The 2016 Survey results highlighted a disconnect in some firms between the values espoused by the firm and the way in which some employees saw business actually being done. Understanding this mismatch has been one of the BSB’s work themes over the past year, and one that we took the opportunity to explore further in the 2017 Assessment (both in the Survey and with focus groups).
This section brings together the findings of our work to date; evidence that reinforces the importance of leadership — and, in particular, of leading by example. In every firm, whether or not employees see behaviour and the firm’s values as being aligned, leaders are described as talking about and referring to values. The difference comes when employees see those values played out in leaders’ actions, and when feedback is listened to as well as encouraged. When it comes to setting the ‘tone from the top’, actions speak louder than words.
What the Survey evidence tells us on this theme
The BSB Survey contains two questions that related to the Assessment characteristic of ‘Shared Purpose’: Q35, that asks whether the organisation’s purpose and values are meaningful to the respondent; and Q36, that asks whether the respondent agrees that there is no conflict between their organisation’s stated values and the way in which business is done.
Shared Purpose was one of the areas where improvement was most evident in 2017. 85% of employees found their organisation’s purpose and values meaningful in 2017, from 81% in 2016 (Q35); and when asked if they saw no conflict between their organisation’s stated values and how business was done, 69% agreed, from 63% in 2016 (Q36). 11% of employees did see a conflict (down from 14% in 2016), with the remainder neither agreeing nor disagreeing.
FIG. 11 SHARED PURPOSE 2016 AND 2017
By business area, our models and tests suggest improvements in both questions within Retail and Commercial Banking, and on Q36 within Functions also. We are less certain of the statistical significance of improvements within Investment Banking.
87% of employees in Retail Banking found their firms’ purpose and values to be meaningful (Q35); a higher proportion than in other business areas. Within Retail, branch employees were especially positive about their sense of shared purpose. Investment Banking employees were less likely to find their firms’ values meaningful (though the proportion was nevertheless high, at 81%), but the most likely to see values and business practices as aligned (71% in 2017, similar to 2016).
Looking at gender, the responses of women to the two questions on Shared Purpose (Q35 and Q36) are significantly more positive than those of men. While women’s responses (controlling for other factors) tend to be more positive than those of men across the Survey questions in general, the difference on Q35 is among the largest in the Survey. This is also one of the few questions where a material gender difference is evident in Investment Banking.
On tenure, employees are notably less positive about shared purpose at their firm after they have been there for a year, as is the case with many other Survey questions. Controlling for other variables, perceptions do not subsequently differ substantially as tenure increases. The exception to this is, however, Investment Banking, where perceptions improve among the longest-serving employees (i.e. those at their firms for more than 15 years), who find the values just as meaningful as do new starters (Q35). Figure 12 illustrates perceptions among employees in Investment Banking with those of Survey respondents as a whole.
Fig. 12 Q35 by tenure 2017
Line managers are more likely than other employees to find their firm’s values meaningful and to see them as aligned with business practices. More positive perceptions among line managers were evident across the survey questions in general, but the effect is larger on Q35 than on any other question. The line manager effect is marked across all business areas, but especially so in Retail.
We asked an additional question in the 2017 Survey (Q38) that was given only to respondents who said that they saw a conflict between their organisation’s stated values and the way that business was done (Q36), or were neutral. This question showed the respondent the stated values of their own firm, and asked which value (or values) they felt this conflict applied to. Responses were reported to each firm but cannot sensibly be aggregated and are therefore not reported in this Review.
Using the grounded theory approach described in the previous section, we analysed evidence from focus group discussions to try to identify what might distinguish business areas in firms where values were seen as highly aligned with the way the firm did business (Q36 in the Survey), from those where such alignment was less evident. Identifying such factors may help in the collective formulation of good practice, enabling firms better to manage and maintain their organisational cultures. The results of this analysis are set out here, with the most clearly differentiating practices set out first. For each of the practices identified, summary tables are included to show the relative frequency with which they were referred to among focus groups with participants from both higher and lower-scoring business areas.
Leading by example
The ‘tone from the top’ stems not only from what leaders say, but also — and perhaps even more importantly — from what they do. In firms where Survey respondents saw alignment between the way they worked and the firm’s stated values, focus group participants were much more likely to say that they saw leaders and managers living the values than in firms characterised by a lack of alignment. Demonstrating the values, rather than simply talking about them, is what appears to make the difference. Focus group participants from areas of firms both where behaviour was seen as aligned with the firm’s values and where it was not, spoke of their leaders promoting or referring to the values. This does not mean that speaking about the values is not important or necessary; it does, however, suggest that it is not enough. Survey Q1, ‘I believe senior leaders in my organisation mean what they say’ has the second highest correlation of any question with Q36, ‘There is no conflict between my organisation’s values and how we do business’.
Figure 13 shows the frequency with which participants in different focus groups referred to aspects of leadership. The focus groups analysed were from business areas of firms that had relatively high or low Survey scores for Q36 and are clustered accordingly in the chart as being from ‘higher-scoring business areas’ or ‘lower-scoring business areas’. For each ‘high’ and ‘low’ pair of circles, the number of segments in each circle represents the number of focus groups analysed. The number of focus groups in which a practice was mentioned by different focus groups, is indicated by the number of segments that are shaded.
Fig. 13 Behaving consistently with the values as leaders or managers
Employees from both higher and lower scoring business areas frequently mentioned ways that their firm promoted its values internally, such as via leadership communications and prominent office displays. The lack of differentiation between higher and lower-scoring business areas on this point suggests however that, while promoting and referring to the firm’s values may be a necessary condition for ensuring that behaviour is aligned with values, it is not of itself sufficient.
What did clearly distinguish higher from lower-scoring business areas was the extent to which employees believed that their leaders or managers lived the values. Employees from higher-scoring business areas said that their leaders or managers genuinely believed in the firm’s values, discussed them without cynicism and demonstrated them in their day-to-day actions. In some lower-scoring business areas employees felt that, while their leaders or managers spoke about the values, they did not truly behave in line with them.
Fig. 14 Opening two-way flows of communication
- Employees from higher-scoring business areas more commonly said that their leaders’ communications were consistent, frequent or reached all parts of the organisation. They said that large proportions of the workforce heard leaders’ messages, and that they found these to be accessible, practical or relatable.
- Employees from lower-scoring business areas more commonly said that their leaders did not explain decisions or set out how these fitted into the firm’s overall strategy. Some employees felt that clear messages did not reach their level of the organisation; others found that issues were repeatedly discussed with no real outcome.
- Employees from higher-scoring business areas spoke more positively about the way that senior leaders listened to employees and responded to their input. They gave examples of structured interactions, such as sessions where employees gave feedback on their day-to-day working practices. Employees from lower-scoring firms said that they did not have opportunities to ask questions at town hall meetings, or felt that requests for feedback were not genuine.
Appropriate autonomy
Giving employees appropriate space and support to exercise their own judgement may allow them to feel more able to behave in line with the values. Focus group participants from business areas that saw less conflict between values and how business was done, were more likely to describe working in an environment where they were given a degree of autonomy, or where new ideas to bring about changes were encouraged and supported.
Fig. 15 Allowing employees appropriate autonomy
- Employees from higher-scoring business areas more commonly described a working environment in which they were given the autonomy to behave in ways that they saw as being aligned with the firm’s values. They felt guided by principles rather than instructed to follow standard checklists, and said that they had the freedom to exercise common sense to find the best solution to problems without fear of retribution if the end result was not as hoped.
- Employees in higher-scoring business areas also more commonly referred to their firm as having a culture of innovation. They were encouraged to suggest new ideas to bring about improvements, and given the support to implement these.
- In lower-scoring business areas, employees more commonly described layered decision-making structures and a culture overly adherent to process. This was seen as stifling new ideas and problem-solving. Some felt that they were not empowered by their firm to try to find solutions to customer problems, or that there was a tendency for employees to hide behind processes rather than actively seek out solutions. In some cases, employees felt that the firm’s risk appetite led to low levels of innovation in customer initiatives.
Effective tools and frameworks
Focus groups participants frequently discussed the tools and frameworks used by firms to help employees understand and put into practice their values. In the focus groups selected for our grounded theory analysis of this theme, participants from both higher and lower-scoring business areas spoke about ineffective tools. The key difference appears to be not that higher-scoring firms have no ineffective tools, but that effective tools are much less apparent among lower-scoring firms’ business areas.
Fig. 16 Using tools and frameworks to guide behaviour
- Employees in focus groups from both higher and lower-scoring business areas frequently said that their firm provided tools or practical frameworks relating to their firms’ values. In both sets of focus group, ineffective tools and frameworks were noted.
- In higher-scoring business areas, however, employees more commonly also described structures that did help them to implement their firms’ values on a day-to-day basis. These included simple, practical tools to aid ethical decision-making and processes to report anything that conflicted with the values.
- In lower-scoring business areas, focus group participants were slightly more likely to describe a tendency for the values to be over-explained, or referred to frameworks that actually led to confusion. Some also felt that overly rigid or lengthy processes inhibited employees from acting in accordance with the firm’s values.
Prioritising customer outcomes
Focus group participants frequently linked their firm’s values with doing what was in the best interest of customers. In the Survey, Q9, ‘I believe my organisation puts customers at the centre of business decisions’, is the question most highly correlated to Q36. Employees in higher-scoring business areas more commonly felt that the values of their firm were reflected in its products and its dealings with customers; those in firms with less positive perceptions more commonly noted a conflict between meeting customer needs and commercial considerations.
Fig. 17 Prioritising customer outcomes over immediate profit
- When asked about how well aligned their firms’ values were with the way in which business was done, employees in focus groups frequently saw this through the lens of doing what was in the best interest of customers.
- In higher-scoring business areas there was a greater sense from employees that the values of their firm were reflected in the products offered to customers and that a conscious effort had been made to focus on customer service. Examples of this included ensuring services (such as branches) remained widely accessible and placing a greater emphasis on meeting customer needs than on explicit targets e.g. the number of interactions with customers. In some cases, employees felt that the firm had taken a long-term view despite this having led to an increase in costs or a fall in profits in the short term.
- In lower-scoring business areas, employees more commonly felt that the need to reduce costs or maximise profits in the short term was prioritised over customer outcomes. Employees in some business areas noted a conflict between customer-orientated targets or performance measures and commercial considerations, with the latter felt to win in practice.
Encouraging integration across business areas
The extent to which employees communicate and work together across business areas may have an impact on their sense of shared purpose. Examples of cross-team collaboration and inclusive attitudes were offered slightly more frequently among focus groups from business areas that saw less conflict between their firms’ stated values and how it did business.
Fig. 18 Encouraging collaboration across business areas
- Employees from both higher and lower-scoring business areas said that silos were a feature of their organisations. They differed slightly, however, on opportunities to integrate across and within teams.
- Employees from some higher-scoring business areas described an inclusive and team-orientated environment in which people were open and honest. They found it easy to talk to colleagues across the firm, and found them ready to collaborate. This was supported by programmes that brought people from different business areas together and allowed them to get to know each other. Approaches referred to included innovation projects, charity work, team-building and simply socialising.
- In one lower-scoring business area, by contrast, employees said that they did not understand the work of other business areas or found it hard to get information from other areas.
- The low frequency with which ‘silo busting’ initiatives were referred to across all of the focus groups analysed suggests that even higher-scoring firms could benefit from doing more to integrate their employees across business areas.