How do you make cultural change happen throughout an organisation?
One of the Financial Conduct Authority’s four key drivers of culture – which will gain prominence as the FCA’s Consumer Duty guidelines pick up steam across the financial services industry – is leadership.
There are thousands of different leadership training courses and models out there but few focus on the value of culture which, from my experience of working with authorised FCA firms, is a common area of weakness.
Leadership constitutes many different styles and abilities for all types of businesses from large to small and each face their own unique challenges. However, one key theme runs through all of them – knowledge.
In financial services, we LOVE knowledge – and rightly so.
From the day we set foot in the world of financial services, we’re learning. We learn about products, services, technical aspects of regulation, markets and, of course, how to keep the Regulator at bay.
We attend conferences, participate in webinars, and take specific qualifications that are relevant to the sector we’re in. However, for those who step up the corporate ladder, things change.
Yes, they still need to update and refresh their knowledge, but what about leadership itself?
Leaders of financial services firms are expected to meet the Senior Managers and Certification Regime (SMCR) – which, if you don’t know, is a financial services regulation in the UK designed to impose personal accountability on senior managers at financial services firms and improve the conduct of all employees. They need to be individually accountable and responsible for the work that they do.
Some people seem blessed with natural leadership skills. They have an unerring ability to lift those around them to make sure they shine. They inspire, encourage, motivate, and nurture.
Others aren’t so lucky. Many leaders fall into the senior managerial roles without acquiring the skills to lead. They are expected to know what to do and how to do it. Some even mistakenly believe leading is the same as managing. It’s not. Typically, we lead people and manage things. It is quite a distinction.
And there’s also a casual assumption that those who reach the top have made it because they’re brilliant at what they do. Again, it may be the case, but often it’s not.
That’s why the SMCR is urging firms to carefully consider who they appoint to senior management functions (SMF) with a specific focus on training and competence.
If I were to ask 100 senior managers how many had undertaken leadership personal development training in the last five years, I reckon five at most might raise their hands.
Go further and ask how many engage regularly with their junior employees and the dial barely flickers.
This is a huge problem. If leaders are disconnected from the reality of what’s going on around them how can they effectively lead people?
Leadership has to be nurtured and fine-tuned like any other skill.
Take sport. Many of us were gripped by the Ashes last summer. Having suffered a 5-0 drubbing Down Under just 18 months previously, England’s cricketers closed the gap to creditably draw the recent five-match series.
Key to England’s revival has been the appointment of Ben Stokes as captain – someone many of us would readily recognise as a natural leader – able to lead from the front, stoical under pressure, respected by his teammates.
Okay, he’s made a few tactical errors (who doesn’t?) but his team never wavered in following his lead as the human face of his team’s belief. He’s been groomed for the role over several seasons so has become a measured leader rather than a wayward, swashbuckling hero leaving chaos in his wake.
By contrast, I sometimes see firms whose HR staff lack an understanding of the regulatory environment and fail to grasp the training requirements of their leaders.
This is where executive coaching and Training Needs Analysis (TNA) needs to be undertaken regularly to fit the firm’s wider Training & Competence Scheme and performance management regime.
A good TNA should be devised by people with knowledge of the sector who are able to challenge the leader to help them recognise their blind spots and identify their training needs.
The result will be different for each leader but form a key part of their Personal Development Plan (PDP) and additional Continuous Professional Development (CPD).
The FCA – via SMCR – expects leaders to show ‘reasonable steps’ they have taken to improve their competency. By implication, this increases the need for them to continuously develop their competence. More than a mere life raft of regulation and requirement, the FCA wants to see leaders recognise specific skills they need to acquire and plans to undertake relevant training.
One such area of leadership is psychological safety and the value of being an inclusive leader which may not feature in the Tier 2 Conduct requirements but form part of a suite of considerations any leader needs to create a positive working environment. I just don’t see this happening enough.
And what about the leaders who lack a leadership title as such?
During the pandemic we saw lots of ‘shining stars’ jump to the call to rally their teams, motivate those around them, support colleagues and lead them through the maze of lockdown and remote working changes that had to happen quickly and effectively.
These are the leaders of tomorrow – but what has happened since 2020-21? What training have they been given? How have their careers progressed so they can become tomorrow’s leaders?
And there’s the rub. There is no singular ‘right way’ to lead. We can all spot poor leadership from a mile off but need to focus on the things that make good leaders.
If you would like to leave any comments or observations, pose a question or request further information on leadership training for your financial services firm feel free to contact me.
OTHER BLOGS IN THIS SERIES
Driving cultural change – the case for culture
Driving cultural change – purpose
Driving cultural change – governance
Driving cultural change – people
Psychological safety – is it for real?
ABOUT THE AUTHOR
Julie Ampadu is the current chair of The Association of Professional Compliance Consultants (APCC), a member of the Reporting & Data Standards Transformation Board for the Bank of England (BoE) and Financial Conduct Authority (FCA) as a representative of the APCC and the founder of Chameleon Compliance Ltd and Business Chameleon Ltd.