How is culture doing in investment organisations given COVID?
Culture is a unique source of competitive advantage for investment organisations. And the COVID crisis seems to be multiplying that opportunity. That comes from the ramifications of dealing with the crisis and the move to remote work practices. Opportunities are emerging in response to COVID in five dimensions of cultural edge: innovation, staying power, purpose, diversity and inclusion, and openness. We develop these below.
What seems quite powerful is how the transmission works both from culture onto the COVID issues within organisations and also from the COVID issues onto the opportunities for greater cultural edges in investment organisations.
Innovation has always been a difficult challenge for investment organisations but crises produce more fertile conditions for change. This follows the truism that necessity is the mother of invention but also reflects the idea that crises will generally reduce the lure of the status quo. They support more test beds for ideas to be tried out. They allow a safer space around trial and error, so enabling good ideas to emerge. A strong innovation culture, particularly implying agility of thinking and action, enables an organisation once the crisis subsides to be on the front foot and primed for action when regular times return.
Crises inevitably produce negative thoughts and are breeding grounds for negative actions. Such problems can be combated through resilience which comes principally from staying power in organisations that are: focused on the long term; well calibrated in risk-taking; and adaptive when adverse circumstances arise. Resilient organisations use the challenge of adversity to mobilise positive energy.
Research is clear that resilience increases when a purpose is engaged (think of healthcare workers in the current coronavirus pandemic). This suggests that crisis conditions present an opportunity to deepen the organisation’s purpose and strengthen the cultural impact of purpose.
Crises also bring good values to the surface such as being inclusive in caring, kindness and loyalty to colleagues. The cultural edge here is best captured as inclusion and diversity. The concern for the safety and well-being of every individual must register and be actioned for this to be an edge. The acid test is where individuals are distressed or disrespected, they know that they do not have to suffer alone.
The openness of a culture is a positive factor here. This means individuals revealing their feelings and being open in bringing their whole selves to work. And it means leadership expressing their inclusive values in support and ensuring that their organisations provide the full backing including the psychological safe space that individuals need.
Here the deep sense of injustice felt by African-American, Black people and other minorities that surfaced following the death of George Floyd in Minneapolis is an important marker. The responses that were communicated to this injustice from many organisations, in our industry and outside, have been consistently pitched and placed an extremely high value on diversity and inclusion, and openness. It will be a big test of the strength of culture at these organisations whether the words will be followed by just and fair deeds.
The new operating model
Most investment organisations in the COVID crisis have re-shaped their operating model into remote working using technology links with much diminished physical working in offices. While circumstances vary by geography and time-line, the return to an ‘old normal’ working model is likely to be slow and ‘new normal’ models may from now on maintain a much higher virtual element.
The working-from-home model has produced benefits to the employee experience – defined as how employees see, hear and feel about all aspects of their employment. Much of this benefit has been via the inclusive culture that investment organisations have shown with their attention to the well-being of the workforce. This has been through regard for safety, reaching out to check-in with people, support for child-care and elder-care, and providing practical support in well-being and mental health areas.
But there are some challenges to culture lurking in this model for both the employee and the organisation. First, strong culture tends to weaken without an increase in the collective efforts of leadership to maintain it. And achieving this level of effort is likely to be harder when leaders lose physical opportunities to interact. While initial indications are that organisations have stepped up their cultural responses through leadership actions, there is a question as to whether this can be maintained.
Second, silos make joined-up management and culture harder and silos may prove harder to shrink when engagements are virtual. This introduces risks that sub-cultures can develop into stronger fiefdoms and leave organisations with less alignment of purpose and action.
Third, trust in colleagues is critical at all levels. Value creation in investment organisations comes principally from informed risk taking which needs trust to be present for appropriate commitments to be made and sustained. But trust is likely to be easier to maintain where physical meetings are part of the mix as opposed to a full virtual operating model.
There have always been challenges to trust in managing teams across multiple locations. While physically separate groups can function together as a practical matter, they may find deeper levels of trust harder. This trust gap from distance carries through to teams that are working remotely. Some trust is carried forward from prior relationships but there are challenges for newcomers to teams that must build trust from scratch.
There are substantive cultural changes emerging for all investment organisations as they refine their purpose and adapt operating models involving prolonged remote working and virtual inter-actions.
The choice is to let cultural change just happen – in which case the outcomes are going to be mixed; or shape this culture change – in which case some real benefits can emerge.
Organisations opting for the culture shaping path will be working on purpose, leadership, trust and innovation. They will find approaching the challenge through a systems lens helpful. And they may find the survey tool below helpful to judge how well they are doing on this so far.
Culture check-in. How well have COVID circumstances been dealt with so far by your organisation?
The purpose and vision of the organisation have been positive for employee engagement
Leadership communication has been authentic, consistent, empathetic and engaging
Leadership actions have been positive for employees, effective for stakeholders and helpful to culture
Trust and loyalty between the employees and the firm has been strengthened
Trust between colleagues, and between the organisation and clients has been strengthened
Innovation in the organisation has increased and been impactful, with more creativity and agility