Change takes more than FSA ruling

By Mary Clarke, CEO, Cognisco

Much of the debate about the perceived failures in UK companiesí corporate governance in this financial crisis has focused on banks and financial services companies, with a spotlight on the behaviour and actions of certain individuals within them.

On 6th August 2009, The FSA broadened its ëapproved person regimeí to include senior personnel in financial institutions will mean a greater number of tests and checks to see if individuals are fit for their roles. Traders, brokers, managers, and those who influence organisations, including directors and non executives, will be under greater scrutiny from the regulators. Of course, in general terms, this move should be welcomed. It is a step towards achieving greater compliance and potentially improved business practices in the industry.

But, I question what it will actually achieve.

I feel that it is one thing to comply with an FSA regulation and another altogether to affect lasting change. Complying with a regulation and passing a test does not mean that behaviour will actually change. Letís not forget that many financial regulations and compliance procedures were in place before the financial crisis.

For genuine change to take place, a culture must exist where assessments are not seen as box ticking for compliance purposes and mistrusted or feared by employees, but are wholeheartedly embraced by everyone. They should be regarded as an essential part of professional development, a professional standard once achieved to be maintained and in use at every level within an organisation. Assessments shouldnít just focus on testing skills and knowledge; they should also incorporate measurements of employee confidence, competence, and motivation. It is only by testing confidence and motivation that we establish a clear picture of how individuals might behave in certain circumstances and by using situational judgement questioning help identify those who could place a company at risk.

Companies need to move away from regarding assessments as an activity that follows training carried out solely to achieve compliance by using memory tests. Instead they need to look at how they can gain a better understanding of their entire workforce at any point in time, whilst helping their employees reach their full potential by offering coaching, mentoring and encouraging continuous professional development. This means offering different kinds of assessment that quickly directs the individual to a personal learning experience that meets their specific needs and improves their motivation and overall performance.

The airline industry offers a prime example of how assessments can be accepted as a vital component of continuous professional development.

Pilots donít think twice about being assessed – it is fully expected and embraced as part of their role. No one had to tell the pilot who landed a US Airways plane on the Hudson River in New York how to behave – he instinctively behaved in the right way because he was confident in his knowledge of how to respond in critical situations. Likewise, financial companies should strive to achieve the same level of confidence if they really want to affect change. The thing companies need to remember is that it wonít happen overnight, but, by regularly assessing peopleís knowledge in conjunction with their confidence and motivation, companies will achieve sustainable change.