Cultural change starts with the individual
Realising that we see ourselves as unimpeachably more moral than everyone else shows why ‘tone from the top’, often considered the primary route for culture change, is a weak lever.
So argues Mind Gym CEO and co-founder, Octavius Black in a discussion paper recently published by the UK’s Financial Conduct Authority examining ways to transform culture in financial services companies.
‘When it comes to assessing ourselves at everything from driving to sense of humour, most of us think we’re above average,’ says Black. ‘The same applies to our moral compass, only more so.’
Indeed, when asked to score themselves across a range of ethical dimensions, respondents in one study rated themselves up to 50 per cent better than the average and only a smidgen below what they considered ‘ideal’.
Are bankers any different? Black asked 500 bank managing directors (MDs) how honest they rated themselves, their ‘ideal’ and the average MD at the same bank i.e. their direct peers. On a scale of 1-9, the MDs rated themselves 8, the ‘ideal’ a little above, and scored the average MD around 6.
‘This psychological finding lies at the core of how to change culture and reveals why much of what we currently do to improve conduct is misdirected,’ says Black.
‘We know from other behavioural science studies that regulatory efforts such as penalty fines, zero tolerance and whistleblowing have, at best, limited benefit and may do unintentional harm, causing more ethical transgressions than if they didn’t exist.’
Rather than top-down, Black says a successful culture change strategy will focus on the individual. Specifically, its aim will be to get each of us to notice when our behaviour is inconsistent with our moral identity.
One bank Mind Gym is working with has been running short workshops on the psychological situations where good people are more likely do bad things.
‘By recognising what leads us astray, we become better at self-regulating and so limiting our own bad behaviour,’ says Black.
It also helps leaders spot the warning signs for ethical collapse in others so that they can take pre-emptive action.
‘People are much more likely to change their behaviour when they talk openly about ethically ambiguous situations without feeling judged,’ adds Black.
Managers need to ask employees about more than just the tasks they execute, focusing on the ‘how’ as well as the ‘what’. For an employee, it’s about speaking up about transgressions – even if one is the only voice in the room.
Black cites research that found that if just a handful of people express a clear and consistent point of view over time, it is enough to win over the majority.
Given all these research insights, Black says: ‘Behavioural science reveals a faster and more certain way to effect culture which reduces risk, accelerates performance, wins over discerning clients and stems the burgeoning cost of compliance.’
If you’d like to learn more about managing culture, download Managing Culture — A good practice guide.