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Culture is Local

Culture is a Local Construct

Problems with Current Approaches to Culture

Culture also comes from the middle – not just from the top. It is also a local construct because conduct is sensitive to context. It is driven by social factors.

Boards, leadership teams and line managers are not necessarily the biggest influencers of conduct. The main influencers on a day-to-day basis are local colleagues who are highly liked and trusted by their peers – they are known as Culture Carriers.

This process is called “Social Learning” and it is how knowledge becomes habit and how behaviour becomes ingrained. Culture Carriers exert an immense level of positive or negative impact on conduct at the local business unit level. However, due to the fact they are not usually management, internal experts or designated champions, they are hidden and unknown for their influence.

Most culture assessment approaches rely on surveys, interviews and workshops. These do provide a level of insight, but they are static because they are an assessment at a point in time whilst culture is fluid and constantly changing. Surveys are also susceptible to gaming and the dreaded “survey fatigue”.

Most AI or “RegTech” tools focused on risk, governance and compliance use either key word searching (basic approach) or algorithmic analysis (advanced approach). They don’t incorporate the social dynamics and human interactions of the workplace. This means they ignore up to 66% of critical information.

Solutions
  • Most information sharing within an organisation (up to 70%) is undertaken through informal channels and the Culture Carriers control the flow of that information and knowledge. These hidden Culture Carriers can be revealed through Social Network Analysis (SNA). Their influence is not based on their seniority or expertise, but on the fact they are liked and trusted by their peers (which emanates from their high Emotional Intelligence [EQ]).
  • Whilst surveys, interviews and workshops have static limitations, Artificial Intelligence (AI) enables the dynamic and up-to-date analysis of existing culture and conduct data and negates the need to rely solely on surveys. In advanced applications, this analysis is based on how email communication is used and how the email content is written (using the science of psycholinguistics – the psychology of language). It can also include other internal data such as electronic meeting logs and telephone logs.
  • In addition to internal data, AI can also analyse external publicly available data involving Expert Analysis (websites and blogs), Swarm Analysis (Wikipedia, Facebook and online forums) and Crowd Analysis (Twitter, etc.). The external data analysis is not necessarily about tracking the behaviour of your employees on social media, but on analysing what your customers and prospects really think about your culture and brand.
  • The combination of algorithmic analysis with social network structure and social network dynamics is far more effective than the sole application of complex Natural Language Processing (NLP) to large collections of text. This enhances the value of the data by 66% and provides for a far more accurate assessment and prediction of behaviour. It is also far cheaper to run as it significantly reduces the amount of computer processing required to conduct the analysis on a continual basis.
Benefits
  • Identifying the hidden Culture Carriers through Social Network Analysis and formally engaging them to drive cultural transformation increases the speed of behavioural change by up to 8 times. The desired change spreads like a virus within the whole organisation through the Culture Carriers. Just as importantly, that change is permanent because the social fabric of the organisation is being shaped all the way down to the local business unit level.
  • Using AI analysis of conduct data to complement existing culture surveys minimises survey fatigue, automatically captures ongoing changes in the workplace and makes culture monitoring and reporting live and always current.
  • Combining AI with Social Network Analysis significantly enhances the accuracy of the AI tool and substantially reduces the cost of running these resource-hungry programs.
  • Culture/Conduct/Compliance related training and development programs can be targeted to specific areas of the organisation, thereby significantly reducing the cost of these programs whilst enhancing their efficacy.
  • Individuals have a personal and live benchmark for their conduct related performance.
  • The Board & C-Suite have a live dashboard on the cultural pulse of the organisation based on up-to-date and proactive quantitative indicators.
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Measuring Culture

Measuring, Predicting and Shaping Culture

Culture Matters

Corporate culture has become a topic of national conversation. Organisational balance sheets and reputations are being severely impacted and regulatory scrutiny is intensifying. At the same time, organisations are investing significant time and money surveying, guiding and training staff on values, ethics and conduct. Despite this heightened focus, staff members continue to act contrary to clearly espoused standards of behaviour. At Blackhall & Pearl, we know why this discrepancy occurs and how to resolve it. Our CONDUCT-iQ model assesses, shapes, benchmarks, predicts and monitors culture and individual conduct. From the boardroom to the storeroom.

Local Culture

Whilst the tone of leadership, corporate values and ethics, risk appetite and the type of incentives (all key factors in our model) are important, culture is ultimately a local construct. It is driven by social factors, which means people are mainly influenced by the colleagues they interact with every day. These local influencers can be people they like and trust or fear due to pressure and bullying. This is known as Social Learning, and it is how knowledge becomes habit and how behaviour becomes ingrained. Social Learning influencers are ‘Culture Carriers’. They exert an immense level of positive or negative impact on workplace culture and conduct at the local business unit level. However, they are not always recognisable.

Culture Carriers

Culture Carriers are not necessarily senior management or internal experts. They are work colleagues that function through informal networks. These invisible networks account for up to 70% of an organisation’s total knowledge and behaviour flow. Identifying these invisible networks and the Culture Carriers that are positively or negatively influencing their peers enables the organisation to significantly shape and ingrain desirable conduct at the individual level. The identification and engagement of Culture Carriers is achieved through Social Network Analysis (SNA).

SNA is like an Organisational X-Ray

SNA reveals the invisible social networks that have the most influence on culture and conduct at the local business unit level.

The formal organisational structure reflects authority, accountability, budgeting, policies, reporting, etc.

The social network structure is how everyday work is actually performed. This has the main influence on local behaviour.

Social Network Analysis

Our CONDUCT-iQ model aligns all the key drivers of culture, with SNA at the core of the process. This enables us to identify the positive and negative Culture Carriers and shape and ingrain individual behaviour. We do this through a combination of Human and Machine based SNA.

•Human SNA: This involves a concise online survey that identifies the positive and negative Culture Carriers who influence conduct at the local business unit level. This enables the incentivisation of positive Culture Carriers to change the behaviour of the peers they directly influence and the counselling or exiting of negative Culture Carriers to prevent the spread of dysfunctional culture.

•Machine SNA: This reinforces and augments Human SNA and involves the analysis of internal data (such as email archives and meeting logs) and external data (such as Tweets and Blogs). The algorithmic analysis of this data enables the accurate prediction of conduct and is based on an AI platform that has been developed in conjunction with leading global academics and research institutions.

Blackhall & Pearl CONDUCT-iQ

The Blackhall & Pearl CONDUCT-iQ model aligns and ingrains behaviour at the local business unit level.

Direct & Align:

The model directs and aligns expected behaviour through an assessment of:

•Corporate values and ethics
•Governance and leadership
•Risk appetite framework
•Incentives and development
•Escalation and consequence
•Enterprise risk assessment

Change & Ingrain:

The model shapes and ingrains behaviour at the local business unit level through a combination of Human based SNA and Machine based SNA

Culture Indicators

The unique combination of Human and Machine SNA enables us to provide a comprehensive suite of predictive Culture Indicators to proactively monitor and report on enterprise culture. A sample of the culture environment our indicators monitor includes:

•The type of culture and individual conduct evolving throughout the organisation.
•The likelihood and level of adhesion of behavioural change amongst individuals.
•The level of effective management by teams and individuals.
•The level of challenging and issue escalation empowerment.
•The level of employee motivation and engagement on key issues.
•The level of internal stakeholder satisfaction with key issues.
•The likelihood of individual employee misconduct.

Culture Benefits

Risk culture does not exist in a vacuum. It is still part of the wider organisational culture and the way in which that general culture influences the management of risk and the behaviour of individuals in relation to risk. The benefits of our CONDUCT-iQ model include:

•Ability to assess, align, shape, benchmark, predict and monitor individual behaviour.
•Up to 8 times faster level of cultural change compared to usual practices (including typical incentives).
•The Board has a much clearer view of the risk culture and conduct of the organisation.
•The C-Suite has a predictive warning system of risk culture practices throughout the organisation.
•Management has a synchronous dashboard for risk culture performance monitoring.
•Business units and teams have a risk culture benchmarking improvement framework.
•Opportunity for a significant reduction in the cost and complexity in managing risk culture.
•Strengthening of the organisation’s unique competitive advantage through its own culture.
•Minimised risk of fines, class actions, regulatory interventions and reputational damage.

In addition to the above risk culture related benefits, our CONDUCT-iQ model is also highly effective in diagnosing and improving employee innovation, productivity and engagement.

RegTech

Our CONDUCT-iQ model dynamically identifies and assesses regulatory compliance throughout the whole organisation. This enables our clients to streamline AML checks, transform customer due diligence, enhance anti-fraud measures and improve suspicious activity reporting.