CONDUCT MANAGEMENT

I was thinking about the importance of conduct management or we can call it ‘conduct risk’ and how to mitigate such risks. The subject has become a major issue in Financial Services perhaps mostly due, arguably, to changing cultures in that industry. In any business you will always have a collection of rules that employees are to follow and a set of policies – we could say what to do and how to do it. It is also common to have a set of values and behaviours that seek to define the culture the business wants. Conduct can at times breakdown. Poor behaviours can bring the business into disrepute and a failure to follow procedures and policy can have significant risks. A simple example of this is say the medical staff in an operating theatre deciding not to follow the agreed procedures. We can imagine the consequences. There are similar examples across many industries. I recall when I was working for a global bank over 20 years ago and I was involved in a project with McKinsey & co consultants. They were looking at the complexity in the business and ways to simplify. One thing that always stuck with me was their calculation that there were 10,000 rules to follow!!! I think they probably got to that figure by flicking through the various manuals that existed to govern the business. The manuals in those days actually worked very effectively as they were accepted by all as the ‘rule books’. Arguably business has become more complex in the ensuing years and multiple rule book sources emerge! Here are some thoughts to mitigate:

1. Consciously strive for simplicity. Every time we ask for one more thing to be remembered or actioned then we are adding to complexity. A strong focus in business on keeping things simple and a willingness to streamline pays off.

2. Policy management software. It’s a big help if a member of staff can see what they have signed up to. Like many people I like things neat and tidy and in one place and I always liked the software solutions that allow people to see their own record of training and compliance. An example is www.metacompliance.co.uk.  This also makes management easier and more defined.

3. Internal communications. People gets things more if they are discussed and talked through. Also try to avoid lots of layers of communication. The easier you make it for your teams to digest rules the more likely their compliance!

4. Manage. There will always be some who don’t want to adhere and it’s important to manage directly. Never walk past and say what you see are the golden rules. Keep messages simple.