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Investment industry needs a cultural reset

Investments
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July 6, 2020

Research points to organisational culture enhancing resilience and competitive edge in crisis conditions.

Global, 6 July 2020 – Investment organisations’ appreciation of the value created by effective organisational purpose and culture has grown considerably in the last five years and its importance as a differentiator continues to rise, according to new research from the Thinking Ahead Institute, a not-for-profit member group. However, the research paper - entitled The impact of culture - suggests the implementation of cultural change across the industry still lags.

Roger Urwin, co-founder of the Thinking Ahead Institute, said: “Filling this gap between opportunity and execution presents considerable organisational challenges. During this five-year study, conversations with investment organisations about how to generate sustainable performance from more effective cultures, that started at quite a low base, have improved markedly. There are now a number of investment organisations globally able to differentiate themselves with their purpose and culture. The factor most indicative of edge here is leadership commitment to elevating and actively shaping culture in the organisation.”

In a call to action, the Institute makes three recommendations for institutional investment organisations, both asset managers and asset owners, to build their value proposition around effective purpose and culture:

  • Develop a unique organisational purpose to define client value and grow stakeholder trust
  • Develop, as a key management tool, a culture dashboard to track all dimensions of culture
  • Create a common language and fact base for culture and have an aspirational target culture.

The Institute also supports more use of incentive compensation to align culture and the addition of C-suite culture and talent officers to drive cultural change.

The research includes a new model for defining culture and a framework for investment organisations to assess and manage their cultures. The model includes a reporting dashboard with metrics across ten dimensions of culture, ranging from client-centric and people-centric elements, leadership attributes to sources of competitive edge such as innovation, diversity & inclusion and transparency.

The Institute’s culture model and dashboard represent an attempt to capture a source of considerable comparative advantage for those who recognise the value in measuring culture as a step in the path of cultural improvement.”

Roger Urwin, co-founder,
Thinking Ahead Institute

Roger Urwin said: “We measure what we do because we can. But we can measure more than the activities we currently do. The Institute’s culture model and dashboard represent an attempt to capture a source of considerable comparative advantage for those who recognise the value in measuring culture as a step in the path of cultural improvement.”

The paper points to organisational culture as the nexus point for increasingly common conversations about organisational purpose, inclusion & diversity, and sustainability.

Roger Urwin said: “Organisations that have an edge in these areas have been particularly well-positioned to address stresses from the COVID-19 crisis and the recent social crises around racial injustice. In these abnormal conditions, strong culture has proved to be a huge blessing.”

The research notes that the language used around culture in the industry, and its framing, remains limited. This contrasts with the growing weighting given to asset manager culture assessments in the hiring and firing decisions overseen by asset owners and consultants. According to the research, there are five common organisational failings limiting cultural quality in the industry:

  • Insufficient regard for organisational purpose, beyond focus on short-term business results
  • Low regard for understanding and assessing so-called ‘soft’ or intangible factors
  • Limited development of the language, facts and artefacts necessary to communicate culture
  • Limited appreciation of how sub-cultures exist and interact in the organisation
  • Weak engagement on culture in talent acquisition and development.

As part of the Institute’s ongoing power of culture study, it is gathering data from investment organisations to explore their strengths and weaknesses and develop benchmarking to help drive up cultural standards in the industry.

Roger Urwin said: “Through the study, we have managed to identify best-practice models of purpose and culture that stand out through good alignment with business strategy, strong connections with employees, and consistent engagement with other stakeholders. We firmly believe that best practices in purpose and culture management are critical to improving industry resilience and sustainability and outcomes for all stakeholders.”

About the Thinking Ahead Institute

The Thinking Ahead Institute was established in January 2015 and is a global not-for-profit investment research and innovation member group made up of engaged institutional asset owners and service providers committed to mobilising capital for a sustainable future. It has 45 members around the world and is an outgrowth of the Thinking Ahead Group which was set up in 2002. Learn more at www.thinkingaheadinstitute.org.

About Willis Towers Watson

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