1) A study of over 2,400 managers in financial services found that framing competitive situations in terms of potential losses led employees to feel more anxious and less creative, while framing situations in terms of potential gains led to more excitement and innovative behaviors.
2) Regulators and business leaders can help create a positive culture in the industry by focusing communication on promoting good behavior rather than just punishing bad acts. Management systems also need to measure and reward good performance not just monitor for risks.
3) Recruiting competitive people and promoting diversity can help as the study found women and competitive individuals were more likely to respond creatively to challenges while men were more likely to choose unethical options.
By David F. Larcker and Brian Tayan, Stanford Research Spotlight Series, September 1, 2016
This Research Spotlight provides a summary of the academic literature on the influence that CEOs have on company outcomes (performance and risk). It reviews the evidence of:
• The contribution of the CEO to overall company performance
• The relation between previous managerial experience and future performance
• The relation between personal attributes and performance
• The relation between personality and performance
• Factors that might influence risk tolerance
This Research Spotlight expands upon issues introduced in the Quick Guide “CEO Succession Planning.”
Succession “Losers”: What Happens to Executives Passed Over for the CEO Job?
By David F. Larcker, Stephen A. Miles, and Brian Tayan
Stanford Closer Look Series
Overview:
Shareholders pay considerable attention to the choice of executive selected as the new CEO whenever a change in leadership takes place. However, without an inside look at the leading candidates to assume the CEO role, it is difficult for shareholders to tell whether the board has made the correct choice. In this Closer Look, we examine CEO succession events among the largest 100 companies over a ten-year period to determine what happens to the executives who were not selected (i.e., the “succession losers”) and how they perform relative to those who were selected (the “succession winners”).
We ask:
• Are the executives selected for the CEO role really better than those passed over?
• What are the implications for understanding the labor market for executive talent?
• Are differences in performance due to operating conditions or quality of available talent?
• Are boards better at identifying CEO talent than other research generally suggests?
Unlocking Workforce Engagement: The Critical Business Issue of the Decade James Sillery
Presented at Workforce Engagement, September 18, 2013
With today’s global economy dependent on people and their knowledge, skills and commitment, companies need to fully engage their workforce to be successful. The challenge is enormous. Demographics suggest critical talent shortages across industries and geographies. At the same time, we are experiencing record levels of employee disengagement. It has become the critical business issue of the decade. The company can effectively engage its workforce can create a significant competitive advantage going forward.
Human Resource professionals are positioned to play a key role in workforce engagement. In this presentation, you’ll hear specific strategies and tools for developing human capital solutions that are needed to unlock workforce engagement. We will provide participants with an understanding of concepts like behavioral economics, perceived values and amplified voices. As a result, participants will leave the presentation with specific actionable items that they can bring back to their workplace to immediately begin to drive cost effectiveness, improve productivity and increase company performance.
David F. Larcker and Brian Tayan
Stanford Closer Look Series
June 24, 2016
One of the most controversial issues in corporate governance is whether the CEO of a corporation should also serve as chairman of the board. In theory, an independent board chair improves the ability of the board to oversee management. However, an independent chairman is not unambiguously positive, and can lead to duplication of leadership, impair decision making, and create internal confusion—particularly when an effective dual chairman/CEO is already in place.
In this Closer Look, we examine in detail the leadership structure of publicly traded corporations and the circumstances under which they are changed. We ask:
• What factors should the board consider in deciding whether to combine or separate board leadership?
• How can the board weigh the tradeoffs between stability of leadership, efficient decision making, and decreased oversight?
• What structure should be the default setting for a corporation?
• Why do activists advocate that corporations strictly separate the roles when there is little research support for this position?
By David F. Larcker and Brian Tayan, Stanford Research Spotlight Series, September 1, 2016
This Research Spotlight provides a summary of the academic literature on the influence that CEOs have on company outcomes (performance and risk). It reviews the evidence of:
• The contribution of the CEO to overall company performance
• The relation between previous managerial experience and future performance
• The relation between personal attributes and performance
• The relation between personality and performance
• Factors that might influence risk tolerance
This Research Spotlight expands upon issues introduced in the Quick Guide “CEO Succession Planning.”
Succession “Losers”: What Happens to Executives Passed Over for the CEO Job?
By David F. Larcker, Stephen A. Miles, and Brian Tayan
Stanford Closer Look Series
Overview:
Shareholders pay considerable attention to the choice of executive selected as the new CEO whenever a change in leadership takes place. However, without an inside look at the leading candidates to assume the CEO role, it is difficult for shareholders to tell whether the board has made the correct choice. In this Closer Look, we examine CEO succession events among the largest 100 companies over a ten-year period to determine what happens to the executives who were not selected (i.e., the “succession losers”) and how they perform relative to those who were selected (the “succession winners”).
We ask:
• Are the executives selected for the CEO role really better than those passed over?
• What are the implications for understanding the labor market for executive talent?
• Are differences in performance due to operating conditions or quality of available talent?
• Are boards better at identifying CEO talent than other research generally suggests?
Unlocking Workforce Engagement: The Critical Business Issue of the Decade James Sillery
Presented at Workforce Engagement, September 18, 2013
With today’s global economy dependent on people and their knowledge, skills and commitment, companies need to fully engage their workforce to be successful. The challenge is enormous. Demographics suggest critical talent shortages across industries and geographies. At the same time, we are experiencing record levels of employee disengagement. It has become the critical business issue of the decade. The company can effectively engage its workforce can create a significant competitive advantage going forward.
Human Resource professionals are positioned to play a key role in workforce engagement. In this presentation, you’ll hear specific strategies and tools for developing human capital solutions that are needed to unlock workforce engagement. We will provide participants with an understanding of concepts like behavioral economics, perceived values and amplified voices. As a result, participants will leave the presentation with specific actionable items that they can bring back to their workplace to immediately begin to drive cost effectiveness, improve productivity and increase company performance.
David F. Larcker and Brian Tayan
Stanford Closer Look Series
June 24, 2016
One of the most controversial issues in corporate governance is whether the CEO of a corporation should also serve as chairman of the board. In theory, an independent board chair improves the ability of the board to oversee management. However, an independent chairman is not unambiguously positive, and can lead to duplication of leadership, impair decision making, and create internal confusion—particularly when an effective dual chairman/CEO is already in place.
In this Closer Look, we examine in detail the leadership structure of publicly traded corporations and the circumstances under which they are changed. We ask:
• What factors should the board consider in deciding whether to combine or separate board leadership?
• How can the board weigh the tradeoffs between stability of leadership, efficient decision making, and decreased oversight?
• What structure should be the default setting for a corporation?
• Why do activists advocate that corporations strictly separate the roles when there is little research support for this position?
Only Human: The Emotional Logic of Business Decisionsgyro
In order to better understand and quantify the role that emotional human factors play in decision making, gyro partnered with Fortune Knowledge Group to survey more than 700 high-level executives from a variety of disciplines across nine industries. We asked pointed questions about their hopes and fears, how they choose their partners, and how they deal with the tremendous complexities of business decision making within this hyperconnected world.
American business is losing its war on customer engagement.
As a quick reminder on why we took up arms in the first place, it was June 2013 when Gallup first released its State of The American Workplace study that revealed only 30 percent of the nation's workers were fully engaged in their jobs.
Since then, companies have gone on to launch all kinds of well-intended missions, campaigns and strategies, all with the goal of upending apathy, discontent – and the low discretionary effort too often displayed by their rank and file employees.
Agency talent churn is coming. The Great Recession has bred hordes of restless agency staffers. These valuable people are getting ready to seek better jobs.
Here are some thoughts on addressing this problem.
White Paper - Dear John - A New look at why employees leaveshokr.ahmed
As talent management professionals strive to balance the changing needs of baby boom
employees with evolving expectations of younger employees, talent retention has become
more complicated than ever. To retain top talent, competitive companies need to understand
what drives an employee’s decision to leave or stay with an organization.
As talent management professionals strive to balance the changing needs of baby boom employees with evolving expectations of younger employees, talent retention has become more complicated than ever. To retain top talent, competitive companies need to understand what drives an employee’s decision to leave or stay with an organization.
Conventional wisdom has always been that employees leave supervisors, not companies. However, newer studies are finding that conventional wisdom may be wrong. It’s NOT just the boss anymore.
This Research Spotlight provides a summary of the academic literature on CEO pay levels in the United States. It reviews the evidence of:
• Long-term trends in the CEO compensation
• The relation between CEO compensation and governance quality
• The relation between peer group composition and CEO pay
• The relation between compensation consultant selection and CEO pay
This Research Spotlight expands upon issues introduced in the Quick Guide “CEO Compensation”.
The Closer Look series is a collection of short case studies through which we explore topics, issues, and controversies in corporate governance. In each study, we take a targeted look at a specific issue that is relevant to the current debate on governance and explain why it is so important.
Only Human: The Emotional Logic of Business Decisionsgyro
In order to better understand and quantify the role that emotional human factors play in decision making, gyro partnered with Fortune Knowledge Group to survey more than 700 high-level executives from a variety of disciplines across nine industries. We asked pointed questions about their hopes and fears, how they choose their partners, and how they deal with the tremendous complexities of business decision making within this hyperconnected world.
American business is losing its war on customer engagement.
As a quick reminder on why we took up arms in the first place, it was June 2013 when Gallup first released its State of The American Workplace study that revealed only 30 percent of the nation's workers were fully engaged in their jobs.
Since then, companies have gone on to launch all kinds of well-intended missions, campaigns and strategies, all with the goal of upending apathy, discontent – and the low discretionary effort too often displayed by their rank and file employees.
Agency talent churn is coming. The Great Recession has bred hordes of restless agency staffers. These valuable people are getting ready to seek better jobs.
Here are some thoughts on addressing this problem.
White Paper - Dear John - A New look at why employees leaveshokr.ahmed
As talent management professionals strive to balance the changing needs of baby boom
employees with evolving expectations of younger employees, talent retention has become
more complicated than ever. To retain top talent, competitive companies need to understand
what drives an employee’s decision to leave or stay with an organization.
As talent management professionals strive to balance the changing needs of baby boom employees with evolving expectations of younger employees, talent retention has become more complicated than ever. To retain top talent, competitive companies need to understand what drives an employee’s decision to leave or stay with an organization.
Conventional wisdom has always been that employees leave supervisors, not companies. However, newer studies are finding that conventional wisdom may be wrong. It’s NOT just the boss anymore.
This Research Spotlight provides a summary of the academic literature on CEO pay levels in the United States. It reviews the evidence of:
• Long-term trends in the CEO compensation
• The relation between CEO compensation and governance quality
• The relation between peer group composition and CEO pay
• The relation between compensation consultant selection and CEO pay
This Research Spotlight expands upon issues introduced in the Quick Guide “CEO Compensation”.
The Closer Look series is a collection of short case studies through which we explore topics, issues, and controversies in corporate governance. In each study, we take a targeted look at a specific issue that is relevant to the current debate on governance and explain why it is so important.
I need a 100 word reply to each of the following forums (total 800 w.docxtroutmanboris
I need a 100 word reply to each of the following forums (total 800 words)
Statistics Forum #1
As stated in my previous discussion, my supervisor uses a spreadsheet called a CEMASTER which allows her to see our credentials like how long we have been with the company, our skills, our wages, our bonuses, and what training we need to advance. A confidence interval gives an estimated range of values which could include an unknown population parameter. If my supervisor were to add confidence intervals this would give her a percentage probability that an estimated range of possible values includes the actual value that is being estimated. For example, she could use this information when its time to evaluate if we are eligible for our yearly raises.
Statistics Forum #2
After reviewing my pervious example on estimates I can understand why people do not entirely trust single point estimates. Our book states that “
The
confidence
interval
of
the
population
mean
is
a
range
within
which
the
value
of
an
unknown
population
mean
has
a
specified
probability
of
occurring
”
(Tanner & Youssef-Morgan, 2013).By adding confidence intervals we are able to narrow the number down. I asked a manager in human resource who keeps of the schedule to include time off, sick day, and no shows if she would prefer a signal point estimate or a range . She told me that she would prefer the range estimate. She agreed with our text witch states “
a
range
of
numbers
within
which
the
true
percentage
of
spoilage
will
occur
with
a
stated
probability”
(Tanner & Youssef-Morgan, 2013)
.
I also asked another person in the HR office and he thought the range estimate was also a better idea. They both felt that the numbers where better and more reliable for their job. They stated that when dealing with a large employee population it would be better to get a range that encompasses the possibilities in numbers.
Statistics Forum #3
Chi – Tests are also called distribution – free tests and no assumptions are needed about how the data are distributed and there are no requirements regarding their scale. I think a good example of a chi – test would be how your grades have changed over the course of a year. You would compare last year results to this year results. The results would tell you whether your grades improved over a years time.
Statistics Forum #4
Our book states that “chi-square is a test of the independence of two nominal scale variables” (Tanner & Youssef-Morgan, 2013)
.
I would have used the chi-square test when purchasing a new car. There are difference in overall cost to consider. To include the sticker price, taxes, the mpg and general repair the car would need in its first few years. “Chi-square is a statistical test commonly used to compare observed data with data we would expect to obtain according to a specific hypothesis” (Pennsylvania State University, 2013). I could get a better understanding on the overall cost on car owners.
Making compensation pay: Increasing the ROI from monetary investments spent o...Bhupesh Chaurasia
Recent transformations in performance management and compensation practices are making it possible for companies to rethink traditional compensation approaches and reward employees in more meaningful ways. This paper shares insights from business leaders, compensation professionals, managers and front-line employees regarding the current and future state of monetary and non-monetary rewards. #hr #hrtechnology #hrm #humanresources #hrtech #hrms #humancapital #hrblogs #HCM #HRIS
· Sanjon has worked for the South Insurance Company for the past 2.docxodiliagilby
· Sanjon has worked for the South Insurance Company for the past 23 years. He graduated with a top-notch accounting degree and also has his MBA. Bar none, Sanjon is considered by everyone in his organization to be a brilliant accountant. At issue is that Sanjon's brilliance may be coupled with just a little too much "creativity" when one considers his approach to maximizing the company's profits.
At the end of every quarter, Sanjon calls up the supervisors of each of South’s insurance branches and asks them to estimate their outstanding insurance claims. These insurance claims represent money that the company likely owes its customers—that is, claims are estimates of money owed at the end of the quarter to South’s customers who are likely to file a claim in the near future, but who have not yet done so. (The total money owed—but still outstanding—is referred to as a "claims lag," since there is a lag between the date of an insurable event and the date that South becomes aware that a customer has filed a valid claim).
For instance, based on historical experience, at the end of each quarter, Division 1 of South Insurance estimates that 20% of all claims for that quarter are still outstanding (i.e., an insurable event has occurred, but has not yet been reported to Division 1). This is the number (20%) reported to Sanjon. Being the "brilliant" accountant that he is, and in light of his sheer eagerness to maximize profits for the quarter (and because his quarterly bonus is based on each quarter's profits), Sanjon reduces the outstanding claims reported by all of South's insurance divisions by 10%. In doing so, he has effectively reduced the company's quarterly claims expenses by this same 10%—and voila!— Sanjon has also managed a creative increase in his own quarterly bonus.
Sanjon sees nothing wrong in reducing the divisions' company claims estimates, reasoning, "Look, they're all a bunch of estimates anyhow!" Sanjon further opines, "Besides, I have a duty to this company and to its stockholders—to maximize profits!"
Consider this situation from a virtue ethics perspective. What virtues are at stake?
Does Sanjon appear to be rationalizing his behavior as a "duty" to others?
On a scale of unethical (1) to ethical (5), where would you rate Sanjon’s practice? Why?
Note:
150 word response to the posts of at least two of your classmates. Your responses should have depth of critical thought and not simply agree or disagree. For each response also bring in information from at least one background source or your own research to help inform your classmates. Cite the source.
Classmate Post #1
Who Do You Want To Be???
Hello Everyone,
Virtue ethics you are decisions we make that help mold us into better people. This implies that our character, who we are, changes based on the decisions we make throughout our life (The Ethics Centre, 2016). In other words, a virtuous person makes decisions not based on personal gains but on the sheer fact that ...
It is time to conduct a “reset” exercise and put employee
engagement back in its proper place and perspective. This paper
identifies five areas that our research has shown to be
potentially troublesome for companies - especially in terms of
helping them frame their expectations in the most reasonable,
realistic and productive ways. We have discussed them here to
help you understand the true power of aligning employee drives
and needs with those of your company
Professional and Ethical, Issues and ResponsibilitiesUpekha Vandebona
Discussing about Ethics in Business World. This mentions why we need to foster an ethical working environment and how to perform ethical decision making process.
1. www.pwc.co.uk/fsrr
Stand out for the
right reasons
Why you can’t scare
bankers into doing the
right thing
Creating excitement about
winning, rather than a
fear of losing, is the key to
increasing innovative and
ethical behaviour across
the sector.
PwC and London Business
School research June 2015.
2. 2 PwC and London Business School research June 2015
Contents
The research, and what it shows 4
What this means for the industry 6
Methodology 10
Stand out for the right reasons 11
About the authors 12
3. 3Stand out for the right reasons
A get‑tough approach to poor performance in financial
services is creating a climate of fear. And that risks
breeding more unethical conduct, not less – exactly the
opposite of what regulators, businesses and the public
want. The threat of fines, bonus clawbacks and even
prison won’t on its own prevent further misselling and
market‑rigging scandals.
That’s because anxiety disrupts people’s capacity to
make good decisions, often leading them to behave
less ethically.
This is the clear implication from our research with London Business School.
Just as clearly, the findings show that if businesses pay more attention to
creating excitement about competition, they can help employees be significantly
more innovative. We believe the research also suggests how the industry can
stop the cycle of bad news and negative publicity that’s dogged it since the
financial crisis.
• Just by changing how they communicate, rule makers can create a more
positive climate in financial services and individual businesses, while still
being clear about sanctions for bad conduct.
• Leaders can play a vital role by putting the spotlight on the positive outcomes
of good behaviour rather than the penalties for behaving badly.
• Recruitment and rewards can help foster the right kind of competitive
culture.
• And by changing the emphasis of management information systems,
businesses can encourage innovation and creativity as well as spot warning
signs of bad behaviour.
‘No passion so effectually robs
the mind of all its powers of
acting and reasoning as fear.’
Edmund Burke (1729‑1797), writer,
philosopher and statesman
4. 4 PwC and London Business School research June 2015
The research, and
what it shows
Do you prefer avoiding punishments or earning rewards?
Imagine it’s coming to the end of the business year. You’re
lagging behind your colleagues. If you don’t do better
than them you’ll lose your substantial bonus. How does
that make you feel? And might it tempt you to push a big
client towards an investment decision that increases your
profits, rather than one that gets them the best result?
Now imagine that instead of being told
about losing a bonus if you do badly,
you’re told how doing a great job can
enhance your bonus. The underlying
situation is exactly the same. The only
change is the way it’s been presented.
It seems a small difference, but it has
an enormous effect on how people feel
and act.
How competition makes people feel
We worked with London Business
School to study this effect, surveying
2,431 managers working in insurance,
wealth management and banking
(retail and corporate). We were
interested in the choices people make
when they’re competing with colleagues
for bonuses, pay rises and promotions.
The survey presented three realistic
work scenarios. But for half the
managers we described them in terms
of avoiding losses, and for the other half
we described them in terms of winning
rewards. In each case, we asked people
how excited or anxious they’d feel, and
what they’d do. The actions they could
choose included creative responses,
like working in new ways, as well as
unethical responses, like maximising the
bank’s profits at the client’s expense.
We also asked how they felt their
company handled things like
performance management, bonuses,
recognition, promotion and firing. And
we asked about their own preferences:
their attitudes to rewards, and how much
they enjoy competition with colleagues.
They answered anonymously, so they
could be as candid as they liked.
5. 5Stand out for the right reasons
How people behave when trying to
avoid a loss
That’s compared with the managers presented
with the same situations, but with the positive
outcomes of success highlighted. They were
correspondingly more excited than anxious,
leading them to be more than twice as likely
demonstrate innovative behaviour.
When we presented situations as potential
losses, managers were:
15%more anxious
than excited,
leading them to be:
>2xmore likely to behave
unethically
6. 6 PwC and London Business School research June 2015
What this means for the industry
Setting the rules, setting the tone
We aren’t suggesting this research means we should abandon rules or abolish penalties for
bad behaviour. The systemic conduct issues present in financial services are serious and
need to be addressed. It’s essential that people understand what’s acceptable and what isn’t
– and that wrong‑doers at all levels are appropriately sanctioned. However the focus on
sanctions, aimed at punishing the minority of people who are prepared to commit deliberate
fraud, breeds anxiety in those who are seeking to do the right thing, but who now head into
work every day fearful of making a mistake. These kinds of pressures have the potential to
push ordinary well‑meaning people into behaving less ethically than we, or they, would like.
We think regulators can set a positive
tone. For example, when they talk
about new rules, they can focus more
on the good behaviour they want to
promote than the bad behaviour they
want to stamp out. And they can give
examples of companies or individuals
already doing the right things.
And rule makers in businesses can
reinforce the effect by identifying their
firms’ purpose with what the rules
stand for.
Excitementrating
Loss scenario Gain scenario
4.30
4.70
+9%
Scenario classification
0
10
Gain scenario
4.70
+9%
classification
Anxietyrating
Loss scenario Gain scenario
3.10
2.70
+15%
Scenario classification
0
7
%Increasein
creativebehaviours
47%
16%
Overall
50
40
30
20
10
0
20%
18%
Loss Framing (making a negative career outcome salient) results in anxiety
levels that are 15% higher than gain framing based on mean scores
Conversely, Gain Framing (making a positive career outcome salient)
results in excitement levels that are 9% higher than loss framing based on
mean scores
7. 7Stand out for the right reasons
Leading people into the right
emotional state
Our research clearly shows people who
are competing with their colleagues are
more likely to behave ethically when
they’re excitedly pursuing rewards
than when they’re fearfully avoiding
punishments. This matters for leaders
in firms and regulatory bodies. They
play a big role in deciding whether
companies habitually frame competition
positively, in terms of benefits, or
negatively, in terms of penalties. That
has a huge influence on the emotional
state of the people who work in financial
services. By presenting competition in a
more positive way, leaders can create a
culture of excitement rather than fear,
and help people behave more ethically.
In fact, leaders should see creating the
right climate and the right culture as
being a central part of their role.
Experiences matter more than policies
They need to recognise that their firm’s
culture isn’t just about its official rules
and policies, but the kind of behaviour
the business values and rewards. In our
survey, people’s beliefs about the basis
for promotion and bonuses varied very
widely, suggesting no relation to the
companies’ actual policies.
We found that the more people believe
promotions and bonuses are based on
how they behave, rather than just the
numbers they’ve achieved, the more
likely they are to respond creatively
in order to beat their colleagues. In
fact, when they believed their bonus
was based on how they behaved, it
correlated with a near‑50% increase in
creative responses.
So if leaders publically promote good
behaviour, they lead their companies
out of the climate of fear. And they
encourage their employees to find more
creative ways of getting results.
A culture of excitement doesn’t mean
bigger bonuses
Moving towards a culture of excitement
doesn’t have to mean paying bigger
bonuses – more likely the opposite,
in fact. To feel excited, people have
to genuinely see their bonus as an
extra. That suggests their base salary
should feel like it’s enough on its own.
Otherwise, people will tend to feel their
bonus is a standard part of their pay
package, something they rely on and so
fear losing.
But when it comes to bonuses, size isn’t
everything. We asked people how their
company’s approach to performance
evaluation and reward made them feel.
When it made them feel anxious, they
tended to say money was one of their
key motivators. They also tended to take
more risks and act in ways that would
draw least attention to themselves,
as well as being more likely to make
unethical choices. On the other hand,
people who said their company’s
approach made them feel excited were
less driven by money. Instead, they were
more likely to be motivated by approval
from their bosses, colleagues and clients
– which is to say, by doing a good job.
All this has implications for companies’
remuneration policies and how they’re
communicated – including in the
recruitment process.
The greater the perception that bonus and promotion is based on
behaviours versus metrics, the greater the creative / innovative behaviour
Bonus based on behaviours
Promotion based on behaviours
Bonus based on metrics
Promotion based on metrics
Relative Impact on Creative Behaviours
0 20 40 60
48%
20%
17%
15%
8. 8 PwC and London Business School research June 2015
Keep on recruiting competitive people
– and women
There are other implications for
recruitment. Our survey doesn’t suggest
that competitive people are part of the
problem: people who said they enjoyed
competition were no more likely to make
unethical choices. Nor is competition
itself a bad thing. It creates emotional
arousal, which people can experience
either positively, as excitement, or
negatively, as anxiety. What matters is
the competitor’s emotional state.
But competitive people were more
likely to make creative choices. So were
women, while men were more likely to
choose unethical options. In what’s still
a male‑dominated industry, that’s food
for thought for recruiters.
The next step – management
information and monitoring
Can we back all this up with longer‑term
positive action to make company
cultures healthier? In every other
area of management, when we want
to change something, we measure
it. Progress usually consists of the
cumulative effects of many small
changes, and we need data to see
whether they’re working.
Capturing new data
Human emotions are hard to measure.
But that doesn’t mean we shouldn’t try.
The social sciences have made huge
strides in the last five or ten years in
finding cheaper, easier and more reliable
ways to assess how people are thinking
and feeling as they go about their daily
lives, thanks to researchers like Daniel
Kahneman and Paul Dolan (authors,
respectively, of Thinking, Fast and Slow
and Happiness by Design).
It should be possible to develop our
management information systems to
capture and report on this kind of data.
Current systems tend to push us in the
wrong direction. That’s because they’re
based on risk‑management techniques,
mostly geared to looking out for the
warning signs of bad things happening.
Learning from other industries
But financial services should learn from
the experience of other sectors that
have focused on changing their risk
culture, like the nuclear, oil and gas, and
chemical industries. They’ve already
found that focusing on bad behaviour
creates a blame culture, which tends to
make people behave less well. That’s
because the metrics make everyone focus
on the things they’re not meant to be
doing. And so long as you’re not doing
any of the bad things, then the extent
to which you’re doing the good things is
irrelevant.
The warning signs of good behaviour
To get people to act in the spirit of the
rules rather than just the letter, they
need to be paying attention to the good
things they’re meant to be doing, and
the positive outcomes of achieving them.
To help them, we need to get better at
spotting what good looks like (including
good emotions). And we need to adapt
our risk and management‑information
systems so they pick up these signs,
measure, report and reward them.
Meanwhile, if you see a financial services
leader going out of their way to promote
good behaviour and positive outcomes,
then publically encourage more of this.
After all, research suggests it’s the best
thing to do – it will encourage excitement
and innovative behaviour. And it is much
more effective than using fear.
9. 9Stand out for the right reasons
‘To get people to act in the
spirit of the rules rather
than just the letter, they
need to be paying attention
to the good things they’re
meant to be doing.’
10. 10 PwC and London Business School research June 2015
Methodology
The research study was designed to investigate the role
of emotions in determining when and why employees
try to beat internal competitor using creativity versus
resorting to unethical behaviours.
The study involved 2,431 managers from three UK financial services
organisations representing insurance, retail banking, corporate banking and
wealth management.
The research consisted of two online self‑completion surveys issued to
participating employees in November and December 2014.
11. 11Stand out for the right reasons
Stand out for the right reasons
Financial services risk and
regulation –many see it as
a problem, we see it as an
opportunity. An opportunity
to shine. An opportunity
to grow. An opportunity to
build trust.
The company that overcomes risk and
adversity is the company that people
remember. The organisation that
understands how to protect itself is the
one that customers will turn to.
At PwC, we work with you to redefine
the way risk and regulation is seen.
Actively embracing change is a powerful
way to enhance your reputation, secure
long‑term growth, sustainable profits
and to deliver value to customers.
With our help, you won’t just navigate
around potential problems, you’ll also be
positioned to get ahead.
To achieve this, we support you in four
key areas.
By alerting you to
the financial and
regulatory risks
you are exposed
to we help you
understand the
position your
business is
in and how to
comply with the
regulations. You
can then turn risk
and regulation to
your advantage.
Adapting your
business to
achieve cultural
change can pay
dividends. Doing
the right thing for
your customers
and your people
will continue to
transform your
business. By
equipping you with
the insights and
tools you need, we
will help you be
better prepared to
turn uncertainty
into opportunity.
Even the best
thought‑through
processes or
products can
sometimes fail.
We help you to act
swiftly to repair
any damage so
you can ensure
that you build
even greater
levels of trust and
confidence in your
business.
Preparing for
issues such
as technical
difficulties,
operational failure
or cyber attacks
is an important
way to protect
your business. We
advise and support
you to design
and implement
the systems and
processes that
can make your
business resilient,
reliable and
effective.
Alert Adapt Repair Protect
1 2 3 4
Working with PwC will help you to get a
clearer understanding of where you are
and where you want to be. Together, we
can develop and help you to implement
transparent and compelling business
strategies that customers, regulators,
employees and stakeholders will buy
into. By adding our skills, experience
and expertise to yours, your business can
stand out for the right reasons.
12. 12 PwC and London Business School research June 2015
About the authors
Duncan Wardley
Director, PwC
T: +44 (0)7787 702 248
E: duncan.p.wardley@uk.pwc.com
Duncan is a Director in PwC specialising
in cultural and behavioural change in
business. He works with PwC’s centre
of excellence for research, Research to
Insight, who conducted the field work
and analysis for this report together with
London Business School. He has worked
extensively with Financial Services
organisations.
Dan Cable
Professor, London Business School
Dan is a Professor of Organisational
Behaviour at the London Business School.
His research focuses particularly on the
application of positive emotion in business.
Jessica Leitch
Senior Manager, PwC
T: +44 (0) 7718 097 433
E: jessica.l.leitch@uk.pwc.com
Jessica is a Senior Manager in PwC’s
specialising in the measurement
and implementation of cultural and
behavioural change in Financial Services.
Anna Steinhage
PhD candidate in Organisational
Behaviour, London Business School
E: asteinhage@london.edu
Anna is a PhD candidate in Organisational
Behaviour at London Business School.
In her research, she investigates the role
of emotions in competition and how they
influence people’s choice of competitive
behaviours.
13. 13Stand out for the right reasons
PwC Contacts
Mark Dawson
Culture and Leadership
T: +44 (0) 20 7213 2530
E: mark.j.dawson@uk.pwc.com
Chris Box
HR policy and process
T: +44 (0) 20 7804 4957
E: christopher.box@uk.pwc.com
David Kenmir
Conduct and regulatory impact
T: +44 (0) 20 7804 4794
E: david.kenmir@uk.pwc.com
David Taylor
Customer impact
T: +44 (0) 20 7804 2892
E: david.j.taylor@uk.pwc.com
Tom Gosling
Reward and performance management
T: +44 (0) 20 7212 3973
E: tom.gosling@uk.pwc.com
Nicola Shield
Conduct management information
T: +44 (0) 20 7804 9315
E: nicola.j.shield@uk.pwc.com
Tracey Groves
Diversity
T: +44 (0) 20 7804 7131
E: tracey.groves@uk.pwc.com
14. 14 PwC and London Business School research June 2015
Notes