When reflecting on the findings of The Financial Services Royal Commission (the Commission) Commissioner Hayne has greatly increased the profile -and importance- of culture in organisations. Not so long ago, culture was considered one of the ‘softer’ aspects of business strategy. In re-reading, The Tone from the Top, a report Korn Ferry published in 2016, it is clear that the Australian Chairs and CEOs interviewed recognised that the CEO is responsible for cultural leadership. We asked them to review and rank 12 levers that strengthen culture. CEO engagement was unanimously at the top – however aligning the organisation’s culture with customers’ expectations was at the bottom.
The Commission has shown us the power of listening to customers. It gave voice to 10,323 people who took the time to send a submission. To be fair, the business leaders we interviewed in 2016 noted that all 12 cultural levers were important, but in the wake of the Royal Commission, I suspect the customer ranking would be higher today.
It is challenging for a company to achieve cultural alignment because the values that underpin culture have many interpretations. Commissioner Hayne said as much when he noted that ‘the culture of each entity is unique and may vary widely within different parts of the entity’. However, there is one standard that all can share – and that is that culture and leadership are interdependent. True cultural change can only be achieved with real leadership.
Business leaders need to move from thinking about their success solely in terms of financial performance to thinking ‘culturally’ about organisational and all the elements that contribute to performance. Identifying systemic behaviour and transforming culture is deep work, led by the CEO, strengthened by the executive team, with oversight responsibility and accountability by the board. Until this shift in perspective occurs, fault lines can form in organisations that allow toxic subcultures to flourish.
Many of our financial services companies have started the work of transforming their culture and this has been led by the CEO, who serves as the organisation’s Chief Cultural Officer.
10,323 customers cared enough to write to the Commission about their experiences. Leaders need no greater motivation – or inspiration to act.