What is 'Culture' Anyway? It's the Way Things are Done Around HereMay 31, 2019

 

Corporate culture plays a significant role in the way businesses operate. In this short article, Franklin Templeton’s Head of UK Institutional, Jennifer Ockwell, explains how building and steering culture is important for the asset management industry to deliver its full potential to clients.

Jennifer Ockwell

Jennifer Ockwell
Head of UK Institutional
Franklin Templeton Investment Management Limited London, United Kingdom

Culture is something we know we should think about – it feels right to be thinking about it. In a world of Millennials, #MeToo, Black Lives Matter and a sense of accelerating social change we have the unerring sense that culture is something we should be actively engaging with. But at the same time, we may feel conflicted with the seemingly never-ending pressure of corporate life. Culture has almost always been the soft, nebulous add-on that sits at the bottom of our priorities for investment and attention.

Areas which are more tangible win the day – perhaps because their value is easier to measure, they are simpler to implement, or they are more straightforward to understand.

Culture happens whether we are thinking about it or not. Culture does not just appear because we build an employee engagement programme, start paying attention to diversity or design strategic leadership programmes.

If you work within an organisation, that organisation has a culture.

There are two narratives which tend to dominate our thoughts about culture. The first of these is that culture can accelerate or mitigate failure: this has been the overriding story within the financial services industry since the banking crisis. History tells us that it was not simply technical failings which caused the collapse of mortgage-backed securities, allowed the manipulation of LIBOR or enabled worldwide institutionalised money laundering – rather these crises happened because there was no cultural safety net to catch the behaviours which allowed them to flourish.

The second concept around organisational culture is to do with innovation: in recent years, we have seen significant academic evidence to support the view that 'good' cultures can be a significant factor in how businesses innovate. We hear stories of how the shining lights of innovation place an emphasis on culture and creativity as ways to drive their success.

The problem is when we try to assign our own view of ‘culture’ to one or both of these concepts - when in reality most of us cannot relate day-to-day with either concept. We don’t see ourselves in an organisation poised to fail nor do we exist in a hi-tech, creative bubble. We are more familiar with environments where resources are scarce, practicality is a driving force and existing processes make our choices limited. How can we fit culture into this world when we also need to think about balance sheets, staffing, product and IT systems?

Thinking about culture means we need to look beyond profit margins, returns and efficiencies. Culture is broader than this. If we are only able to articulate what an organisation does in the narrow terms defined above - it means that we will only understand success in limited ways.

If we assume that we have both financial and human capital in a business, thinking about how our human capital functions adds a profoundly different dimension to how we consider “achievement”. Financial success is easy to create and recognise; human or cultural success is much harder. It is made of seemingly subjective elements, such as satisfaction, purpose and engagement, but all of these represent successes and value created within our firms, contributing to our overall value creation. Balance sheets create a two-dimensional vision of an organisation’s potential, to add the others is to build a 3D perspective that encompasses new ways of succeeding.

Asset management is a business just like any other – we work within existing practices and assumptions, we shape our successes and failures through the relationships and partnerships that we build, and we justify our existence through the value we create for those who use our services. This means that culture is as important for us as it is for all organisations.

We need to know what we are doing, how we do it and why we do it. Culture is a critical mechanism in all of these – it is not the only one, but if it is absent then there is a gap in our understanding of the business.

After all, our success lies in a handful of areas – beyond our operational effectiveness are three platforms which enable our achievements:

  • The trust that exists between us and our clients
  • The purpose which underlies the decisions and actions we take
  • The ways in which we define and measure performance and value

Each of these are driven by the cultural building blocks of our organisations. They are shaped by culture and in return shape culture themselves: this endless loop of influence and evolution creates our operating environment and drives the outcomes we produce.

Asset management, as with all business success, is a holistic endeavour. Those who are able to keep in view the full circle of factors which impact on what they do are equipping themselves to sustain their success. Culture is a major link in this circle, and it is due our full attention and engagement.

Culture is not just diversity and inclusion measurements, mission, vision or value statements. It is not just workplace engagement surveys, recruitment practices or corporate social responsibility. It is all of these and more – each of these are part of the patchwork of what culture really is: the way things are done around here and the way in which we choose to succeed.

Data from third-party sources may have been used in the preparation of this material and Franklin Templeton Investments (“FTI”) has not independently verified, validated or audited such data. FTI accepts no liability whatsoever for any loss arising from use of this information and reliance upon the comments, opinions and analyses in the material is at the sole discretion of the user. Products, services and information may not be available in all jurisdictions and are offered by FTI affiliates and/or their distributors as local laws and regulations permit. Please consult your own professional adviser for further information on availability of products and services in your jurisdiction.

The comments, opinions and analyses presented herein are for informational purposes only and should not be considered individual investment advice or recommendations to invest in any security or to adopt any investment strategy. Because market and economic conditions are subject to rapid change, comments, opinions and analyses are rendered as of the date of the posting and may change without notice. The material is not intended as a complete analysis of every material fact regarding any country, region, market, industry, investment or strategy.

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