...Or so we are told at school. It would also seem, in my
experience, that the difficulties children have in understanding
that learning from one's mistakes is part of the overall
learning and performance improvement process, continues into
adulthood. There is nothing untoward about the predisposition to
want to avoid failure. It is hard wired into humans following
millions of years of evolution. You would have thought that we
would have become more adept at looking at the underlying reasons
behind mistakes so as to avoid them in the future.
To be fair, some industries have become better at doing this.
Take the aviation industry where mistakes can cost lives and have
devastating effects on the business as a whole as a result. It is
usually the human element, often comprising a chain of small human
errors, which leads to catastrophic disasters.
And therein lies part of the reason why financial services
businesses do not seem as adept as these industries at learning
from their mistakes. Firstly, the costs of getting it wrong do not
have the immediate physical impact that planes crashing do.
Secondly, financial services have become ever more complex and
their interconnectedness has meant that the cause of macro-economic
failures has become more difficult to identify.
However, underlying all this is financial services'
Achilles' Heel – the celebration and reward of success to
the exclusion of acknowledgement or understanding of failure. As
ever, this attitude comes from the top. It is part of the wider
debate about the culture fostered in financial institutions but
goes beyond bankers not behaving in a reckless manner but looking
at the reasons behind failure in routine, expected behaviours.
The most common ways mistakes or deficiencies are identified in
financial services are; when a problem is identified in an annual
review or through an internal compliance monitoring programme; the
regulator finds it; or a client complaint means that the issue
cannot be ignored. The latter event usually results in the event
most businesses dread : notification to PII insurers and/or to the
regulator. What rarely happens is what should happen –
getting individuals to talk openly about mistakes or concerns. This
should be the early warning mechanism in an institution which might
head off a problem later down the line.
The reason why this happens infrequently is that acknowledging
one's own mistakes (being genuine mistakes as opposed to
deliberate rule breaking which can raise questions as to integrity)
can have repercussions. Voicing concerns about others can lead to
being marked out as a troublemaker.
Senior management needs to ensure that if employees are expected
to talk about their own mistakes or air concerns about wider
problems then it is safe to do so. Unfortunately this does not
commonly occur, especially when the concerns are about corporate
governance, the compliance function or resources more generally
– an area for which senior management has more direct
responsibility. The problem lies in the hierarchy gradient where
those who have risen to the top have a seemingly unshakeable faith
in their own abilities and those below them feel unable to speak
truth unto power.
In the same way that senior management sets the tone at the top
about the practices they don't expect to see they should also
be encouraged to talk about occasions where something didn't
work. It is a brave recruitment decision to hire a senior person
who is prepared to talk about his or her own failures but maybe the
next interview question should not be : "Tell me about your
greatest achievement and your role in bringing it about" but
"Tell me about a time when you took a wrong decision and how
you and your organisation learned from it."
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