The Financial Conduct Authority (FCA) has published a discussion paper on driving purposeful cultures. The paper is a set of essays which present a range of views from industry leaders, professional bodies and culture experts to help firms embed purposeful cultures.
The paper makes the case for healthy purposeful cultures in firms, leading to good outcomes for their customers, employees and investors. The FCA describes purpose as what a firm and its employees is trying to achieve – the definition of what constitutes success.
Transforming culture in financial services is a priority for the FCA and should be for firms too. The FCA is tackling this in multiple ways, including making diversity and inclusion the norm and eliminating sexual harassment and other unhealthy practices from the workplace. But the regulator recognise that there are barriers to creating and maintaining healthy, purposeful cultures including fear of shareholders’ short-term profit expectations and fear of the regulator itself. The contributors to the paper set out how leaders in financial service might go about overcoming these barriers and embedding purpose in their organisation.
Jonathan Davidson, FCA Executive Director of Supervision – Retail and Authorisations, said:
‘The purpose of a firm sits at the heart of its business model, strategy and culture. Unhealthy cultures and purpose have been at the root cause of too many mis-selling and other conduct scandals in financial services. I want to see strong leadership creating purposeful cultures where it is safe to speak up and diversity is encouraged and listened to.
A healthy purposeful culture should lead to better outcomes for consumers and markets, and healthy and sustainable returns for shareholders. It should also lead to a healthier and less stressful environment for employees, and a reduction in increasingly concerning mental health issues.
‘However, culture transformation is difficult; even with strong leadership it takes time and consistency, but small changes can make a big difference. I hope that everyone who reads these essays will be inspired to take at least one idea back to their organisation to try for themselves and take a step towards creating more purposeful cultures in financial services.’
A firm’s individual purpose is their own responsibility and, as with culture, the FCA does not prescribe what this should be. However, there are common elements of a healthy culture:
- a meaningful purpose
- an inclusive environment where it is safe to speak up
- effective leadership and governance
- employees that have the necessary capabilities and are motivated by appropriate incentives