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Culture and Ethics
|Article - 12 Important Guidelines in Creating and Sustaining Cultural Change
| Questions for your Board
Do we do set the right example and do our decisions reflect what we want our culture to be?
Are we open and honest in all our dealing?
Would we be happy to have our decisions published for all to read?
Are any conficts or interest recognised and disclosed?
Do we test our decisions and the impacts they will have carefully before we act?
Do we act differently when profit is under pressure?
Can we deliver what we promise?
Do we treat everyone fairly and equally?
Are we clear about what ethical behaviour looks like in our company?
Do we, as a Board, lead on ethics?
Since 2000 the regulators have provided an ethical framework underpinned by the core values of firms. They expect firms to be:
- Open, honest, responsive and accountable
- Committed to acting competently, responsibly and reliably
- Relating to colleagues and customers fairly and with respect
This remains a current topic, high on the agenda.
"For the avoidance of doubt – and in view of recent history – I want to start with what I intend as an unambiguous statement, namely that the culture of firms and the people that make them up - and of course therefore the culture of industries insofar as it can be generalised – is of the utmost importance to financial regulators." Culture in financial services – a regulator’s perspective - speech by Andrew Bailey, May 2016
All firms have a culture, driven by the CEO and the Board. We work with clients to help them uncover and articulate what their culture is and where sub cultures exist. Once an understanding is established then the Board needs to recognise and demonstrate that culture in all it does and says. Culture is not the same as ethics and the ethical framework can give examples in the context of the business activities what to do in situations where conflicts of interest arise the the "right thing" is not easily apparent. In many Board evaluations the existence of an ethics policy or adherence to that policy is often unclear to Board members and without their understanding it is unlikely it will disseminate throughout the organisation as part of the governance framework
This is not easy. It is not just firms that are challenged by this topic. Following a review of culture in the regulators it was concluded that:
the 2008 financial crisis there was a familiar attempt to increase regulators powers in order to protect
a similar crisis happening again. This was enacted through changes to the structure and objectives of
regulators and the powers given to them. To ensure these changes are not just symbolic, they needed to
be translated into more sustained changes to the culture of FCA, PRA and Bank of England." Research Paper Cultural change in the FCA, PRA & Bank of England - Practising what they preach?
If you want to conduct a culture audit, would like to review your ethics policy or explore ways to engage the Board and senior management in owning and demonstrating the way you want your business to behave contact us now...
BP&E Global - because Board Performance Matters