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A piece in The Guardian announces that Barclays is going to send 2100 Compliance Staff to the Judge Business School  in Cambridge to be ‘trained by academics ranging from philosophers to lawyers’. Barclays is launching a multi-million pound programme called Compliance Career Academy. This is of course all happening in the context of the Banking Industry’s recent history and, in particular for Barclays, the fresh allegations by the New York Attorney, Eric Schneiderman, about ‘dark room trading’.

Barclays chairman, Sr David Walker, says that the bank already spends 300 million pounds on ‘compliance’. The piece in The Guardian continues by saying that the academics will train staff in ‘truthfulness’ and ‘what is compliance’. The later sounds a sensible thing to do for people who are Compliance Officers. (But, how did they get to be there without ‘knowing’ what compliance is? I wonder).

I am afraid Barclays has chosen the path of a highly sophisticated, highly prestigious, highly visible, highly educational, highly well intentioned, highly expensive, waste of time. A Compliance (Police) Academy will not change the culture. It’s the wrong answer. Culture is behavioural. Behaviours are not taught in classrooms. Most of the non-compliance/deviant/crossing the legal border banking problems are behavioural, not due to lack of rational (or even emotional) understanding. More trained compliance police will increase the number of better-educated and skilled people in compliance, with zero guarantees that this will have any effect on culture what so ever.

Take the example of Safety. Do you think that the problems in BP with the Deepwater Horizon oil spill in the Gulf of Mexico, the Macondo disaster in 2010, happened because BP people were not well trained? Should we send them back to the classroom to be retrained in Safety? Should BP double the pool of Health and Safety officers to guarantee the avoidance of another Macondo? ‘It’s the culture stupid!’.

You can go back to any single ‘famous disaster’, NASA for example, and you will find that everybody involved were very intelligent, well educated, well trained, and highly skilled. The last thing they would have needed was ‘more training’. Every single time you’ll hit ’culture’. The same applies in Banking. Increasing compliance squads in Banking, Oil and Gas, Transportation, Pharmaceuticals etc, will never solve the culture issue.

Behaviours create culture. Behaviours are something that people exhibit, other people copy, critical masses are created, these critical masses copy each other and, soon, ‘a new way of doing things’ become the norm. Behaviours belong to, what I call, World II, a ‘pull’ world (we are pulling each other in behavioural terms, from the way we dress and talk, to how we push the envelop, stretch the concept of truth, speak up or not, or work within or beyond ethical boundaries). We are ‘Homo Imitans’. The world of communication, sensitization, awareness and education is, however, a different world, it is, what I call, a ‘push’ World I. It’s not behavioural. It’s informational. The currency here is communication. But communication is not change, certainly not sustainable behavioural change. Compliance training and legislation belong to this World I ‘push’.  You push messages down and hope people will behave accordingly. But this is the ‘if we just train enough people, we will be OK’ fallacy.

Cultures are created in the day-to-day shaping of an environment by some subgroups of high influence, mainly on a peer-to-peer basis, and in the informal organization that hosts the unwritten rules. The written rules in compliance manuals are the easy ones.  These unwritten rules are the hard ones.  You can have as much training as you want, but legislating behaviours is not a good idea. If peer-to-peer influence and behaviours go in some wrong direction, or rewards systems don’t change, the company will become a highly trained (in compliance) one, but with little true behavioural change.

If there is a ‘push’, top-down communication system that explains what needs to be done, what is acceptable and not (this top-down system is always necessary for this purpose; we would expect the top leadership to own this) but, at the same time, there is no ‘pull’ from a bottom up, grassroots, peer-to-peer change in behaviours, then the message will die. You can have as many Compliance Officers as you want, you will never shape a culture. Behaviours create cultures, not messaging and rarely threatening.

Also, compliance training, even with the Cambridge stamp, will not deal with the elephant in the room which is ‘what is the (social) purpose of banking’. I’ll tell you what is not: to be a ‘compliant industry’.

Come on Barclays! Look around (beyond Cambridge, that is). There has been an Arab Spring, a multitude of new social habits (from social media to smartphones, to smoking cessation), new grassroots movements everywhere, a huge increase in the voluntary sector, etc. Where was the training behind all of these? Look at the kindergarten, the playground of your kids, the urban tribes, how social movements are created (and culture shaping is the creation of an internal social movement) how political campaigns are run, violence in the streets (on the negative side), the social spread of altruism… You’ll always find these common features: no command and control, no top down training, mainly grassroots, bottom up, peer-to-peer influences. It’s an ‘infection model’, not an education model. We, in business, are missing the point if we believe that ‘our world’ is different.

Dysfunctional banking needs a behavioural, internal epidemic of integrity and ethical behaviours. This is doable, but it’s not about legislating behaviours or announcing that the sky will fall in the case of non compliance. One indicator of success? When ethics are as common a conversation as football/cricket/rugby. Unapologetically, I’ll say, this is what Viral Change TM does.

Banking needs Jefferson’s ‘a bit of revolution’. The problem is that no revolution was ever born in a classroom.

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  1. John Childress

    Your best and most on target blog so far, and certainly timely. The question is, will those in charge in the banks listen and ask the right questions, or just tick the box and move on?

  2. Scott Fahlman

    Good essay on an important topic. While you are right that culture needs to be organic at all levels of the organization, it would be good to hear some more of your thoughts on what the top managers can do to change a broken culture. Obviously the first step is to live the desired new culture yourself — there’s no point in preaching what you do not practice — but then what?

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