3 August 2010

Financial Services - A Culture Needing a Crisis - Part 1

A bit of a longer article this time, so I've split it in two...

Ever since doing an Open University management course many years ago I have been interested in the culture of organisations. So much of how an organisation works – including the actions of individuals – is down to the culture. It’s rarely explicit or easy to describe, but it’s vital in the success or otherwise of that organisation.

Basically the culture says what is really important to us – never mind what any published mission statement says, or how the organisational structure is put together.
  • If the important thing is to cover your rear-end to avoid the big boss getting angry, then that will certainly take precedence over providing a good service to your customers
  • If it is more important that you can’t be blamed for anything in case you are reprimanded, then you are not going to take any risks in what you do
  • If there is a strong “can do” attitude, then that is likely to be more important than sticking to the rules
One other example of a culture is that you might call someone a “jobsworth” – it’s more important to them to do exactly what is expected of them and no more, than it is to go the extra mile and actually help someone.

What has this to do with personal finances? Well, quite a lot, actually, because it is quite possible for a culture to apply across organisations, too. In fact, I would contend that the whole financial services world has a culture... and I’m not alone in that – “Whoops!” by John Lanchester is one of quite a few books on the global financial crisis of the last two years, and it says the same thing.

Although there have been changes resulting from that crisis which have cost eye-watering sums of money (to the taxpayer mostly), I can’t help avoiding the feeling that nothing has really changed. The culture is still the same. John Lanchester describes people in the City as having “fundamental assumptions based on the primacy of money, and the non-reality of other schemes of value”. The culture is all about letting the free market do its thing.

I can’t help thinking we have gone way past that. It’s time for some real change.

continued soon...

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