Company culture is a powerful resource, it is the DNA – the soul of any organisation. Simply speaking, a company’s structure and design can be viewed as its body, and its culture as its soul. It is hugely important and often neglected.
So, what is corporate culture? Simply put culture is the way in which organisations do things.
King IV recognises culture by its outcome namely the positive effect of good governance along with good performance, effective control and legitimacy.
There are many policy frameworks that govern the insurance industry and its culture – but is culture something that can be created by regulation? Or should culture transcend the rules, creating more trust among partners than any rule book ever could?
When first published by the former FSB in 2011, the Treating Customer Fairly Outcomes included an outcome that customers must feel confident that they are dealing with an institution where the fair treatment of customers is at the core of their culture. This has subsequently been provided for in legal frameworks for example the Policy Holder Protection Rules. It is often said if you get this right, the rest of the outcomes will follow.
The FAIS Fit and Proper Requirements, published in December 2017, prescribes an organisation’s corporate behaviour is to be demonstrated through the personal behaviour or conduct of the persons who control or govern the organisation as part of the legal requirements in relation to honesty, integrity and good standing.
In July 2018 the Prudential Authority issued its Governance Standard on Corporate Culture for insurers confirming that a governance framework can only occur if it is supported by the insurers Conduct of Financial Institutions Bill. Additionally, it states that corporate culture is the shared values within the insurer including norms for responsible and ethical behaviour applicable to all employees of the insurer.
The recently published Conduct of Financial Institutions Bill provides for a dedicated chapter on culture and governance. This chapter allows the Financial Sector Conduct Authority to set requirements to support the development of appropriate corporate culture with a focus on the fair treatment of customers, improving customer confidence and enhancing transparency and discipline in the industry.
The PWC 2020 and beyond – creating a winning culture report identifies that winning cultures have a clear and compelling sense of purpose that attracts talent and guides expectations. Having the right culture in an organisation can foster innovation, encourage quick decision-making and provide an openness to new ideas, resulting in high team performance that will ultimately contribute to the financial returns of a business.
How to practically go about is to consider regular culture value surveys, setting the tone at the top and internalising corporate culture.
One of the top-tech companies that get it right is Dropbox whose motto is “You’re smart, you figure it out”. Dropbox’s approach is simply to identified what people are good at and let them do it. Airbnb is another example of a company known to get this right by acknowledging the role that culture plays to create the foundation for all future innovation. Co-founder and CEO Brian Chesky relayed the following “If you break the culture, you break the machine that creates your products.”
The culture of a company should translate to the culture of its partnerships. In other words, insurers that embody a culture of giving the customer the best solution for their problems, regardless of who they have to work with to get there, are more likely to survive the wave of disruption currently rolling through the insurance sector.
Everything else (products, strategies, marketing, even innovation) can be replicated, but corporate culture is a differentiator on how business is done.
Suzette Olivier is the Head Business Assurance at Partner Solutions.