The emphasis of measures taken by financial services firms and regulators globally to deter employee bad behaviour has to date largely centred on admonishing, penalising and punishing.
“Few firms have sought to build and nurture cultural environments that are built around emphasising the right behaviours and, in so doing, sow the seeds that will yield more positive outcomes in the long term,” a study has concluded.
The study was carried out jointly by PwC and the London Business School among 2,341 managers from UK financial services organisations, representing banking, insurance and wealth management.
The report, Why You Can’t Scare People Into Doing The Right Thing, shows that firms are likely to have greater success in changing behaviours by increasing the focus on the desired behaviours, as opposed to primarily focussing on the negative outcomes of bad behaviour.
It concludes that a tough approach on poor behaviour, risks creating a climate of fear and breeding more – not less – unethical conduct in financial services firms, the opposite of what regulators, businesses and the public want.
“Culture is a crucial source of competitive advantage and is set to play an even more important role in the ability of financial services firms, globally, driving growth,” Jon Terry, PwC’s leader for financial services human resources consulting, commented.
“Our research shows that cultural change is likely to fail if the focus is primarily driven as a compliance requirement.”