Simon Cowell – Saviour of Performance Management in the UK

Now I’m not a big fan of constructing a blog around a national stereotype, but.... when it comes to giving direct, straight, unequivocal performance feedback the Brits are, on the whole rubbish.  We have historically been the masters of understatement – happy to describe a shockingly poor performer at work as “slightly below average” and an excellent performer as “not bad”.  We were happy with our understatement and have prided ourselves on our ability to interpret nuance and place greater value on what wasn’t said rather than what was.

That was, of course, before Simon Cowell exploded onto our TV screens and into our National consciousness.   Now unless you have been living under a rock in the Kalahari desert for the last 10 years you are sure to have heard of Simon Cowell – the Svengali of the talent show and now one of the UKs most globally recognised faces (in a recent survey, vastly more people in the US and the Far East recognised him than recognised David Cameron) – and, whether you love him or hate him (he does have that Marmite effect) you can’t help but be impressed with his business acumen and ability to understand what the viewing public want.

But what this blog seeks to explore is the subtle effect his “say it as you see it” feedback may be having on the Brits attitude to Performance Management.  For the first time in our recent history we have a very visible role model who makes his fortune by giving “honest” feedback.  Almost every week for the past 10 years (since Pop Idol in 2002) we have seen Simon and his fellow judges heaping vitriol and/or praise on our fellow countrymen and we have loved it (just check the viewing figures for confirmation).   The funny thing is it’s not what Simon Cowell says, although he does seem to be pretty accurate most of the time, it’s the manner in which he says it that is having a funny effect.

He just says it, no stammering, no obfuscation, no rambling, no embarrassed ums and ers, no blushing, no wringing of hands – just straight, clear feedback (and no, he isn’t Dutch).  Wow, a whole new role model for the people of Britain and I think it may just be starting to have an effect.  Granted, the “Cowell” model has only been around for 10 years and the Nation has been a model of tongue-tied reticence since before the era of Jane Eyre et al but I do believe I’m beginning to see a change in attitude towards performance management.

From my experience of working with businesses over the last 25 years I think I can relatively accurately say that over the last 10 years we do seem to have been getting better at giving and receiving feedback.  Now it may be because we have much more effective performance management systems in place (perhaps), or it may be because we have much better training programmes on giving feedback (possibly), or it may be because we are required by the HR compliance teams in our businesses to actively participate twice a year (maybe) – or it may just be because of the mental picture we can conjure up in our minds of Simon Cowell giving life changing feedback on a week in week out basis.

So for those who are looking to deliver an uplift in their organisations ability to give and receive feedback you have two options a) send a 10 minute video montage of Simon Cowell in action to those staff just about to carry out performance reviews or b) inspire yourself and your leadership team to role model the fine art of giving feedback yourself (scary I know) – now either solution may not make your staff instantly brilliant at giving feedback but it might just help and with solution b) they will at least have another high profile  role model or two to inspire them to be a bit more like the Dutch when appraising their fellow employees performance.

Let me know how it goes.

No rest for Financial Services as the FSA ups the ante with new Conduct Risk guidance

Following in the much appreciated grand tradition of Guest Blogs, this blog is courtesy of Sandra Quinn - Associate Director of Conduct Risk at Capgemini.  Sandra has a very insightful view on Conduct Risk having worked both for the FSA and a major UK Retail Bank as a Risk Director.   

Now, if you are an FS industry watcher you are going to love this.  For everyone else, take note, other regulators are watching with interest how a revamped FSA takes on its responsibilities. This blog focuses on the implications for FS firms following the recent publication of the latest set of guidance from the FSA

With the publication of its second Retail Conduct Risk Outlook, the FSA has set out the priority consumer risks for its attention in 2012/13.

http://www.fsa.gov.uk/static/pubs/other/rcro12.pdf

Conduct Risk – the risk that a financial services firm’s behaviour leads to poor customer outcomes – is high on the FSA’s agenda. And will be higher on the Financial Conduct Authority’s agenda. The clue being in the name.

What the Risk Outlook means for firms is that those looking to stay out of the FSA’s Enforcement Division will need to treat this as their marching orders on conduct and customer risk for the next year and demonstrably get onto seriously examining the risks in their firms and unequivically doing something about them.

The problem for them is that the report highlights 48 risks, with 16 risks new since 2011, covering just about all financial services firms and businesses. Only 3 risks from last year have been relegated, but the FSA says that does not mean they are no longer concerned about them or that firms can now ignore them.

So firms who thought they might look at the list and decide it didn’t apply to them should be disappointed.

And the content and the message is clear - FSA expects all financial services firms to get serious about ensuring they are not creating poor customer results through how they behave.

The RCRO focuses on risks extending from the complexity of products such as structured investment products, through reward and business models, via how firms are responding to regulatory and legal change such as RDR and Solvency II, to cost cutting and how the firms search for business in wealth management and private banking. Packaged accounts and PPI feature, much as expected, with investment risk profiling, investor compensation, general insurance concerns (add ons, PPI, limited value products, initial premia) , governance in life offices, projections and systems weaknesses in network models. 

 It’s a heavy duty list. And as if the list of 48 issues isn’t enough, the RCRO implicitly presents three strategic challenges for firms:

The regulator is increasingly focusing on business models.  This is largely about getting conduct risk prevention embedded in firms. But what the FSA and the RCRO do not sufficiently acknowledge is that a top risk for a firm is now how, in a market of shrinking margins, they make the kind of returns they have built their budgets, business models and shareholder expectations on, in a way which is fair to customers. Or put another way, the risk that firms want to offer the products in the first place.

Some firms are trying to address this by improving efficiency and customer reach through digital transformation. But they need to build management of conduct risk into any proposition to avoid transforming themselves into just being more efficient at making old mistakes – at least from the regulator’s point of view.

And most fundamentally, the FSA’s definition of ‘conduct risk’ means a risk to the FSA’s statutory objective of consumer protection. That’s not the same as a risk for a firm which traditionally focuses on commercial risk and risks arising from the effectiveness of policies and controls. So, firms have to figure out how to align their approach with the FSA’s more strategic and consumer centric approach.

That’s why any firm tackling conduct risk has to bring together compliance, policy, control framework, product and process development, risk identification and regulatory relationship management with self challenging governance, insightful management information, conduct risk informed reward and HR and a more strategic and outward looking risk and customer management capability.

The sooner a firm actions these together, the sooner they will make real inroads on the conduct risks that the FSA is highlighting in firms and for customers and on which it has thrown down the gauntlet.

Why won’t we talk about what the UK should be good at?

It is a sad but true fact, that, at an occasional dinner party or two, I have been known to ask the question, “So, by comparison to global standards what is Britain actually good at?” 

(Note to Readers:  I know, I know, there are quite probably more interesting topics to discuss at dinner parties than this one, but I like it, so please humour me and don’t stop inviting me to dinner parties.)

However, once the question is posed the optimists nonchalantly wade in to open the debate with a “Well of course we’re brilliant at ... (slight frown, embarrassed pause) ....er.... lots of stuff”.  “Such as?” and after much toing and froing, a list of what the UK is truly world class at slowly begins to emerge.  The list is usually made up as follows:

1.     Musicals

2.     Education (only arises at the intellectual dinner parties)

3.     Monarchy

4.     Queuing

5.     Ideation

6.     Eccentricity

7.     Exploring

8.     Add your own

Now the point of this blog is not to actually determine what we are good at, although that would be fabulous, but rather to ask the question, “Why do we never seem to have this conversation anywhere other than dinner parties?”  Surely being clear as to what we are about is a good thing?  Is it because we are actually all too afraid of the answer? 

For instance, if we think we ought to be world class at high end manufacturing we should be aligning our education system, tax system and political system to support that end.  Likewise, but substantially more controversially, if we think we want to be world class at Financial Services we should also align the systems to support that end.  Of course the implication is that by actually deciding what we should be good at we will instantly marginalise a large number of constituents whose interests are not favoured by the answer, never a popular option for any politician.

However, and here’s the rub, the longer we as a nation stick our head in the sand on this issue and fail to have the debate, the less likely we are to be able to choose our own destiny and the more likely we are to genuinely end up being no more than mediocre at anything but the list above.

Of course there are other schools of thought on the necessity of having the debate.  The “Jingoistic” school holds the view that the debate is pointless as anything produced or conceived of in the UK is de facto world class so why do we need a debate we’ll just get on with being British.  There is also the “Ex-Pat” school which holds that it’s too late to have the debate anyway as India and China are already doing everything better so why bother having the debate, let’s just move to Singapore and learn Cantonese.

Whilst these schools do have validity I can’t help feeling that in the year of the Diamond Jubilee and the Olympics we really ought to be able to have the debate.

Looking forward to the opening salvos and an occassional dinner party invite