Survive or thrive: people, culture and leadership teams in financial services

The financial services sector has entered an era of uncertainty. Businesses are looking to build new capabilities and capacities that will allow them to thrive in the face of larger and more frequent external ‘shocks’.

Volatility and lower margins are expected to continue as the competitive landscape broadens and diversifies. The digital global economy is opening markets like never before and customer service expectations are being completely redefined. As a result of this, businesses are looking to build new capabilities and capacities that will allow them to thrive in the face of larger and more frequent external ‘shocks’.

While it is clear that the industry is changing, there are few answers for people, culture and leadership (PC&L) professionals who are being challenged by this environment, and are trying to respond.

We can see that a new operating paradigm may be emerging for these portfolios with three interesting aspects:

1. Intervention design: Balancing rigour and speed
2. Operating model: Designing for flexibility
3. Putting ‘customers’ and business performance first.

Intervention design: Balancing rigour and speed

In the current financial services environment there is a far greater expectation on ‘fit for purpose’ solutions that can be designed and deployed quickly to meet emerging needs. So how do people, culture and leadership functions preserve a tolerable level of rigour when working at this new speed?

We are working with clients to apply two techniques in response to this challenge:

• People, culture and leadership experiments – testing more than one prototype option to achieve the same result to see what works best. This approach reinforces the application of evidence through A/B testing techniques and allows teams to be more creative in their intervention designs and application of theory.
• Exploratory impact evaluation – applying new evaluation techniques that blend exploratory qualitative methods (like direct observation, in-depth interviews and contextual immersion) with pragmatic quantitative measurement. This helps us to unearth rich cultural insights that complement quantitative data.

Operating model: designing for flexibility

Enabling the business to move faster and more flexibly requires changes to the PC&L operating model to increase ‘agility’. However, there is a real concern that ‘agility’ can become ‘rushing’ that erodes potential benefits due to a lack of thought, preparation or consistent focus. This can cause chaos when resources are redirected to immediate priorities and other work is deprioritised, or missed.

We are working with financial services clients to address this issue in the following ways:

• Delivery sprints balanced by a BAU ‘spine’ – sprints are periods of intense effort, framed by clear outcome objectives, and constrained to a tight timeframe. Within the sprint there is regular and rapid reprioritisation of tasks, reflection on progress, and immediate feedback and learning amongst a multidisciplinary team. Sprints are most successful when enabled by a stable ‘spine’ or, group of people managing the essential BAU in a more regular operating rhythm.
• Managing strong and loose ties across dense partnership networks – businesses are becoming more networked, less hierarchical, less vertically integrated. This means that PL&C teams will increasingly be able to access specialist talent and capability on demand, ranging from global consulting firms through to individual freelancers. These relationships must be managed with mutual understanding, a strong focus on context and an emphasis on generosity, possibility and mutual enrichment.

Culture: putting ‘customers’ and business performance first

Financial services were one of the first sectors in Australia to apply customer-centric design techniques to improve or rethink products, services and customer experiences. These techniques emphasise the importance of really understanding the customer, their perspective, and the job they need to get done before considering solutions.

Nous is collaborating with some of our clients on customer-centric design for leadership development:

• Applying customer profiling techniques to understand participants, as well as business needs – we are increasingly working from the starting point of employees as customers of internal services. Applying marketing techniques we help our PC&L clients really understand who their clients are through profiling, in order to create employee personas or archetypes based on their different needs, perceptions and expectations.
• Learning journey mapping – drawing on customer journey mapping, backwards design and theory of change techniques, we help clients visually depict and communicate learning and development journeys. These are useful to understanding how learning ‘channels’ or ‘touch points’ come together to create a cohesive learning experience.
• Rapid prototyping and iteration – prototyping is a method for iteratively developing and testing an idea, design or intervention with your target employee audience. It is a way of quickly testing critical assumptions about how people will engage with and respond to your idea early, so that time is not wasted developing solutions that won’t resonate.

While there are certainly challenges to be overcome, it is an exciting time to work in financial services and in PC&L. In moving towards this new, agile operating paradigm, we encourage PC&L functions to think boldly and be pro-active when considering HR approaches.

This article was prepared by Nous Group following a series of in depth discussions with People, culture and leadership executives in a diverse set of major Australian financial services businesses. The thinking draws on the insights from those discussions, but is the responsibility of Nous Group. The paper was prepared to help all of Nous Group’s clients to better prepare for the future.

Written by Penelope Cottrill during her time as a Principal at Nous Group.