The 5th of March marked the next step in the FCA’s focus on culture, with the publication of a series of essays looking at ‘purpose’. Discussion Paper DP20/1,“Transforming culture in financial services – Driving purposeful cultures” contains a collection of essays looking at corporate purpose. Whilst the FCA makes clear that the views contained in the essays are not its own, the introduction to the paper provides an insight into the FCA’s thinking and approach, and the role that it envisages purpose should play.
Those familiar with the FCA’s previous statements on culture will remember that purpose formed one of four areas identified by the FCA as a driver of culture(alongside leadership, the approach to rewarding and managing people, and governance). The FCA has stated that in order to understand the culture of the firms it supervises, it assesses the effectiveness of these four drivers in reducing the harm that could result from a firm’s business model and strategy. Outlining its views on the importance of purpose, the FCA states that “Purpose is the gravitational force that draws in and aligns teamwork, engagement, inspiration and creativity.” Continuing the astronomical theme, it goes on to say that to achieve such alignment, “the stars of employee purpose, social purpose, firm purpose and shareholder purpose all need to align. But in many sectors and for many years, the stars haven’t aligned. And the fault in the stars has created unhealthy cultures.”
The FCA draws a now-familiar link between whistleblowing and culture, stating that a healthy culture is both purposeful and safe. It states that ‘safe’, in this context, means leaders at all levels fostering an environment in which employees are comfortable expressing their opinions and are listened to when they do.
The essays themselves are split into three groups: firm-specific, sector-specific and thematic. Like the culture-related essays published in 2018 in DP18/2, the essays are intended to give food for thought and to help organisations do their own thinking around what their purpose is and how they can align decision-making and behaviour throughout the organisation with its stated purpose.
Although written largely (and unsurprisingly) from the perspective of financial institutions, the themes and practical points emerging from the essays could have wider application, and may particularly be of interest in a listed company context, given the expectation from a corporate governance perspective that boards will be responsible for establishing a company’s purpose, values and strategy.