Creating a Better Culture for Compliance · There is less weight being given to legal training, and an emphasis on an individual’s qualities as opposed to their previous experience

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DevelopingLeaders

Insights from Barclays and Cambridge Judge Business School

Creating a Better

Culture for Compliance

Influencing Practices and Behaviours

Quis custodiet ipsos custodies Who guards the guardians

The cloak of sombre piety donned by many when they roll out that phrase ndash the work of the scurrilous Roman satirist Juvenal ndash never entirely covers the tagrsquos origin in a ribald discussion of how to prevent lusty wives from straying with their strapping Syrian bodyguards

In the not so distant past customers at Barclays Bank may have felt they were getting similar treatment from those tasked with protecting their virtue Scandals resignations regulatory enquiries plunging stock values ndash each new revelation added thread to a growing narrative weave depicting Barclaysrsquo staff as technically ethically and culturally unable (unwilling even) to comply with either regulation or best practice

How do you influence people who donrsquot report to youThis was the question facing Mike Roemer on his promotion to the role of Barclaysrsquo Head of Compliance He had joined the company in January 2012 as Head of Internal Audit bringing with him 27 years of internal audit experience ndash mostly gathered at JPMorgan Chase Like other senior executives across the banking services sector Roemer had witnessed how the action of a single employee or rogue group of individuals could severely impact a damaged reputation that had taken years to establish Was he facing a few bad apples or would the challenge be to overhaul a barrel no longer fit for purpose

Founded in the 1690s Barclays is a British multinational banking and financial services company headquartered in London Its activities include operations in retail wholesale and investment banking as well as wealth management mortgage lending and credit cards Present in over 50 countries and territories servicing around 48 million customers as of June 2014 Barclays had total assets of US$224 trillion the tenth-largest of any bank worldwide

ldquoBanking is a trust businessrdquo Roemer reflected ldquoCustomers have to be able to trust us to safeguard their familyrsquos security their way of life and their assetsrdquo While investors want a profitable return they also need to know that their bankers are acting responsibly Roemer and some other senior managers saw that Barclays urgently needed to re-centre their business processes on customer outcomes His own seat on the Barclays Group Executive Committee is not only unusual for a Head of Compliance it is a signal that the function for which he is responsible is no longer being left on the back burner

Training the GuardiansBarclays Bank and Cambridge Judge Business School Create a Better Compliance Culture

By Dan Lentell

While there is no denying that for several years the words lsquoBarclaysrsquo and lsquocompliancersquo were rarely used positively in a single sentence encountering reality big time prompted some really big questions a serious effort to overhaul particular mechanisms within a function and that functionrsquos place within the wider corporate machinery Like other executives in other sectors they saw executive education as one piece of the puzzle

The idea of a custom program was lsquoin flightrsquo when Roemer took up his new post With the stakes so high Barclays undertook a global study in collaboration with a leading consultancy to explore compliance training over 100 providers including consultancies and business schools were appraised These were whittled down to two then down to one Cambridge Judge Business School named after its principal benefactor the British businessman Sir

Paul Judge is the business school of the University of Cambridge Though only established in 1990 the school has carved a world-class reputation for itself in its first quarter century befitting its status as part of Cambridge University

ldquoI was very excited about this program since it also ties up with a reputable institution like Cambridge I believed it would be able to help build up my knowledge and also would look good on my resumerdquo ndash Program participant

Peterhouse the oldest of Cambridgersquos 31 constituent colleges was founded in 1284 by the Bishop of Ely and over the intervening centuries through religious reformation and societal upheaval the Universityrsquos reputation for scholarship has been nurtured by some of the brightest minds known to the arts and sciences

Boardroom battles had been a feature of Barclays in the period of crisis High-level leaks to Parliament and the media were an all-too public proof of what could also be read in the firmrsquos high rates of executive attrition Here the business school of the University of Cambridge was uniquely qualified to assist in calming troubled waters ldquoWersquove got over 800 years of experience dealing with institutional wrangling and politicsrdquo remarked Richard Hill Executive Director for Cambridge Judge Business Schoolrsquos Centre for Compliance amp Trust

Selecting Cambridge meant that Barclaysrsquo concerned stakeholders would not require much persuasion when signing off on such a critical element of their own brandrsquos revival Both technically and culturally the second oldest university in the English-speaking world had much to offer banking executives seeking to restore traditional values to a sector living with the consequences of trendy bling thinking high risks and shallow rewards

How do you collate anecdotal evidence to build a bigger pictureThe technology behind the monitoring and enforcement of banking regulations has transformed in recent years enabling ever more sophisticated scrutiny of transaction patterns Barclaysrsquo compliance tool bag includes software which enables easily visualized real-time surveillance of trading activity as well as the capacity to monitor an individual traderrsquos short term inout communications and long term behaviour patterns There is also the expertise to quickly flag concerns in conduct behaviour and values

ldquoBanking is a trust business Customers have to be able to trust us to safeguard their familyrsquos security their way of life and their assetsrdquo

From Socrates to Shakespeare ldquothe fool doth think hersquos wise the wise man knows himself a foolrdquo Equally the best academic tailoring of business materials works in the knowledge that the clients often possess greater (and probably more current) real-world experience It was not the technical aspects of banking compliance which were lagging behind the curve it was the overall culture Most of the 99 other schools approached in the competitive tendering process focused their pitches on the technical side of compliance

The team at Cambridge however recognised that a broader culture-orientated perspective would better frame

the collective and individual behavioural shift those at the Barclays helm expected the program to support ldquoItrsquos about equipping the compliance function to act as the point which provokes business to ask why as well as what they are doing and about getting [program participants] to see how their role impacts on the system to draw a line between action and consequencerdquo asserts Richard Hill

The BarclaysCambridge program is a significant undertaking Already 1500 Barclays staff have had some training through the program which is pitched at three distinct corporate levels The core content for each level was selected by Barclays drawn from privileged real-world scenarios and data Each module has an academic director from Cambridge Judge Business School plus two lsquochampionsrsquo from within the company

Level 1 the broadest is a two year program split into eight different modules (four foundations four advanced) each taught over two to three days at centres in Cambridge New York Johannesburg and Singapore with Mumbai being added to the roster in 2016 Level 1 is highly interactive featuring e-learning case studies discussions and lectures aimed at covering around 300 employees in cohorts of 25-30 participants Level 2 is for managers (assistant vice-presidents vice presidents to directors) covering similar topics in more detail Level 3 is for the most senior leaders approximately 40 individuals ranging from managing directors to department heads and directors

The BarclaysCambridge program was rolled out representing and reflecting the corporate hierarchy but rather than entrenching executive division it actively helped promote conversations between (and through) once calcified layers of management There was a positive recognition of the dampening effect lengthy chains of command can have on any change process Barclaysrsquo particular need was to encourage a form of self-monitoring which Roemer compares to community policing projects in his native USA

Mike Roemer saw the parallel between the two ldquothe job of community policemen is to walk a given beat getting to know whorsquos who and whatrsquos what in the community Then if and when swift immediate action is needed they know when how and who to targetrdquo

It was not the technical aspects of banking compliance which were lagging behind the curve it was the overall culture

Where previously the focus of compliance has been on a relatively passive lsquocheck amp challengersquo model the direction is now towards influencing behaviours This mandates a shift in the experience and background of those entering compliance There is less weight being given to legal training and an emphasis on an individualrsquos qualities as opposed to their previous experience of the sector ndash for example one of Roemerrsquos key lieutenants majored in psychology

ldquoRecruiting top talent regardless of previous experience or a financial services background has elevated compliance within Barclays Compliance graduates in the Americas come from non-traditional compliance backgrounds (eg ex-military business school graduates political science and government majors philosophy and language majors) but with a unique set of skills which only complements the talent of our fellow colleaguesrdquo ndash US program participant

The BarclaysCambridge program is not simply designed to service the internal needs of the company but also to stimulate the wider development of banking compliance as a serious professional specialty operating and maintaining professional standards similar to those in specialties such as the law accounting and auditing Roemer is quick to trace the outline of a future in which their program has evolved to become an entry requirement for chartered status within an envisioned UK Institute of Banking Compliance In the meantime according to Hill other financial services firms are looking to ldquotailor similar materials in similar waysrdquo

ldquoThe benefits [of a chartered institute of Banking Compliance] would include standardization of the skills and knowledge base of compliance professionals and recognition of compliance as a disciplinerdquo ndash Program participant

The foundations have already been laid in the form of a Centre for Compliance and Trust in Cambridge with a remit to explore the ways in which financial services can be delivered in the twenty-first century Working with banks and other institutions to develop practices and behaviours which put customers and values at the heart of decision-making the Centre will lead the development of knowledge around appropriate and responsible business practices which respond to both the evolving regulatory environment and customer demands

With wider ambitions come wider challenges Broadening the appeal of banking compliance as a career path will mean raising the comparative level of remunerationincentive packages available to individuals Although compliance pay is rising ndash it was up 13 in 2013 according to recruitment firm Astbury Marsden ndash not only do compliance professionals take home less than front office bankers the experience of investigating past misdemeanours can be gruelling to the point of burnout1

ldquoBanks donrsquot like to share their laundryrdquo confides Roemer Even so there is growing awareness of and interest in the sector-wide change process Barclays has set in motion While client data will always remain confidential inter-organizational benchmarking (in terms of compliance departmentsrsquo size and distribution) does go on at the sectorrsquos formal and informal get-togethers Within limits institutional memories swirled around during the ldquogame of musical chairsrdquo when executive attrition rates among Barclaysrsquo compliance officers reached 30 - they have almost halved since Roemer took over

ldquoComparing the significance of compliance with other institutions I will confidently say Barclays has achieved a lot and has taken great strides of establishing a solid compliance culture which is continuously being developed and betteredrdquo ndash South African program participant

The compliance department at Barclays was previously a box-ticking department It possessed little overt responsibility for ensuring business practices were aimed higher than just about meeting statutory requirements It had no ability to help ensure the stability sustainability and responsibility best suited to the needs of customers And yet having once trailed behind the opposition Barclays is now positioned to lead the field and best capture the advantage of future developments As one Asia-region participant summarised their experience of the program

ldquoIt has made me realise the importance of the work currently being in done in Conduct Risk Understanding bank failures as seen in the 2008 financial crisis and its causes has made evident the unsustainability of the current system It has confirmed my view on the necessity to collaborate in the way we do business particularly because of the externalities Realising this means I check and challenge thoroughly provide effective training that leads to a better understanding of Conduct Risk requirements and operate with the knowledge of the domino effect onersquos conduct has on societyrdquo

1 httpnewsefinancialcareerscomuk-en178631morning-coffee-worth-burning-less-100k-retail-bankers-

causing-annoyance-barclays

The BarclaysCambridge program is not simply designed to service the internal needs of the company but also to stimulate the wider development of banking compliance as a serious professional specialty

The Cambridge Centre for Compliance and TrustThe Centre for Compliance and Trust is one of a suite of research centres at Cambridge Judge Business School including the Centre for Business Research Centre for Financial Analysis and Policy Centre for Science and Policy Centre for Endowment Asset Management and the Centre for Entrepreneurial Learning Sitting within the Executive Education function of Cambridge Judge Business School the key aim of the Centre is to lead the effective development of skills and behaviours of those who lead and drive practices which impact on these critical areas

Despite much discussion about the need for leadership development in corporate and public organizations and

the considerable industry that surrounds it this is the first authoritative periodical focused entirely on this area

Developing Leaders looks at the critical confluence between the provision of executive education and the real everyday

needs of organizations to strengthen their management teams their corporate performance and their leadership

The publication presents the latest thinking and most recent developments in both academic and commercial executive

education provision worldwide what it is achieving and which are the best models for success sharing the experience and

expertise of top leaders and world class educators

Developing Leaders is published in both hardcopy and online ldquopage turningrdquo format The quarterly magazine

complements the IEDP website - the definitive resource for executive developers worldwide

wwwiedpcom

Awakening Millennial Leadership in India - On the Jagriti Yatra Journey

Quis custodiet ipsos custodies Who guards the guardians

The cloak of sombre piety donned by many when they roll out that phrase ndash the work of the scurrilous Roman satirist Juvenal ndash never entirely covers the tagrsquos origin in a ribald discussion of how to prevent lusty wives from straying with their strapping Syrian bodyguards

In the not so distant past customers at Barclays Bank may have felt they were getting similar treatment from those tasked with protecting their virtue Scandals resignations regulatory enquiries plunging stock values ndash each new revelation added thread to a growing narrative weave depicting Barclaysrsquo staff as technically ethically and culturally unable (unwilling even) to comply with either regulation or best practice

How do you influence people who donrsquot report to youThis was the question facing Mike Roemer on his promotion to the role of Barclaysrsquo Head of Compliance He had joined the company in January 2012 as Head of Internal Audit bringing with him 27 years of internal audit experience ndash mostly gathered at JPMorgan Chase Like other senior executives across the banking services sector Roemer had witnessed how the action of a single employee or rogue group of individuals could severely impact a damaged reputation that had taken years to establish Was he facing a few bad apples or would the challenge be to overhaul a barrel no longer fit for purpose

Founded in the 1690s Barclays is a British multinational banking and financial services company headquartered in London Its activities include operations in retail wholesale and investment banking as well as wealth management mortgage lending and credit cards Present in over 50 countries and territories servicing around 48 million customers as of June 2014 Barclays had total assets of US$224 trillion the tenth-largest of any bank worldwide

ldquoBanking is a trust businessrdquo Roemer reflected ldquoCustomers have to be able to trust us to safeguard their familyrsquos security their way of life and their assetsrdquo While investors want a profitable return they also need to know that their bankers are acting responsibly Roemer and some other senior managers saw that Barclays urgently needed to re-centre their business processes on customer outcomes His own seat on the Barclays Group Executive Committee is not only unusual for a Head of Compliance it is a signal that the function for which he is responsible is no longer being left on the back burner

Training the GuardiansBarclays Bank and Cambridge Judge Business School Create a Better Compliance Culture

By Dan Lentell

While there is no denying that for several years the words lsquoBarclaysrsquo and lsquocompliancersquo were rarely used positively in a single sentence encountering reality big time prompted some really big questions a serious effort to overhaul particular mechanisms within a function and that functionrsquos place within the wider corporate machinery Like other executives in other sectors they saw executive education as one piece of the puzzle

The idea of a custom program was lsquoin flightrsquo when Roemer took up his new post With the stakes so high Barclays undertook a global study in collaboration with a leading consultancy to explore compliance training over 100 providers including consultancies and business schools were appraised These were whittled down to two then down to one Cambridge Judge Business School named after its principal benefactor the British businessman Sir

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Creating a Better Culture for Compliance · There is less weight being given to legal training, and an emphasis on an individual’s qualities as opposed to their previous experience

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