On 23 October, BACB hosted a group of leaders from across London’s banking sector at its headquarters in Mansion House Place to discuss the importance of understanding company culture and measuring psychological safety. The roundtable discussion brought together 23 attendees from a variety of HR, risk management and compliance backgrounds and was chaired by the Association of Foreign Banks (AFB) CEO, Giles French.
To kick off, Jane Perkin, BACB’s Chief People Officer, welcomed guests by introducing the theme of understanding corporate culture and the importance of psychological safety, highlighting the central role it plays in a healthy workplace. Perkin explained that a company culture that prioritises psychological safety is one in which colleagues feel confident, empowered and encouraged to raise concerns, report errors, or put forward ideas without fear of backlash, blame or embarrassment.
Within the banking sector, where decision making often involves navigating high stakes and complex risks, this is particularly important. In turn, financial services firms have invested significantly in psychological safety within the workplace in recent years. Yet in absence of a solid basis of understanding, efforts frequently miss the mark.
“Healthy cultures that are inclusive and psychologically safe will support and allow diversity of thought to flourish.”
Financial Conduct Authority, Diversity and inclusion in the financial sector, September 2023
Co-creating a tool to measure psychological safety
In order to tangibly improve psychological safety within the workplace, practitioners must first understand their current culture and level of psychological safety and how it is experienced by colleagues. In doing this it is possible to identify where issues lie. Perkin outlined how BACB was eager to learn whether its company culture matched its stated values – assessing this in an objective way came with obvious challenges.
As such, the bank reached out to specialist people consultancy, Brands with Values about its Culture Decoder tool. Building on the work of researcher Shalom H Shwartz – which has been cited in thousands of academic papers – the Culture Decoder presents respondents with a series of specially-chosen words from which they must choose ten that best reflect their own personal values, ten that best describe the culture of their workplace, and ten that reflect the desired values they would like to see at work. These words are then placed through a variety of algorithms that help determine an organisation’s culture.
Working together, BACB and Brands with Values identified the potential to reassess data gathered to measure key markers for psychological safety. These metrics were then applied to Brands with Values’ existing data – collected from 6500 people throughout the UK working in companies across 30 different industries – in order to gain a clearer understanding of how psychological safety varies between sectors.
The financial sector is largely aligned with the UK average
Martin Roach, Founder of Brands with Values, and Adrian Walcott, Managing Director, talked attendees through the results of the research. In defining psychological safety for measurement, BACB and Brands with Values broke the concept down into four key pillars: open communication, healthy challenge, trust and conflict resolution.
Across the UK, 43% of respondents see evidence of the four psychological safety pillars within the organisations that they work. This percentage decreases as the size of company increases, reflecting the challenges of implementing cultural initiatives in large, multinational corporate structures.
UK respondents particularly value open communication and trust more than other aspects of psychological safety, such as being courageous, bold, or challenging [both important for a speak up culture]. At 44%, scores for the financial services sector were largely consistent with the UK average, both for overall rating and in terms of the four pillars.
Roach and Walcott then opened up the discussion to roundtable attendees, inviting them to share their thoughts on these results and whether they reflected their expectations.
The subsequent discussion placed findings squarely within the context of the banking sector’s broader drive to improve culture. For years, the Financial Conduct Authority (FCA) has made conduct and governance a key priority, placing significant resources and regulatory heft behind its efforts to transform the industry.
Creating fertile ground for innovation
The discussion then progressed to explore the role of psychological safety in creating a culture that is receptive to change.
Banks have invested heavily in diversity, equity and inclusion (DEI) programs such as unconscious bias training. But in absence of a clear understanding of how colleagues experience an organisations current culture it is difficult to know where efforts will reap the greatest rewards, therefore change has been slow and, in many cases, fallen short of expectations. Certainly, staff operating in a workplace where they are consistently overwhelmed, faced with siloed working practices and micromanagement are far less likely to be receptive to new ideas than those working in an environment where they feel supported and their opinions are welcomed and valued.
In this context, middle managers – who may receive direction on how to guide company culture from senior leadership but are primarily faced with the realities of keeping things ticking from day to day – become the cornerstone of creating a psychologically safe environment.
Indeed, data from PwC shows a divide between how corporate leaders and their staff perceive company culture. While 54% of CEOs agree that psychological safety is a feature of their culture, only 27% of their employees agree.
Meanwhile, an FCA study highlighted that 38% of respondents believed company boards were not adequately informed about non-financial misconduct within the organisation – meaning senior leadership may have an inaccurate perception of their own company culture.
Attendees also discussed the importance of establishing a strong foundation in the context of innovation. Data from Accenture shows that a psychologically safe workplace leads to 76% more employee engagement and 50% more productivity. With financial services leaders currently firmly focused on implementing new technologies such as artificial intelligence (AI) and automation, ensuring staff feel motivated and empowered is central to ensuring their investments deliver results.
Ongoing action informed by data
Being able to transform an intangible concept into numbers and data offers a strong foundation for change. By being able to measure psychological safety along with identifying an organisations culture attendees acknowledged the role this can play in providing early warning signs for potential issues, and its importance in guiding subsequent actions from leadership creating the platform for intentional, proactive change in the cultural space.
Of course, simply identifying an organisations culture and measuring psychological safety is not a panacea. Change takes time, and requires purposeful action. Businesses that are serious about meaningful change must continue to measure and invest in areas that require attention. Perkin closed the session by detailing plans to do just this: working closely with Brands with Values, BACB is intending to make purposeful change in particular in the area of how BACB colleagues experience psychological safety within the workplace and will retest in 2025 to determine if and how this has progressed.
Acknowledging the crucial role of psychological safety in company culture is no longer a ‘nice to have’ – it is an imperative. Using a tool such as the culture decoder can give leaders direction, ensuring actions they take to create a safer workplace are informed by data. Through ongoing action and regular measurement, financial services firms can progress towards a healthier, more inclusive and more productive workplace.
