What keeps top executives awake at night? The latest global study by SunGard Financial Systems shows leadership stress symptoms about company regulations keep rising.
Almost half of all senior financial leaders, including CEOs, complain of feeling “highly stressed” by the pressures from changes in the rules of the game. The greatest tension arises from
- Fear of harm to the firm if a failure occurs
- Anxiety about personal damage and liability
- Frustration at becoming involved more often with regulatory matters
- Concern at missed opportunities due to handling regulation issues
Nor do those in the C-Suit expect much improvement. Most say in two years’ time they’ll still be suffering sleepless nights from this issue.
The pressure goes well beyond concerns with the mere mechanics of compliance. Terror of dealing with yet more regulations makes some of those at the highest levels take their eye off core activities at the expense of the business as a whole.
What these leaders fear most (52%) is the damage to the reputation of the company from the consequence of getting regulation wrong. This compares with just 28% who fear the financial penalties, despite the massive fines paid out already by many companies, with yet more to come.
It’s the culture stupid!
A big question mark hangs over the effectiveness of many companies’ ability to achieve employee conformity to policies, rules and codes. This is despite huge sums spent in recent years on beefing up controls.
Forty percent of respondents are finding it challenging to move from a check-the-box approach to compliance to a regulatory approach that is ingrained throughout the culture of their organizations.”
The Regulatory Pressure Cooker, Sungard 2014
A once-famous political motto was “it’s the economy stupid”. Today’s message about compliance must be: “it’s the culture, stupid.”
To avoid serious reputation damage and breach of regulations–the executive nightmare, only one secure route exists. Formalised systems alone will never deliver the kind of certainty for which they yearn.
The attention of the responsible business leader therefore requires a different focus. Rather than demanding ever more technology to ensure obedience, we need a shift towards real cultural change in which employees become ethically engaged. That is, they are so connected with the company purpose they want to protect their firm from reputation and regulatory damage rather than be compliance driven.
To date, less one in five firms have moved beyond a tick box response as this new report makes clear:
Where businesses are striving to simply ensure that they stay on the right side of the rules, rather than taking a more positive attitude towards treating customers fairly, further breaches are much more likely.
Not ready for change
Few companies consider they are ready for cultural change. This is understandable, since yet another procedure or process will prove far easier to install than a shift in the culture.
Unless an alternative approach takes hold we may have to wait for a fresh generation of employees before some organizations transform their cultures.
For the most troubled, renewal could be postponed until different leaders grasp the reins of power. Values-driven, these will understand what ethical engagement means and how this can be achieved.
