Hybrid culture

Sheldon Mills, Executive Director, Consumers and Competition at the FCA, spoke last Friday on culture, the role of purpose and the importance of diversity and inclusion. 

Mr Mills reiterated the FCA's previous messages on culture and diversity and inclusion, before moving on to discuss the extra challenges and opportunities posed by the "new normal" of hybrid working.

Culture remains central to how the FCA supervises the firms it regulates. It believes that firms with healthy cultures are less prone to misconduct and evidence increasingly shows they are also more likely to perform better.

Mr Mills reiterated that the FCA measures and assesses a firm’s culture against four drivers: purpose, people, leadership and governance. Here, he focussed on purpose, which the FCA sees as absolutely central to a healthy culture. "Purpose" can seem intangible, but the FCA has previously called it "a gravitational force" and Mr Mills described it as "the goals that a firm sets itself, the economic function it performs and the value it provides to its customers". 

The FCA believes that purpose directly influences workplace culture and people. People need psychologically safe places to work to be able to give their best. They need to be able to speak up when they see things that they think are wrong, without the fear of reprisals, and leaders need to value the voices of all their staff. 

Mr Mills then considered these drivers of culture in the context of the pandemic. The world has changed and one of the lasting impacts is the prevalence of hybrid working (the FCA is itself starting a hybrid working trial from November). 

The FCA believes, as do most, that hybrid working can bring huge potential benefits to staff wellbeing and productivity. It can also enable leaders to be more visible and connected to their staff and, in the right circumstances, can also promote better inclusion.

But, conversely, it can also lead to isolation, provide fewer avenues for staff to speak up about issues of concern, and can lead to a lack of control and oversight.

So here, as with so many things, it is all about balance. The hybrid working balance must be right, both for staff as individuals and for the organisation itself. Firms must consider new joiners and younger staff, who may need or prefer more time in the office, together with the clear benefit of having the opportunity to collaborate freely with colleagues. Getting this balance right will be key to building trust and ensuring people feel valued and supported, which will enable them to contribute to building a healthy and sustainable culture.

The FCA will be monitoring how firms continue to adapt to this new normal, through its range of supervisory tools, and will look for assurances that leaders are identifying and mitigating the risks that emerge. It will be looking for an authentic, embedded purpose, visible leadership and an inclusive environment where staff feel safe to speak up.

For firms, then, clearer evidence that the FCA views its regulatory responsibilities as extending beyond financial conduct, and confirmation that non-financial conduct – and misconduct - will be an unshakeable part of the FCA's supervision and enforcement approach, as we move forward.