The Banking Royal Commission recommended working on culture and governance. We talk about how they can go about putting it into action. Corinne Canter and Dominic Gourley discuss the report findings and the pragmatic application of them.

Listen to our full discussion on how companies can practically implement the findings on the Hayne Commission:

  Key Takeaways from this episode:

Royal Commission Recommendations on Culture

The Hayne Report made 4 key recommendations for Financial Institutions in relation to culture:

• Assess the entity’s culture and its governance
• Identify any problems with that culture and governance
• Deal with those problems
• Determine whether the changes it has made have been effective

(Read a summary of all the recommendations at the Australian Institute of Company Directors)

Here is how to put them into action:

Burning Ambition vs Burning Platform

Right now, Financial Institutions have a ‘burning platform’. The spotlight is on them and everything that’s wrong and not working. The problem with a ‘burning platform’ is that it inherently triggers a threat state – which means you’re going to get a reactive response where people move to protect themselves. The problem is, that reaction will not build a healthy culture.

Instead, they need to define their ‘burning ambition’. How do we want to be? What do we want to achieve? The ‘burning ambition’ gives people something to work towards. The ‘burning platform’ gives them something to avoid. Ambition is a lot more powerful when its to motivating people to do the right things for the right reasons.

Involve People to Identify the Values that Help Achieve the Ambition

Ambition, unchecked with values, can run amuck. A lot of organisations have stated values. A lot of those values are decided by the Executives and pushed down. Instead, involve people (in some way) in defining the values we are going to need to be successful in the future. Then, break those values down into behaviours – what does the value look like when it is put into action every day (and what does it look like when we are falling short)?

Do What Needs to be Done Now

There are likely to be decisions that need to be made, and actions which need to be taken, that are already well understood. Those things need to be done and can be done now. But that can’t be all they do if you want a successful culture change.

That’s where these things come in:

Measure a Baseline

Once you have identified your future cultural ambition –you need to know where you are right now compared to where it is you want to be. It gives us an idea of where we are right now, but it also gives us an idea of where the gaps are. In that gap is where we get the first indications of what it is you’ll need to address in order to reach the ambition.

Identify any Problems and their Causes

Our How Culture Works model illustrates the five groups of Causal Factors that shape the current culture. These factors are how the organisation sends messages to people about how they are expected to behave. We know that the gap analysis will involve one or more of those five groups of causal factors.

Mission and Philosophy: How strongly the organisation has identified its values, mission, and way of doing things. If the current mission is focused on short term results – what message does that send? How could it be expended to include the customer and what kind of experience you want to create for them?

Structures: Who has influence and who doesn’t? Who is involved in decision making? Highly centralised power structures can drive a top-down organisation. This often leads to people at the frontline being passive. You need to create opportunities for people to get involved and share their views without fear.

Systems: How we recruit people in, how we onboard them, how we set goals, how we manage performance, how we train them, and how we reward them. These systems and processes are signals to people about where they should put their focus and effort. They have to reinforce your values and behaviours that you want.

Job Design (Technology): How jobs are designed to allow the opportunity for autonomy, variety, taking ownership, being able to do a task from beginning to end, finding significance in what they do. Do people get the opportunities to think for themselves, use their creativity, and care about what they do.

Skills/Qualities of Leaders: Leaders shape, reinforce, and change the culture of an organisation through what they do and how they do it.

Communication needs to be open and often. It shouldn’t just flow downwards but also be volunteered back up the organisation. It should also be a discussion not only instructions or information.

Leaders impact the organisation directly through the ‘things they do’ – what they say, what they do, what they don’t do, what they pay attention, what they reward, what they value, what they recognise. All these things send signals to the organisation. If the leader doesn’t reflect the stated values then it’s not going to work.

Leaders impact the organisation indirectly through the ‘decisions they make’ and how they implement things like the vision, set objectives, how they implement the systems and processes. Essentially how they go about implementing the other cultural causal factors. How leaders behave, but without the other factors, they won’t be able to move the culture.

Track Progress

You’ve measured a baseline of the culture. You’ve taken actions on identified causal factors. Now it’s important to know that what you’ve been doing is making a difference.

As a rule of thumb, we recommend doing a full remeasure of the culture only every 18-24 months. In between remeasures, you can pulse the specific causal factors you identified to work on to track the progress and impact over actions. These pulses can be done every 3-6 months depending on the tempo of the business.

Want to talk to us about how to shape culture in your organisation?

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Listen to related episodes of the Culture Bites Podcast:

007: How Leaders Impact Culture
008: Is Culture / Climate / Engagement the same thing?
010: How the Banks got here
012: How Culture Works Pt1 – Overview
013: How Culture Works Pt2 – Mission, Philosophy, Structures
014: How Culture Works Pt3 – HR Systems
015: How Culture Works Pt4 – Job Design
016: How Culture Works Pt5 – Leadership
033: How Culture made Headlines in 2018
035: How to Change Culture in 4 Phases