In the last decade, since the financial crash we have seen an increased social, political and business pressure for leaders to be held personally accountable for the conduct and misconduct of their organisations. Across the world and in different sectors we are seeing leaders held to account, whether it be examples such as Facebook, Oxfam, the BBC, the NHS or, of course, banks and financial services.
UK financial services regulators have introduced an accountability regime for senior managers in the form of the Senior Managers and Certification Regime. Since the financial crisis, increasing emphasis has been placed on how effective leadership contributes not only to functioning markets but also the fair treatment of customers.
From 100 hours of interviews, my research identified key differentiating behaviours, thinking and drivers of successful leaders in regulated organisations.
What are leaders saying?
I interviewed and surveyed leaders of regulated firms in many sectors, asking how they felt about being a leader in this changing environment. Here’s just a selection of what they said:
It’s absolutely vital to gain the regulator’s trust
It took two years for people to genuinely trust that I wanted to them to speak honestly to me
Sometimes it can be personally terrifying
My number one priority is ‘culture preservation’ – preserving the great culture we’ve developed, despite our challenges and growth plans
You just can’t focus everything on short term profit – the regulator insists you consider the customer at all times
You have to realise you really do have a ‘duty of care’ to customers that are often vulnerable or just place themselves in your hands
I try to spend a lot of my time visiting the ‘front line’ and listening to people
Everyone seems a lot smarter and experienced than when I was working in a non-regulated business
You have to actually enjoy the complexity and shifting sands.
What differentiates a successful leader?
My research identified 3 key areas in which successful leaders stand out in regulated environments:
Personal – specific personality traits and skills enabling them to cope with and thrive on the personal accountability for the conduct and that of their businesses
Relational – the ability to relate to, empathise with and influence people of all types including colleagues, boards, front line staff, customers, regulators and auditors
Organisational – a strong understanding of governance balanced with empowerment and innovation is critical to success as a leader – the ability to be in control, but not too controlling.
Put simply, I believe leaders in regulated businesses need to be expert in customers and conduct, making difficult decisions, risk and governance, changing organisations and people, learning and anticipating. They also need to be great at developing these skillsets in the people around them, building a legacy of strength in the organisation, or they end up taking all the burdens on their own shoulders.
Gary Storer is an experienced Board adviser, leadership coach and risk professional, having worked in regulated sectors for nearly 30 years. In 2002 he founded and leads Enterprise Learning, a specialist risk and regulatory consultancy which has won many awards including being listed in the FT Top UK Consultancies list in 2018, 2019 and 2020 for its work in risk and governance. In this blog Gary writes about his research into what differentiates leadership in regulated sectors and a new skills model for successful regulated leaders. His research was published in the Journal of Risk Management in Financial Services. If you’d like to know more about his research, Gary can be contacted via www.enterprise-learning.co.uk or on LinkedIn.