By Darryl Mead
These are challenging times for the financial sector, an industry that has weathered its fair share of knocks since the Millennium. Having worked hard to repair its reputation since the financial crash of 2008, many institutions in the sector are still feeling the aftershocks as they fight to deliver on efficiency and meet the demands of a digitised global economy.
That fight has not been without its casualties. One estimate put job cuts in banking at nearly 80,000 in 2019, and in February 2020 HSBC announced that it would be cutting 35,000 jobs worldwide in a restructuring effort to steady profits.
However, for change like this to be effective, it has to be supported wholeheartedly across the organisation. A such, throughout periods of intense transformation for the workforce, the likes of HSBC and efforts to prioritise communication, promote a positive culture and define purpose should be seen as an urgent priority.
Change starts with a clear narrative
Any form of restructuring exercise is, by its nature, disruptive and transformative. It is a dramatic deviation from the status quo. To follow and implement that change effectively, employees need to understand the why and the wherefore. There needs to be a clear narrative to follow.That narrative is built on answering a range of deceptively simple questions: Who are we? What do we stand for? Where are we going? Why?
These are deceptively simple questions because they’re far from easy to answer and then communicate effectively. But, as with all good marketing, it helps to start with the customer – in this case, the internal customer.
Segmenting by stakeholder need helps define which narrative is best and at what time. For example, in times of change, employees are most concerned with what’s in it for them, what is the change that will impact them, why is this change happening (‘was it my fault?’) and what they can do to maintain their own personal equilibrium.
They also need to retain confidence in their organisation, and so need to understand what will not change – namely the values, culture and purpose on which basis they chose to join the business in the first place. Employees each have their own, very personal hierarchy of needs but while salary and job security are important, maintaining values aligned with the company’s own are also a very high priority. In a period of change, employees want to know the purpose with which they align will not be watered down or jettisoned in favour of something they feel much less affinity for.
Finally, how that narrative is communicated needs to be balanced between the needs of the many, and the few. Cascading a broad change message across the organisation needs to be complimented by communications that are personal and relevant to the different stakeholders, creating opportunity for conversation.
Culture is a competitive advantage
According to a new report released by creative management consultancy B+A, 73% of senior business leaders agree that culture is central to success when all factors affecting success are taken together.
The report also found that culture is valued most of all when businesses are struggling, ahead of client or customer relationships, and quality or performance of the product or service. Although the vast majority (82%) of businesses had invested in culture, 60% of them believed they were not investing enough, blaming perceived cost and the time needed to effect change.
Many financial service businesses and leaders focus on achieving profits. To do this means you need to focus on the customer and their experience. But to deliver the best possible customer experience there needs to be a focus on people; more specifically, employees. This is where the strongest competitive advantage lies. People create a unique culture, while almost everything else within a business is replicable. From strategy, to process to tools – the one thing that cannot be copied is the internal environment that fosters the conditions for a great external customer journey.
The value of values
Alongside a clear narrative and culture sit values and behaviours, and being 100% transparent about how you expect people to behave starts with the C-Suite. Leaders shouldn’t just outline what good looks like to the workforce, they should live it, allowing employees to mirror desired behaviours.
Equally as important is outlining what ‘not good’ looks like. This means embedding these values across the employee lifecycle: recruitment, onboarding, leadership, appraisals and recognition. Not everything will be right all the time. Help people navigate the grey areas, help them deal with dilemmas and always recognise and reward the right behaviour.
A McKinsey study found the greatest impact on the outcome of a major change efforts stems from ownership of, and commitment to, change. The study talks of leadership that “sets bold aspirations with clear accountability.” In a rules-driven, risk-averse environment, it is commitment that beats compliance. Leading from the front and using open, honest communication to build a sense of belonging lends an authenticity to leadership that the workforce can trust.
Take, for example, XPS Pensions Group. In 2019, it launched its new purpose, vision and values. A recent employee survey showed an extremely high awareness and understanding of these values. This was in part down to the co-CEOs’ roadshow which included 50 meetings with employees in all 15 offices across the UK. By explaining the company’s values and relating their importance in personal stories, the workforce was engaged and emotionally invested in the project’s success.
Listen, respond and act
Modelling desired behaviours, tailoring messaging and making sure you have an effective communications framework in place that contains effective, proactive tools for creating a culture that will support change are essential but thus far they only flow in one direction. To be truly impactful, developing a strong culture during change is about dialogue. The flow of information must be two-way.
Following the change in UK Corporate Governance code, financial leaders are tasked more than ever with not only describing purpose, culture and workforce engagement, but reporting and evidencing progress and workforce engagement too.
Central to engagement is the question of how well you are listening to employees. It’s not enough to take notes – there has to be demonstrable proof of how those insights are influencing decision-making at board level.
Most organisations conduct employee surveys to understand satisfaction, engagement, hot points for action, and whether managers are effective. Progressive companies have shifted from annual surveys to regular, sometimes weekly, ‘pulse’ surveys with few questions. This enables quick responses to the hygiene factors (teaspoons and toilets) to be fixed locally and tracking trends around strategic or macro issues. Similar channels for listening and feedback contribute to the effective change programmes because employees want to listen and be listened to.
Find the influencers
Two-way conversations are important, but many fail through no ideological or practical fault of their own. It is often a ‘them versus us’ problem. Change like HSBC’s restructuring is invariably dictated from the top and this implies that everything else is the bottom. However well-meaning, it’s hard to escape this sense that change is in the control of those in power.
A greater problem arises with the capability gap at the top. Many change programmes fail due to cascade communications: leaders crafting a PowerPoint and it being shared with line managers who are expected to share with their local teams. However, this approach relies on all managers having the confidence, competence and communication skills to deliver a consistent message – which often they didn’t write nor can defend.
Instead of relying on the message being delivered by an out of touch ‘boss’ (however wrong the perception) or an otherwise exceptional line manager sadly lacking in communication charisma, spend time to find those people in the organisation who are hyper-connected. These are the people with a high ‘social GPS’, who everyone knows, and who are often relied upon to know what’s going on. These are ‘go to’ people and financial brands would do well to get them on board early and help them understand the change and give them tools and support to talk, share and help. They’ll spread the message and often win over the cynics.
We are now in a ‘change as usual’ environment that requires resilience, agility, humility and humanity. It could be an exhausting prospect if viewed as a relentless challenge rather than for what it is, an ongoing opportunity. We just need to look to Leandro Herrero’s three models of change for inspiration.
Model one is all about the destination. Implementing change to get away from A – the current, undesirable state – and to the goal of Z, somewhere deemed infinitely preferable to A. Tools and tasks are set out and ticked off along the way. Traditional management tend to prefer model one, but every time they need to go on a new journey from A to Z (our last Z having now become A), they need to start over. And now that we need to go on lots of change journeys, it’s no wonder change is an exhausting prospect.
Model two also has a goal in mind, but places almost equal importance on the learnings picked up along the way. Wholesome, but perhaps seen as less concrete or effectual.
Model three, however, is Herrero’s Building Model. Yes, there is a goal in mind and indubitably there will be some learnings along the way. But importantly, each change along the journey brings lasting change to the fundamental way the organisation operates – it changes its DNA. This, Herrero says, is the only sustainable way to manage culture and change. It changes the very way the company reacts to all change, not just project by project. It enhances adaptability, improves agility and bakes change into company culture so the whole business pulls together as one.
It’s a fool’s errand to try and predict the future and it’s not something you can quantifiably prepare for. But in a financial environment where change is the new normal, my money’s on a business culture that is open and responsive to it – it will be far more resilient than most.
About the Author
Darryl Mead’s career in employee engagement spans over 20 years. He has led dynamic, progressive in-house Internal Communications teams at Just Eat, HSBC and New Zealand Post, and is now Head of Employee Experience at Emperor. Darryl’s expertise lies in developing impactful employee engagement, culture, internal communications and employer brand strategy for clients.