The Royal Commission into Misconduct in the Financial Services Sector in Australia has highlighted and indeed helped drive the need for cultural change in the financial sector. This short discussion identifies just five impediments to deep cultural change in the industry.
The five impediments identified are not intended to be comprehensive , however they do serve to illustrate some of the challenges. What can be done from a culture change perspective will also be specific to organisations and can be the topic of another discussion. Before launching into the five impediments let’s set the scene.
Do you think people are getting smarter? Do you think we know more about the risks inherent in running economies and businesses? Do you think we will look to others to work out what we should do? Do these sound like loaded questions? Of course they are, however there is a point to be made. Knowing more doesn’t stop us being human and making the same errors people have in the past. The context and details may differ however the errors are the same.
History Repeats Itself
In early 18th century France an investment bubble developed around shares in the Mississippi Company. Trading over a period became frantic. Normally sober people found themselves investing and those who recognised what was happening were sometimes mocked and just as often developed significant doubt about their attitudes to the trade. At dinner parties, being the only person who seems not to be making great profits can be a deflating experience. Even the person responsible for the float of the company could not dissuade people from being overzealous. Of course the company went bust. It is all beautifully chronicled in Charles Mackey’s entertaining “Extraordinarily Popular Delusions And The Madness of Crowds” published in 1841. It’s a great read as an introduction to what would now be referred to as behavioural economics. And more importantly to draw parallels to the boom phase that led up to the crash in 2007/8. There is the possibility it could be applied to the inflated Australian markets as well.
When change is the norm then it goes largely unnoticed (and mostly unrewarded). Often with unintended consequences.
Anyone who has a school-age child will have asked, “What did you do at school today?”. The typical answer is, “Nothing”. As adults are we all that different or are some things just part of the human condition? Following up on planning or change-oriented workshops it is not unusual to hear the lament, ” it was a waste of time, nothing has changed!”. And they could be right … however, it’s worth taking a closer look and providing some feedback.
In any change situation there is going to be better results if there is reliable, valid and timely evidence and feedback. And who has access to that can make a profound difference.
This is what my head told me I was doing!
Brisbane has long history of producing world champion swimmers (Leisel Jones, Keiren Perkins, Hayley Lewis) and many more have trained here. I’m not one of them. I’ve been encouraged and given feedback as I happily churned out a few laps at the University of Queensland pool or perhaps the Centenary Pool. Keep my head down, lengthen my stoke, reach out more, keep my hips higher, increase my kick rate and breath both sides. I worked at everything I was told and there was almost no improvement in my results. I thought doing it harder and getting stronger would help. It didn’t, at least not much! Then something important happened.
Kate Ceberano in concert has almost nothing to do with this article however you can bet both the wonderful bassist and Kate have had a lot of coaching and performance opportunities. And I just loved their performance and the photo.
Coaching and counselling opportunities have provided both professional highlights and disappointments. Some opportunities were specifically commissioned while others just occurred within or around ongoing consulting work. Early cases that motivated and changed me were mainly the second type and usually when there was sufficient time. The following is one of the earliest I remember well. I was involved in a restructuring initiative and temporarily had line responsibility.
Rod was mid to late twenties in a clerical administrative role working in an investment organisation. He was sharp, sarcastic, wary of the executives and labeled by those executives as disrespectful, rude, lazy etcetera. He was also articulate, insightful, well read and Continue reading →
Our brains are well conditioned to see what they expect. Image from: Illusions.org
We all make the mistake, even when we know better. If something is good then more must be better. A nice, straight, linear relationship … except it’s not … and very rarely is! At some point exercise will just injure and fatigue us, the extra serve of ice cream stops being a treat, working longer doesn’t improve your work performance and trimming more costs can make matters worse, etcetera. In these cases, there’s an inverted U relationship. Recognising when something else is going on can make you a better consultant, manager, and person.
Our day to day lives makes us familiar with other relationships in specific situations such as recognizing some diminishing returns relationships. That is, doing more will lead to improvements but less improvement for the same increase in effort. Weight loss could be an example. Another familiar relationship is in consumer pricing where the addition of more benefits and features leads to big increases in price (a logarithmic relationship). Mostly we’ve learned to expect these relationships and they influence how we think in a variety of situations however there is any number of things where we don’t know what to expect. We can’t be so certain what the relationship is. When that happens then logical errors are much easier to make e.g. if the threat of jail stops some crime then increasing the harshness of sentences will stop more crime. Perhaps, I don’t know exactly, however, the US has the death penalty and a very high murder rate for a western country, so maybe not. Perhaps you have to do other things if you want the murder rate to come down.
Very few social relationships will be as simple as those above and yet often we act as if even these are too difficult to consider.
Can Australia be ‘open for business’ and more strategic about the extraction and use of it’s resources at the same time? And does it really need to limit public scrutiny and make mining protections and applications easier to get through? Mining and resource extraction is absolutely essential to our industrial society. However the mining sector is powerful and influences government in ways that distort good economic and social policy.
It’s Transient: Use public transport or a smart phone and you’re using a multitude of mined products. It takes a lot of money to do and a lot of money is made. Also keep in mind that all mining and resource extraction is transient though some projects are more transient than others. In any location it comes and it goes. It’s important when considering any project e.g. coal seam gas (CSG) extraction with it’s thousands of transient sites (4,489 Queensland sites in 2011) and environmental and social impacts. Income from any particular CSG site is relatively short lived 5 to 20 years.
Hidden Costs and Industry Strategy: Besides the potential to leave behind a very Continue reading →
A second post for the post-truth era. There’s a minor edit regarding Trump though this was written for other reasons – mostly frustration. Shock and Awe may just be what Trump supporters wanted. The difficulty is we all know how it worked out last time.
It’s supposed to be a conversation however it doesn’t feel like it anymore. You’re being overwhelmed and it’s bullying. It becomes clear the person wants to appear tough-minded (the softer version), if not just tough (the harder version). They are so confident of their opinions they leave no handle for doubt. In the ‘soft version’ the person may suggest they are a ‘straight talker’ or perhaps claim they are speaking ‘common sense’. They can be populist and even charismatic. It’s like meeting a radio shock-jock in person. Regardless, they don’t want to hear what you think or know, they just want your approval, for you to recognise their dominance or authority. And in some cases your capitulation and compliance. They ask no questions unless rhetorical. They prefer your silence and surprise. While their confidence can be engaging, here the problem is that you are aware the person is so shatteringly, eye-watering uninformed, misrepresenting or wrong that you can barely make out where to begin. And Continue reading →
The changing political discourse around the world and the election of a new “Leader of The Free World” made me go looking for some thought bubbles I had written on people who like to present a tough face to the world. Here’s one:
There are people who define themselves* as blunt, direct, telling it the way it is, etcetera. They have the ‘tough’ meme and just as often it’s associated memes that assist in shaping their behaviour. There are several possibilities to look for when explaining their behaviour. One is that they are a little sociopathic and really don’t care what you think. A second is that they are low on ‘Agreeability’, one of the big five personality factors. Or perhaps you consider they have low ‘Emotional Intelligence’ and just don’t get how discussion works and generally screw up Continue reading →