The proliferation of technological tools today, and the shift to hybrid and remote work that these tools have enabled, are affecting the workplace significantly. In a recent study on the future of work in the investment industry, global professional association CFA Institute identified a number of areas where investment firms need to consider the impact on their organisational culture. These include the ethics and compliance aspect, and the ability to maintain a high-performance culture.
To understand more about what the findings mean, People Matters spoke with Nick Pollard, CFA Institute's Managing Director for the Asia Pacific. Here are the key points he shared.
Has the investment industry become more receptive to digitalisation and hybrid working in recent years? What are some common considerations when shifting towards the hybrid model?
Our research has found that that investment management, and financial services in general, lends itself in many ways very well to remote working. The adoption of WFH policies has been prolific within the financial services sector.
Now in our research, we have examined a series of different job groups in the sector to understand which ones lend themselves to remote work. And one group that faces particular difficulty is the client relationship function. The private banking industry thrives on personal contact, on meeting, sharing ideas, building rapport, and developing trust. All those attributes and soft skills are very important to practitioners of private banking.
If you can't meet face to face, how do you replicate those skills? How are you able to build rapport with someone who's just a two-dimensional picture in front of you?
On the other hand, if you're processing information, doing research, or writing, there's no reason why you can't do that at home.
But the challenge for any organisation is trust.
Firstly, are we being as productive as we can be? Are people working in the same way at home as they would in the office? Secondly, are there issues from a compliance perspective that may cause challenges? Our research shows that a significant number of organisations have suffered compliance challenges in the last two years, particularly in aspects such as data protection or trademarks. This kind of confidential information is more difficult to manage from outside the physical office.
CFA Institute's research surfaced the possibility that as financial institutions implement more technology, the ethical and compliance risks will increase. What can firms do to address this?
The culture of an organisation is very important to how it operates. If the culture is strong, it will continue outside of the office. And if it's not strong, people will behave differently when they're in different environments. It's said that compliance is what you do when no one's watching. And in a sense, no one's watching you when you're working from home. So you have to have a very strong culture around compliance.
It's about understanding policy and being loyal to the organisation, even if you're not physically in the organisation on a regular basis.
Technology plays a role in addressing this. We see that regulatory technology or regtech, tools that either regulators or compliance functions can use to make sure that data is being managed properly outside of the office, is a growth area within all industries. Having these tools means that the use of information is highly monitored and tracked. And although working from home is about trust, this aspect of compliance is not necessarily about trust, or about working from home, or even about the hybrid model. It's about risk management, and communicating to employees the fact that we want to make sure our clients' data is being managed in a secure way.
Another interesting finding of the research is that hybrid work might present a risk to high-performing cultures. Which features of high-performing cultures are likely to be stressed by the hybrid model?
Loyalty is one challenge. It is not easy to generate loyalty when people are not there physically. We have some people in the US, for instance, who have been with us for nearly a year but have never set foot in the office. It's not easy for them to feel that they are part of our mission when they have never really touched it or felt it in person.
Working in teams is another. Before the pandemic, we'd have sat down together as a team. Now, we're doing it on Zoom at all hours of the morning or night, and it almost always ends up being a somewhat individual process.
Celebrating success is one way of reflecting high performance within a team, and that also suffers. Whether it's a deal that has been struck, a piece of work that's found approval, or some research that hit the mark, you'd celebrate together. It might be something very simple—a cake in the office, or dinner after work—but those things are hard to replicate when there is less of a sense of place.
And one more aspect of a high performance culture is continuous learning. It's about having the chance to watch people work—sitting next to them when they are on the phone with clients and listening to how they position conversations or deal with issues. Again, that's going to be much, much harder to replicate going forward, because you can't learn from watching others if you're not in the same place as them. Yes, you can supplement that with distance learning programmes or self-study, but if your day is already very full, when will you find the time to do that?
So one of the questions we are asking is: what's the right way of making sure people continue to learn on the job?
The research also found that since 2019, people's motivations have shifted from the intrinsic to the extrinsic. Could you share some thoughts on what's happening here?
In the past, people focused on the content of their work, the learning involved, and having a passion for the work. Now, the conversation has switched slightly and our research finds that compensation, flexibility, working with other people, and having good colleagues—the extrinsic factors—are more valued. As to why, these are all things that have been challenged in the last few months. For example, we see less of each other. People's compensation has been at risk. People have lost employment. And when you are deprived of these things, you of course will want them more.
Our view is that this change is probably temporary. The extrinsic issues may become more important again later, and we're looking forward to monitoring that and seeing which way it goes.
Finally, what are some ways in which the industry is shifting its mission and vision to meet today's demands for good corporate citizenship?
ESG was already the main focus before the pandemic. But I think it's become a much bigger issue for financial service organisations, in particular forward thinking organisations. First of all, visions are much longer term. People are committing to sustainability and environmental issues in a way that they never have before. I was looking just this morning at a shale oil company in the UK that says that by 2030 they'll be carbon neutral. That target is 10 years ahead of the industry, and they're clearly doing that because they want to help save the planet and be competitive against the rest of their industry. So as ESG and sustainability become more important, goals and visions will be longer term and much more aligned with customers than with short term gain.
And in this context, the social side of what we do will also become a much more important conversation. One way to look at it is in terms of attracting and retaining the best talent. People's requirements for employment are changing. You can no longer say “This is our deal, take it or leave it.” Because people are going to leave. This generation is much more discerning about where they want to work and the kind of organisation they want to work for.
There is a very different dynamic now, in which HR functions are not just going on a fishing trip anymore. The fish has to want to take the hook as well.