No-one is an island runs the saying and in business that concept is certainly true. Interconnectedness abounds and not simply in complex worldwide supply chains. We see echoes of the same ideas across business approaches and strategies, across training methodologies and customer focus.
Take for example the Financial Conduct Authority’s (FCA) approach to conduct culture. An intrinsic element of the regulatory system for financial firms, conduct culture is based on five rules. These start with acting with integrity, and acting with due care, skill and diligence. When we look at recommendations for embedding these rules into financial services organisations, themes such as leadership, board accountability, training and integration with the strategy come to the fore.
It’s very easy therefore to see parallels between conduct culture and other elements of business such as strong leadership, corporate governance, or risk management. And that’s not really surprising. After all, successful businesses are founded on cultures which look to embed strong principles throughout the organisation.
With this interconnectedness in mind, we were particularly interested to see the results of the recent Financial Reporting Council (FRC) stakeholder review. Carried out by ComRes the survey examined the relationship between the FRC and its stakeholders including directors, investors, auditors and other professional bodies. The executive summary makes interesting reading, particularly as it throws up a number of recommendations which, although directed at the FRC, could equally apply to other organisations and businesses. Key among these are:
Transparency & Openness. In 2017 the FRC increased its emphasis on the need for transparency in business and it appears from the report that it could do more to improve its own levels of transparency, particularly in terms of process and decision making. Now it has to be acknowledged that there will be times when commercial confidentiality comes into play and this is true of all organisations. However, there are also times in business when increasing transparency will not only boost understanding but also enable people to improve their own approaches to their workflow. For example, sharing information about the direction of the business across the organisation could help people to identify training needs which in turn may help to successfully deliver the strategy.
Outcome. Across the board respondents indicated that they would like the FRC to be more outcome driven. Here again this is an area which has risen in importance across business in recent years. Profitability is no longer the sole focus for business, if it ever was. Innovation, customer focus, being aware of the wider stakeholder population, sustainability; all these and more require businesses to be more aware of the implications and outcomes of their actions and to plan accordingly. In turn, this moves employee training away from process and towards a more holistic view of the organisation and its place in the wider society.
Overall the ComRes report makes interesting reading. On the one hand it sheds light on the workings of the FRC. But it also highlights some areas and questions which businesses as a whole may wish to consider; not the least of which may be whether the organisation really understands and takes account of its wider stakeholder constituency.
