“Good corporate governance practice is an important ingredient in creating and sustaining shareholder value, and ensuring that behaviour is ethical, legal and transparent.”
Barclays Chairman Marcus Agius. Extract from Barclay’s website.
Governance, the financial and strategic leadership of an organisation, appears to have fundamentally failed here. Either the Board knew and participated in the manipulation of the Libor rate or they didn’t know. Whichever way you look at it they have to be culpable, otherwise why bother.
Calls for culture change in the banks is the cry – more so now, today, than ever. Yet – we have all known that despite being shafted by a greedy, self serving, collusive culture in the banking industry, there is still an arrogance and financial dissonance between the few and the many. The dissonance must also exist within the banks themselves – between the people delivering services and those who are the “players”. There doesn’t appear to be any humility, sharing of lessons learned or evidence of real commitment to becoming more principled as an industry. I’m assuming that we’re going to see a lot of interest in culture change following this latest public humiliation.
So culture – what is it? If , for example, financial motivations and the pursuit of financial wealth and status are the underlying drivers behind decision making – how does it compare to a place where ethical, legal and transparent behaviours are the principles used to guide decisions? Or, if pleasing and placating a demanding boss, as opposed to focussing on your customer’s needs – which is going to create the culture that brings about shared benefits?
Culture – the mystery of organisational life
Culture is often described as intangible, a sort of intuitive knowledge of how we do things, the written and unwritten rules. You can’t see it – but it’s there, oh yessir.
What are the real drivers that shape and influence how things get done in an organisation? Grand statements of values may talk about team work, courage, integrity – but when push comes to shove, people are expected to ensure they do what their boss demands of them – whatever that is.
Understanding your culture is a set of conversations, clarifying thoughts and assumptions, exploring how you work together, thinking about organisational behaviour with the same energy that is directed towards the creation of data integrity in your IT.
So why is it that it is more usual that organisations don’t look at their culture until there is problem or fundamental failure that forces them to consider the hungry culture? I wonder – do leaders know how they can manage culture and – should this be a key criterion for leadership and governance?
Managing your culture is quite simple – yes – if you take for example, the simple statement above in relation to governance and apply it through Barclay’s business and ask:
Is our behaviour ethical, legal and transparent? Do these principles permeate through everything we do; is everything we do aligned to these principles, and do we discuss what this means to us on an ongoing basis?
How to manage your culture
If you take each of these elements from the quote above and break them down you begin to make your culture tangible, touchable, you bring it into sharp focus and you make it something you can manage.
Ethical – understanding and defining concepts of what is right and wrong and translating them into day to day behaviours for each role and individual in the business, and evaluating key decisions against this.
Legal – there is a philosophical argument about whether the law is separate from morality – an argument we heard from many of the MP’s for example was that they had not broken the law. However you define it, if you are saying that you are going to behave in an ethical manner, you then bring this into your interpretation of the law.
Transparency – Opacity – it’s opposite – is to be discouraged. “Easily detected and seen through, free from pretence or deceit, readily understood, characterised by ready availability of relevant information”. Is how you do things?
The three are inextricably linked, mutually reinforcing mindsets and guiding principles that will shape a culture that is healthy, constructive and in the long term, adaptable and sustainable.
Culture isn’t a change programme, it’s an organisational dynamic, it’s as real as every other part of the organisation. I hope that the banks don’t just look to change their culture, but look to manage it with the same amount of effort and energy that they put into their management accounts, risk management frameworks and investment portfolios.
As a final thought the banks need to ensure that on their boards they include individuals who’s speciality is not banking, financial services, or even corporate life, but who’s businesses and lives are built around the principles of integrity and individuals who understand organisational behaviour. If you put more bankers into the pot, you’ll get more of the banking mindset.