Prioritize Organizational Culture in the Midst of COVID-19

As life settles into a modified normal in the COVID-19 aftermath, it is time to rethink how financial services companies operate from a cultural perspective. Culture is paramount to achieving the benefits of an effective, sustainable risk management program, as well as for an internal audit function that can effectively challenge the business.

Culture is not a static measure and evolves over time given internal and external drivers. A crisis or pandemic event can certainly lead to a stronger sense of camaraderie, trust and teamwork amongst all layers of the organization and across the three lines of defense, if handled appropriately. Culture often shapes multiple conversations, decisions and actions within an organization and can be considered integral and overarching to the organization’s performance in a manner consistent with its mission and corporate values.

Following the World Trade Center terrorist attacks in New York City on Sept. 11, 2001, organizational culture became an important focus and driver as companies worked diligently to rebuild their businesses and operations as they relocated from downtown Manhattan. During this time, the three lines of defense model that we now embrace in our risk and control structures evaporated. Everyone worked collaboratively to address key tactical initiatives, while simultaneously working on long-term strategic planning efforts through the recovery process. Following this time of rebuilding, risk managers were viewed by the business as trusted risk advisors, and auditors were invited to have a seat at the table. There was a cohesive, tight-knit culture that developed as a result of the shared experience. Business continuity took on a new meaning with an emphasis on the personnel aspects of the plan from a resiliency perspective. Succession planning was now included in business continuity, as the discipline transformed from a check-the-box exercise to a risk management initiative.

In her book, An Unbroken Bond: The Untold Story of How the 658 Cantor Fitzgerald Families Faced the Tragedy of 9/11 and Beyond1, Edie Lutnick details Cantor Fitzgerald’s devastation of losing all of their World Trade Center employees who were in their offices during the World Trade Center terrorist attacks and then rebuilding the firm’s culture, vision and mission. This involved the entire firm, particularly the London office, which helped fuel their rebuilding. Employees reconnected with the organization’s mission, vision and core values and even provided effective challenges when necessary to achieve the strategic goals of the organization. Specifically, this included providing a large percentage of revenue and profits to help support the surviving families of Cantor Fitzgerald, eSpeed and TradeSpark employees.

Many organizations dealing with this COVID-19 pandemic have seen their CEO and executive leadership team communicate with all levels of staff through various channels to set the tone for how they are managing through the crisis and creating an environment supporting transparency. Communication is key during COVID-19, since staff typically are working remotely, and the tone of the communication is equally critical in setting the vision and realigning the culture of the organization.

As organizations transition to a state of recovery, the internal audit team will play a critical role in supplementing the first and second lines of defense, to identify potential risk areas arising from the immediate business impact, including financial risks. Audit and / or risk management can also perform a targeted post-mortem analysis or review for leadership using anonymous surveys to provide feedback on culture in areas such as communication and transparency, accountability, human resource policies for employees, etc. This is especially critical as a majority of employees may have experienced burnout and fatigue given all of the stressors of homeschooling children, job security and caring for sick family members.

Embedding a strong risk culture is a long-term initiative for organizations to bring genuine cultural change. However, the challenge of managing cultural and personnel change components cannot be underestimated. The key to a strong culture is embedding risk management at every level of an organization, starting both from a top-down and bottom-up perspective.

A crisis or pandemic can require a third line or second line function to rebrand as a partner and trusted advisor to the business while helping others in the business to navigate through a time of uncertainty and change. Collaboration serves to build trust and teamwork during a crisis. The culture of the organization has an opportunity to rebrand in this new normal and reflect the collective values and mission statement of the financial services company to its customers and stakeholders and more importantly, its employees who are an organization’s most critical resource.

About DHG Financial Services

DHG Financial Services professionals provide you with indepth industry knowledge and a wide range of advisory, assurance and tax services to address issues facing your industry in today’s challenging environment.

Sources

  1. Lutnick, Edie. An Unbroken Bond: The Untold Story of How the 658 Cantor Fitzgerald Families Faced the Tragedy of 9/11 and Beyond. Emergence Press, 2011. Print.

CONTRIBUTORS

Dave Niles
Partner, DHG Financial Services
Dave.Niles@dhg.com

Mike Dempsey
Senior Manager
DHG Financial Services

benchstrength@dhg.com

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