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When the road ahead is unclear: Navigating beyond the Royal Commission for Financial Services

The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry has dragged some grisly skeletons out of the banking closet since its commencement in December 2017, and you can bet there are more to come.

While all the Ps (practices, policies, procedures, processes) have come under much-needed scrutiny, it’s the C word – culture – where the big banks are really copping a beating. Organisational culture in many parts of these institutions, we’re told, has become diluted, corrupted and toxic. Values are non-existent. Ethics is a dirty word. Behaviour reflects culture, and some very bad behaviour has been allowed to thrive – has even been rewarded.

There are two questions:

  1. How on earth was this culture created?

  2. What on earth can be done to fix it?

There are thousands of answers to the first question, all valid. Many things contribute to culture, and beyond a certain point it is self-replicating – unhealthy workplace culture creates bad behaviour creates unhealthy workplace culture.

What about the second question? The scale of the problem revealed by the Royal Commission is such that an understandable answer would be to start over again, but this isn’t possible. The stability of our banking sector is critical to the health of our national economy, not to mention the financial wellbeing of millions of individual Australians. Also, let’s remember that there are (and always have been) good people doing good work in banking. Nobody wants to throw the baby out with the bathwater.

So, the only answer becomes: change the culture. How? What’s the magic bullet?

Well, sorry folks, there isn’t one. No surprises here. Yet it IS possible to change culture. And to change it fast, if you know how to pull the right levers (and if you know how to find those levers when the road ahead is unclear). At Blue Seed, understanding cultural change and supporting organisations to make it happen is our core business. Here are a few things we’ve learned along the way.

Learning vs. blaming

One of the trickiest things about driving cultural change is to avoid using blame and guilt as a starting position. In the case of the banking industry, there’s been a lot of talk of blame flying around and there is risk of further threatening a weakened culture. This isn’t a great place to begin if you want to motivate people to make big changes.

Shifting the narrative to one of learning, progress and reinvention can change how people feel about what you’re asking them to take on. This messaging needs to come from leaders at all levels of the business, from the CEO to team leaders, and needs to frame the change as a journey the organisation is undertaking willingly, together, towards a healthy future with no more hiding, no more excuses. These leaders also need to set up a continuous practice of calling out what’s not right, as well as the wins – What do we need to acknowledge? Where have we demonstrated learning? Where have we moved forward?

Leadership and culture

The Commission has ensured that accountability for cultural problems in the banking sector will sit at the senior leadership level. This is fair and correct, and is likely to drive real change in the industry more than anything. While pockets of micro-cultures can exist across organisations, the broader culture is always reflective of leadership.

It simply has to be the top down approach to start with and then everybody can be involved and play their part.

We expect that the scale of the issues revealed by the Royal Commission will result in major changes to executive roles across all the big banks. While this can be destabilising, it will also create a fantastic opportunity for new leaders to renew and reimagine their workplace culture. This means modelling the behaviour and values the organisation needs to achieve its goals – including the reestablishment of customer trust – and building deliberate strategies to give all staff a pathway towards reinventing the cultural landscape of their business.

A smart leader, in this situation, will use their freshness to advantage by consulting widely, winning the respect and trust of staff, and working closely with their peers and teams to develop a clear understanding of what:

  • needs to change,
  • change will achieve,
  • will happen if they don’t change, and
  • this means specifically for teams and individuals in their day-to-day work and interaction.

Ownership and participation

While we understand the power of visible, influential leaders articulating a clear and positive message of change, Blue Seed also believes that change is about everyone, and everyone has a role to play. This is never truer than when dealing with cultural change on a large scale with high stakes.

This doesn’t mean everyone needs to be the same. Culture is made up of individuals with unique strengths and limits. It is important to understand this when talking about shifting culture, and to avoid classroom-style lectures about bad behaviour.

Cultural change has to begin with a conversation among staff at all levels, and this conversation has to move into a positive narrative about what specifically people can do, from exactly where they stand, to help the whole organisation move with certainty along the road towards a brighter future.

Our purpose is to make transformational change achievable and create a lasting capability for our clients. Our unique approach empowers organisations to create the best return on investment for their change efforts.

We’ve seen that the sooner an organisation is willing to identify and address its (human) change capability needs and gaps in detail, the quicker it will be likely to reap the rewards.

Contact us to learn more about how you can lift your organisation’s change capability