Measuring conduct and culture

As we close the decade since the 2008-09 global financial crisis, the emphasis on culture and conduct in banking has never been higher. Financial and reputational consequences of misconduct and cultural failures have placed increased responsibility on boards and senior management to demonstrate effective measurement, management and oversight of conduct and culture. Although many organizations today have commenced some form of culture and conduct reporting, most are narrowly focused on misconduct, and continue to struggle with using multiple lenses to develop a holistic view of the culture at their organizations.

Our new paper is part two in our Conduct and Culture series. In the previous installment, we presented a Value-Metrics mapping methodology for organizations to identify meaningful metrics based on their alignment to the fundamental principles of the company. Part two, Measuring Conduct and Culture, helps organizations derive meaning and realize the insights. Through our experience with advising clients and research, we present the necessary metrics to focus on, how to monitor them and how to look for meaning in the data to generate true insights.

Although many organizations today have commenced some form of culture and conduct reporting, most are narrowly focused on misconduct, and continue to struggle with using multiple lenses to develop a holistic view of the culture at their organizations. Culture must be steered by design, otherwise it naturally evolves to suit the surrounding context

1LOOK FORWARD, NOT JUST BACKWARDS

Leading metrics serve as early warning signals that can help identify areas that require further attention or investigation and increase an organization’s ability to respond to potential issues before they become problems. These also point to positive movements and beacons of success.
2Focus On Culture As Well As Conduct

Indicators of culture, such as diversity, morale, and trust, can help organizations understand how employees feel and treat others, and when viewed in conjunction with conduct metrics, can be a powerful tool to proactively identify issues and problem areas.
3Determine When and How to Act

Developing a methodology to designate a monitoring approach to each metric (and metric composites) and identifying the accompanying investigation and escalation processes, can help detect anomalous behaviors and initiate action.
4Collaborate to Create

Instituting a collaborative report creation process—that is led by a focused team and leverages subject matter expertise from lines of business and corporate functions—is key to creating a “big picture” narrative that is both insightful and actionable.
5In Data We Trust

A meaningful report requires developing capabilities that facilitate consistent and reliable data collection, data exploration and analysis, and dashboard automation.
6Governance As the Engine For Change

Assigning governance responsibilities and developing clear processes to facilitate holistic end-to-end oversight helps drive action and prompt change through reporting.