Bath Business and Society

Research, analysis and comment on the role of business in society from Bath's School of Management

Tagged: employment

Careers in sustainable business: risk consulting in financial services

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📥  Business and society, Education, Employers

 

In the first in our series on careers in sustainable business, University of Bath alumnus Joe Hill of FTI Consulting speaks with current MSc students Elliot Johnston and Sanum Jain about how he helps firms tackle the ethical challenges of the financial services industry.

Hi Joe, thanks for taking the time to talk to us. Could you tell us a little bit about what you’re doing now?

I’m a consultant in FTI Consulting's Financial Services team. We work with financial institutions of all shapes and sizes, from multinational global investment banks to small wealth management firms in London - there’s a whole spectrum.

We tend to help firms in four areas that are relevant to sustainable practices in financial services. These are: governance, financial crime (prevention rather than participation) regulation, and conduct.

Generally, we help clients to manage their regulatory risk and their reputational risk. Within the perspective of sustainability both of those are crucial, because in financial services it’s all about people’s confidence in the system. People need to have access to financial services, and they need to have confidence in those services. The industry’s lifeblood is people’s trust in these institutions that trade on their behalf.

 

Did your education at the University of Bath play a part in your desire to pursue a career in the sustainability-related parts of financial services performance or was that career goal something you found earlier?

Well, I studied politics and international relations at undergraduate level, and the global governance and accountability module I sat at Bath pointed me towards the space between politics and business as a place I’d like to explore professionally. When FTI came calling after I had graduated, the opportunity offered a perfect marriage of my interests. In that regard, taking part in the global governance and accountability course was important and quite pivotal in leading me toward this profession. It offered something that the rest of my Masters degree didn’t: a focus on the importance of ethical and sustainable corporate performance.

Interestingly though, now I’m in London I’ve found that sustainability is considered an essential part of financial services performance. This is partly due to the proximity of the 2008 crisis as well as the stringent regulation that is now prevalent. While I was at Bath, the reputation of the financial services industry was at its nadir, and this was an issue that was openly discussed on the course. My classmates brought a range of cultural and contextual ideas into the discussion from a sustainability perspective. Such diverse thinking has been crucial in driving sustainability up the financial services agenda, with increasing international collaboration over issues such as money-laundering and tax evasion.

 

You’ve mentioned the damage the financial crisis did to the financial services industry eight years ago. Is the industry still recovering from that damage? And what do you think are the biggest challenges faced by the industry now?

In a post-2008 world, there’s still a big rebuilding job to be done after faith in the industry was shattered. Financial services play an absolutely vital role in everyday lives which means the industry simply can’t afford to keep getting this stuff wrong. Opportunities in the ethical and regulatory space within the industry have opened up since the 2008 crisis and many firms have stepped up to try and rebuild faith in the industry. One of the most immediate challenges in the industry is addressing the disparity between a firm’s espoused culture and the actions of its employees. There is also the wider challenge of ensuring equal access to financial services.

Access to financial services is a sustainability issue that is not easily solved. Everybody should have access to financial services. Sadly, in reality, it can sometimes be difficult for people both in the developing world and even here in the UK to have access.

Ultimately, financial services should be available to everyone, easily accessible and act as a safeguard to ensure that our economic system works effectively. However, lots of different factors continue to play a part in the ability of financial services to achieve these goals. Things like whether people have valid documentation, which isn’t always as straightforward as it sounds, or whether regulations actually discourage banks from taking on certain individuals because they’re deemed to be riskier customers. You can end up in a situation where those on lower incomes are struggling to gain access to proper financial services, yet they are the people who would benefit the most.

 

How does all of this effect what you do at FTI?

While at its heart what FTI's Financial Services team does is management consulting, we know that the issues we’re working on have a wider societal importance. We know that the consequences of the City getting things wrong are pretty severe, which everyone saw play out after 2008, so it is nice to be working on something and knowing that it has a positive impact. The interesting thing about financial services, I guess, is that it had to “switch on” more quickly to the fact that operating in a way that benefits society actually goes hand in hand with being profitable, perhaps more so than in other industries. As we’ve seen with the LIBOR and PPI scandals for example, behaving badly means fines and remedial costs which can have a big impact on bottom line performance.

In terms of the systemic importance of what we do, sustainability and its importance is really integral to everybody who works here. Hopefully that will become more of a factor now because firms are judged so heavily on their sustainability credentials these days. That can only be a good thing.

 

Image by Ken Teegardin

 

Going the extra mile at work - good for your career, bad for your mental health

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📥  Business and society, Employers

 

"Going the extra mile" at work - helping colleagues, going beyond the confines of a narrow job description, taking on extra responsibilities - can help people feel more engaged with their work, improve job satisfaction and increase promotion prospects. But as Bruce Rayton explains, this doesn't come without a cost.  

Mental health is becoming a hot topic. Boosted by a high profile awareness campaign fronted by the Duke and Duchess of Cambridge and Prince Harry,  recent months have seen public figures from the worlds of music and sport as well as Prince Harry himself speak out about the challenges they’ve faced.

Businesses too have joined the conversation, and it makes sense for them to do so. After all, paid work is the primary activity for many people during their waking hours, and the costs associated with employees’ mental health problems are significant.

The UK’s National Institute for Health and Clinical Excellence estimated the cost of impaired work efficiency associated with mental health problems at £15.1 billion a year. This figure is almost twice the estimated annual cost of absenteeism (£8.4 billion). These costs are associated with loss in productivity because of sickness absence, early retirement, low engagement, and increased staff turnover, recruitment and training.

 The mental health risks of being a good citizen at work

Our recent research helps us understand an important piece of this problem.  Our findings show that employees who work beyond the narrow boundaries of their job roles are at increased risk of mental health problems. We found that going the extra mile at work can lead to higher levels of emotional exhaustion and work-family conflict. We also found that these effects were most pronounced for employees who already performed well in the core elements of their jobs.

We defined ‘going the extra mile’ using well-known academic measures of organisational citizenship behaviour (OCB), with a particular focus on the dimensions of ‘altruism’ (helping colleagues) and ‘conscientiousness’ (going beyond the minimum). We were especially interested in the effects of conscientiousness and altruism because these time-consuming activities have the potential to exhaust employees emotionally and leave less time for family life.

OCB is widely regarded as being beneficial for both employers and employees. We know from earlier work that OCB improves group and organisational performance and influences managers’ decisions on an individual’s performance ratings, promotion and pay. The worker puts in extra time, or takes on extra responsibility, and as a result feels more engaged with their work and positive about their career prospects. The employer gets committed staff, with improved productivity or results. However, our work suggests that there is also a cost to be paid for these benefits. Somewhat surprisingly, these costs are disproportionately paid by those who are doing “the day job” well.

What can employers do?

Managers are prone to delegate more tasks and responsibilities to conscientious employees who are likely to try to maintain consistently high levels of output. We can see the sense in using today’s strengths to solve today’s problems. However, we think that companies should think twice before asking the same ‘good soldiers’ to take on yet more additional tasks and consider how the burden might be shared.  Even the highest performers will eventually run out of emotional energy and the consequences for their mental health will have further consequences for their employers.

We believe that much greater consideration needs to be given to the kinds of behaviours that HR practices are encouraging and how organisations might cope with the consequences. Reviews of practices in three key areas are necessary:

·         A narrow focus of reward and performance management systems on short term goals might encourage the kind of ‘sprinting’ which increases the longer term costs of OCB.

·         Education and training practices for both line managers and employees could aid recognition of situations where employees risk becoming emotionally exhausted.

·         Health and safety practices, especially those associated with mental health and emotional well-being, can help those who suffer from the problems we identified.

An opportunity to “go the extra mile” is something that many employees want employers to provide. The resulting benefits including learning opportunities, skill development and knowledge transfer, can all have a substantial impact on the bottom line for firms and on the career development of individual employees. That said, managers need to keep an eye on the bigger picture if the performance gains associated with providing these opportunities are to be sustained. The human capital developed through OCB can only create value for organisations if the employees are healthy enough to use it to good effect.

Employers should pay attention to more than the quarterly bottom line. They should make themselves aware of both the current state of and potential threats to the mental health of their employees, particularly their high performers. If nothing else, this awareness holds the prospect of helping firms avoid turning today’s solutions into the sources of tomorrow’s problems.

Image: Working late by Victoria Pickering