, saying to others what the right thing to do is and engage the right behaviour.

As the biggest mistake Tesco can make now is to assume that better processes will reduce their exposure to similar problems re-occurring. It is people’s understanding of the process and the likelihood of them following them, which will always pose the greatest risk and until you have the tools and evidence to understand and monitor, Tesco will remain exposed.

Therefore, Tesco may want to consider:

– Starting with a culture survey in order to get a ‘baseline’ of the current cultural norms and understand how people truly behave and understand their roles.

– Review existing training and comms to see if, how and where they match cultural aspirations.

– Audit training and comms to understand why despite continual training, review, and refreshers of a new culture seeming to be in line, ‘it’s’ not sticking.

 

Then Tesco can embed a continual process of reminder and review, which incrementally embeds the values and behaviours Tesco are looking for.

Tesco will value the use of a measure and metric which identifies where individuals will require intervention and helps the Senior Management team AND the Executives to add a level of transparency and visibility around what their people, know and understand and how they are likely to behave so that they can PRE-EMPT problems like this arising.

It’s not going to change overnight, but Tesco need to start somewhere.  And the sooner they do it, everyone, including the shareholders, consumers and employees will benefit from a new Tesco vision.

Every little helps – seriously.

How can Tesco rescue its brand reputation and restore customer loyalty?

After inflating accounts by over £260 million, and wiping more than £2.5 billion off its market value, Tesco has severely damaged its brand, eroded consumer trust and shareholder confidence. To add to its woes, the Serious Fraud Office has now launched an investigation into the company’s over stated profits.

Since news of the accounting scandal was broke, Tesco’s Chairman Sir Richard Broadbent has stepped down, eight of its senior executive team have been suspended and new CEO Dave Lewis appointed with his work clearly cut out to transform the company.

A change at the top is something you would expect from any large corporate in this situation. However, changing the leadership team won’t necessarily help them identify the root causes of the problems. Tesco appears to be no closer to revealing why the accounting scandal happened and might well be papering over some deep cracks.

A company in such a situation needs to uncover where its problems really lie, identify the root causes and then create a strategy to solve the issues in order to win back customer loyalty and regain market share.

 

‘The way we do things around here’

One of the biggest problems may lie with Tesco’s culture. Culture is not a light and fluffy concept existing only in the minds of the HR department; it is a living and breathing entity and it affects how individuals behave, act and work.

Organisational culture not only drives how people behave, but their attitude towards risk taking. In Tesco’s case, it appears that risk taking and ‘creative accounting’ at the top has impacted everyone from the management team and frontline staff, to the customers, suppliers and shareholders – eroding its reputation, share price and company value.

However, a crisis like this doesn’t happen overnight. It builds over a prolonged period in which certain behaviours are overlooked and unchecked by people responsible. When the ‘wrong’ behaviours are driven through an organisation and transparency, openness and honesty aren’t prized highly enough, then it will only be a matter of time before the outside world starts to notice.

The task for a company like Tesco now is not only to invest in new staff, but to define and build a different and better culture, where the right values and behaviours are embraced by everyone from senior management team to the online delivery staff – and customers and shareholders start to notice.

Who am I?

Another issue might be that Tesco seems to have lost its identity in recent years. In attempting to be everything to everyone it has perhaps diluted its customer proposition. Competition is also rife in retail. Aldi & Lidl, two of the UK’s fastest growing food retail chains have chipped away at Tesco’s customer base; whilst other retail chains like Waitrose are creating exclusive retail shopping experiences for customers.

Like all retailers, consumer loyalty and trust are key, but this trust can be eroded quickly with the realisation that a company has individuals in charge who make bad decisions or don’t behave with integrity. People naturally assume that if this kind of behaviour happens at the top of the company, it will also be unchecked elsewhere.

For companies like Tesco, being able to identify and document how people behave at work as well as their likely behaviours, current knowledge, understanding and confidence when making decisions is a critical part of ensuring the right workplace culture.

All brands are an output of the culture within. In this case, the conduct that has been deemed ‘acceptable’ for some time now has diminished the brand and consumers’ perceptions. In such a situation, individuals within the firm must take responsibility for their actions and these long-lasting behaviours they have embedded throughout the organisation.

 

Human behaviour and People Risk

Understanding the human behaviour behind decision making, measuring how individuals perform and understand their roles is a crucial challenge in mitigating People Risk in any company. Human behaviour plays a significant role on the impact of brand reputation, consumer loyalty and ultimately share price.

How people behave at work is a result of the organisational culture, and sometimes individuals deviate from the expected norms that are put in place by the organisation. At other times there are behaviours that are deemed acceptable at first, yet after analysis, are in fact incorrect because the processes driving the behaviour need reviewing, along with why this was embedded in the first place.

Would Tesco have benefited by understanding how individuals are likely to behave in a variety of situations? With this kind of knowledge and by being able to identify gaps in the knowledge and skills of their teams, it would have been easier for the company to pre-empt certain issues before they escalated into a crisis and in doing so, reduce exposure to reputational risk.

 

What should Tesco do next?

Any company in a crisis needs to go back to basics and re-evaluate its strategy and customer proposition. Questions to ask are, “who are my customers?”, “what sort of employees do we want to employ?”, “what sort of organisational culture do we want?” and “are we listening to our staff about how we could change?”

The next step would be to create interventions to embed a new company vision.  With a vision in place, senior management need to lead by example, communicating clearly that “this is how we do things around here” and these messages and interventions must be reaffirmed continually so everyone understands them.

Every employee must be clear about what the company expects from them – how they should work, how they should treat customers and the kinds of behaviours that are acceptable and those which are not. Companies need to measure this to understand what employees are thinking and how they are behaving at work.

By measuring people’s level of understanding of their jobs, their likely behaviour in different work scenarios and how confident they are in making decisions, it will soon by clear who has adopted the right behaviours and if there are still gaps.

With this knowledge, companies can offer more targeted interventions to close the skills gaps, help people change and understand what is accepted and what behaviours are acceptable. It’s about encouragement, saying to others what the right thing to do is and then taking measures to engage the right behaviour.

New processes and procedures are not enough to drive change, what is how well employees understand the processes and if they follow them.

To really drive cultural change, companies need tools that will measure and assess employee behaviour and risk. Without this, it will remain exposed to risk.

 

Tips to drive cultural change:

– Starting with a culture survey in order to get a ‘baseline’ of the current cultural norms and understand how people truly behave and understand their roles.

– Review existing training and comms to see if, how and where they match cultural aspirations.

– Audit training and comms to understand why despite continual training, review, and refreshers of a new culture seeming to be in line, ‘it’s’ not sticking.

 

With these steps in place, companies can then embed a continual process of reminder and review, which incrementally embeds the desired values and behaviours. The use of measures and metrics will also identify where individuals require intervention. This will provide the senior management team and the executives with insight into every individual and enable them to understand what their people, know and understand and how they are likely to behave so that they can pre-empt problems arising.

 

A company’s culture won’t change overnight, but needs to start somewhere and in Tesco’s case, there is no time to wait.

Mary Clarke is CEO of Cognisco, a company that specialises in the behavioural outputs of employee assessments that identify, pre-empt and mitigate People Risk.

An article for My Customer Magazine.

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