- Focusing on the future
For many compliance teams, keeping a lid on risk this year has been a never-ending game of whack a mole. While most firms have a handle on the existing risks – the ones we’re used the dealing with day-in day-out – the new ones that have emerged as a result of the pandemic have left much of the industry operating in reactive, crisis mode. Often the hardest part, as the FCA has pointed out, is identifying new emerging risk in the first place, particularly as operating models continue to change.
The solution is cross-functional one. Conduct risk, particularly in newer areas like homeworking and automation that are particularly pertinent now, needs to be at forefront of everyone’s mind — not just compliance teams. For second line teams, this means stepping outside the traditional remit, driving a cross-functional approach to such challenges and engaging the wider business at every opportunity. To get started, make emerging conduct risk a standing agenda item at every meeting.
- Ensuring transparency around remuneration
Most firms have integrated some kind of balanced scorecard into their performance management, making sure that employees are rewarded for more than just financial performance. While this is great progress, there’s still a veil of mystery that shrouds promotion decisions in some companies.
Update policies to make open and transparent feedback a given. And crucially, train line managers on how to do it effectively to ensure employees across the business get the same treatment. After all, younger generations – who will soon form the majority of the workforce – increasing. Savvy firms who value transparency will always have the edge in the recruitment game.
- Listening, rather than dictating
One thing the FCA celebrated was the increasing engagement from CEO’s in culture initiative, recognising that the ‘tone from the top’ in many firms was generally very good. But bearing in mind that most employees have little day-to-day interaction with senior management, it’s the ‘tone from within’ – what we hear from line managers and fellow colleagues – that will have the most impact on individual conduct.
Training middle management on how to communicate more intangible things like strategy, purpose and values can help make sure there’s no disconnect between the tone from the top and the messages employees get on a more informal basis. Then this can be expanded to include all members of staff, encouraging them to consider and challenge their own sense of purpose.
- Investing in behavioural training
Ultimately, the FCA thinks a psychologically safe working environment is the crux of it all. By this, the regulator means a culture in which employees feel safe to speak up. But this goes beyond things like a whistleblowing policy. Without day-to-day safety, employees are unlikely to flag emerging issues, challenge unfair decisions or get behind your organisational values. Training line managers on soft skills like emotional intelligence and diplomacy will help create an environment where employees feel able to raise concerns, knowing that management will listen when they do. Done properly, and most issues can be resolved long before they get serious enough to blow the whistle.