Culture represents ‘the way things are done around here’ and is a product of shared basic assumptions that underpin behaviours, values and norms in an organisation. Consequently, every organisation has a unique culture that is derived from its people and practices. When culture is managed effectively it has a positive impact on key areas of an organisation’s internal operations and relationship with stakeholders. However, when it goes wrong the implications can negatively affect an organisation and its people for the long-term. Examples of such stories, particularly in the financial services industry, have dominated the press for the last decade.
As a result of this, regulators continue to sharpen their focus on the culture of financial services, developing new controls and checks on those organisations that fall short of the standards required. From the Financial Conduct Authority’s plans with the extension of the reach of the senior managers regime, to the recent Dear CEO and Dear Actuary letters in the Insurance sector, to the Financial reporting council’s reforms of the UK corporate governance code, pressure is building.
At KPMG, we have supported and reviewed the efforts to deliver culture change made so far by many financial services organisations, which have been considerable. In the past decade, we have worked on culture audits with businesses throughout the industry, talking to employees at every level of these organisations to build a detailed picture of where culture is becoming a positive force for good, and where there is still work to be done. In this paper, we share the insights from this work, drawing on the qualitative and quantitative data we have compiled from across the financial services industry, to set out our view of what organisations’ priorities should now be.
Having started the job, financial services organisations now have an opportunity to ensure that wholesale cultural transformation is embedded throughout every level of their businesses, uniting senior staff with more junior colleagues. What has become increasingly clear is that this will be a never-ending journey requiring sustained, consistent and focused effort.
The key findings from our research and analysis suggest that financial services organisations should now focus their attention on the following areas: