The Australian Securities and Investment Commission (ASIC) has recently made an interesting move to have an organisational psychologist observe boardroom discussions of more than 20 blue-chip companies including Qantas, Woolworths and AMP. So, what can we expect to be the outcome and benefits?
The move by ASIC shows they are focussing on what is often referred to as the “tone at the top”, an organisation’s general ethical climate established by its leaders at executive and board level. The executive function is ultimately responsible for organisational culture. While the risk and people functions have responsibilities to embed practices and processes that influence and shape culture, this is on behalf of the whole executive team.
Starting the journey for organisational cultural evolution
Ways that the senior executive at a company can start their organisational cultural evolution to have employees take greater ownership include:
- Incentive schemes and structures that symbolically recognise customer and shareholder as “equal” stakeholders; remove any structures or incentive schemes that could potentially lead to conduct risk
- Enforcement of consequences for unethical behaviour
- Consider “is this in the best interest of the customer” in each conversation
Setting the tone at the top is an important first step for any organisation starting out on a journey of cultural evolution. In today’s environment, companies need to do more than just this – staff culture surveys are no longer enough.
McGing Advisory & Actuarial provides enterprise risk management, investment and actuarial advice to financial services entities and other boards and management. Our Managing Director Sean McGing has written and presented extensively on risk culture.
Bob Shipway is an Actuarial Analyst at McGing Advisory & Actuarial and a committee member of the Young Actuaries Program (Melbourne). His experience spans across Superannuation, Life Insurance, Investments and Data Analytics.