Commercial success starts with culture
Where does culture come on your list of priorities? Lorraine Mouat looks at running a commercially successful business with culture at the top of your to-do list.
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You’ve got a lot to think about when it comes to your business. Among other things, you’re aiming to run a commercially successful firm while balancing your regulatory obligations.
One of these obligations is ensuring you have a positive organisational culture. So where does culture come on your list of priorities?
Understanding the cultural drivers in your business sounds like a nice idea, but realistically you’ve got other important areas of focus, right? Ultimately your business needs to be profitable, and soft issues such as culture can inevitably fall to the bottom of the pile.
But smart businesses understand that to succeed you need to turn this hierarchy on its head.
Culture can’t be an afterthought. It underpins everything in a business, drives behaviours, forms the basis of compliance, and puts you on the path to commercial success. Let’s explore how you bring it to the fore, to the top of your to-do list.
SMCR and culture
Every business has its own unique culture. It’s not like there’s a checklist for the ‘right’ culture. But the FCA’s Conduct Rules, the fundamentals of SMCR, define the minimum standards for behaviour in financial services. They’re broad, but these rules line up closely with features of a positive culture.
SMCR also switches the focus of accountability from firms to individuals. It holds leaders in the business, and their subordinates, to account for their behaviour. This means culture isn’t just part of regulation, it needs to be part of each colleague’s individual responsibilities.
You’ll already be working to make SMCR part of ‘business as usual’, so you have the perfect opportunity to not only embed SMCR, but to evaluate and, where necessary, revamp your firm’s culture while you’re at it.
Read our advice on SMCR and where to focus your budget to get your culture to the right place
But can culture really be the key to everything? Well, in a way, yes.
Getting it right, getting it wrong
First off, let’s talk about getting it wrong. No one ever sets out intending to have an unhealthy culture, one which prioritises commercial advantage over good customer outcomes. But when culture and customer care – sometimes seen as trivial – are not considered to the same extent as financial results, customers can inadvertently suffer as a result. This tends to happen slowly over time, where culture is left to sort itself out without meaningful monitoring and direction. But if left unchecked, poor culture often develops.
Poor culture is the cause of most firms’ conduct failings. In settings where short-term profit is the priority, staff can be pushed towards behaviours and choices that aren’t ideal but have become the norm.
When culture gets really bad, it can lead to the mis-selling and market manipulation issues we’ve seen in the last decade, which inevitably brings a firm under the scrutiny of the FCA, even if it’s years down the line.
Next come fines and sanctions, as well as an erosion of customer faith. Where’s the commercial sense in that?
A better way
A healthy culture, on the other hand, is a powerful thing. It’s an environment where colleagues want to make a difference and are focused on doing right by customers. They feel this way when the business, and therefore their job, is contributing more to the world than just generating profit.
When your culture is positive senior managers inspire and drive an open and transparent environment. It’s not just ‘speaking up’ that’s encouraged, being present and taking notice is supported too. Good culture creates an atmosphere of psychological safety and pushes a new mindset.
If inspired and happy staff alone aren’t enough to convince you to take a look at culture, then remember the bigger picture. Positively motivated people make better business decisions. Customers whose interests are looked after are more likely to hang around. An atmosphere steeped in positivity, transparency and customer care will inherently be more in line with the regulator’s expectations.
All of this feeds directly into a more commercially successful approach. You can be more competitive and compliant, and it all starts with culture.
Tackle culture now
So where do you start? Well, we’re the experts in culture. It’s been our focus for years now, and we understand how to deliver the right approach for your unique business, taking into account the wider regulatory context.
Take a look at our culture and conduct risk assessment to find out what we can do for you.
Connect culture to commercial success
Find out what we can do to help you connect the dots in your business