Creating and Embedding Cultural Change

On 29 September 2022, in a speech delivered at the Consumer Protection in Financial Services Summit, Sheldon Mills, Executive Director at the FCA, said:

Be in no doubt: [Consumer] Duty will be a significant shift in what we expect of firms. It means making lasting changes to culture and behaviour to consistently deliver good outcomes.¹

This emphasis on culture change posed a challenge for firms in not only how they define their culture, but also how they evidence it to inform this change.

A year on, Consumer Duty is in force and firms will be expected to show they have embedded the outcomes of the Duty in their culture, presenting both a challenge and, more importantly, an opportunity. Organisational culture is a complex, nuanced construct that cannot be neatly represented by a set of metrics, so firms will need to think holistically about how they demonstrate good customer outcomes are at the heart of their culture. In addition, this gives firms the opportunity to go beyond satisfying regulatory requirements and instead focus on striving for a strong, customer-focused culture, in which the desired outcomes will follow naturally.

The challenges of bias and context

At its heart, organisational culture is created in the interplay between individuals and their environment, the personal preferences of employees and the way the organisation wants them to behave. It is both explicit, in the stated purpose and values of the organisation, and implicit, in its governance, behaviours and, crucially, its leadership. This creates challenges for organisations as the breadth of available evidence is often widely dispersed, with different owners and in multiple formats. It is also, if done properly, incredibly labour intensive to collate, interpret and report all this information. As a result, many organisations rely primarily on employee sentiment, typically obtained from surveys, to track their culture. Whilst we do not dispute its value, looking at sentiment alone provides an overly simplistic, one-dimensional view that can often introduce bias through poor question design and limited methodology.

In its 2021 Staff Working Paper², the Bank of England highlighted the shortcomings of this approach. It proposed a list of ‘unobtrusive’ measures of organisational culture which do not rely on surveying employees. This was a welcomed perspective as it gave clear examples of outcomes-based evidence that firms could use to understand their culture. However, like surveying alone, only looking at outcomes data does not paint a complete picture. It lacks context and, crucially, misses the ‘why’. So, what is the solution?

Navigating the say-do gap

From our experience, conducting mature cultural assessment is not a simple task, and it certainly doesn’t fit into a pre-defined, out-of-the-box model. It often requires collaboration between multiple teams, each of whom have their own ideas, objectives, and reporting requirements. As a starting point, organisations need to have a clearly defined purpose and target culture to enable them to establish the right measures and indicators that will tell them how far from this target state they are and, critically, what they must do to close the gap.

When it comes to assessment, there certainly remains a place for employee research as it allows for an unparalleled understanding of how employees experience the organisation. We also know from research³, ⁴ that what people say they do can often be disparate from actual behaviour. This means that organisations must be smart about employee research to get to the heart of their culture. There should be consideration around the methodology that will drive the most value – while surveys are useful indicators, supplementing this with qualitative research will provide richer insight and help firms to avoid falling into the trap of regulatory tick-boxing. Assessment should also include a thorough audit of internal ‘indicators’ of culture (such as people policies) and available data sources that can offer an unobtrusive view of the inputs and outputs of culture.

The final challenge is bringing all this together to evidence how the organisation’s culture supports the delivery of good outcomes for customers and fundamentally, what needs to change to enable this. Firms will need to be pragmatic here, culture change takes time and a common pitfall is trying to change too much, too fast. The FCA will expect firms to be specific about which parts of their culture they need to change, so identifying one or two key traits to prioritise and always coming back to the question “how will this enable us to deliver good customer outcomes?” will ensure firms remain focused and set up for success.

Helping you solve the problem

Ipsos Karian & Box work with organisations across the financial sector, as well as other industries, to design cultural assessments that are grounded in best practice, informed by the industry, and that are considerate to their unique context. We provide recommendations on the right design and execution, as well as conduct the assessment and report the outcomes. We have a track record of producing focused reports (such as our annual work for the Irish Banking Culture Board) that are presented to regulators and can provide advisory and tactical support around creative activation strategies, including culture and behaviour change programmes.

For more information on how Ipsos Karian & Box can support your organisation to assess and embed your desired culture, please get in touch.

References

1. What firms and customers can expect from the consumer duty and other regulatory reforms, FCA
2. Organisational culture and bank risk, Bank of England
3. The Say-Do Gap, Ipsos
4. ‘Do as I say, Not as I do’, J P Bernardes et al 2018

Table of contents

1. Introduction to Consumer Duty: A clear way forward
2. Creating and Embedding Cultural Change
3. Building Stronger Stakeholder Relationships Through Consumer-Centric Culture
4. Innovating with Financial Service Customers in Mind
5. Improving Consumer Duty Outcomes Through Customer Experience
6. Using Mystery Shopping to proactively measure staff engagement with Consumer Duty