Can the City be Changed?

Can the City be Changed?

The so-called Shareholder Spring and subsequent city scandals have led to much talk about reforming the City to create greater responsibility.  While some call for more regulation, others demand less.  Few would argue that big bonuses based on short term gains need to go.  But what the City really needs is a change of culture with a renewed emphasis on principle and integrity. If we want to restore trust and avoid a repetition of scandals such as Libor, we need a pathway to achieve this.
From our work assessing companies against the GoodCorporation Standard, we have identified ten key principles that should form the basis for change.

Core Business Principles

1. Treat customers fairly. Organisations must create cultures where they are working to achieve long-term customer relationships and satisfaction

2. No rewards for failure. Organisations should establish remuneration structures that align pay with long term customer relationships and satisfaction
3. Incentives need an ethical dimension. Organisations need to develop appraisals and measurement systems that include ethics as well as sales and trading targets
4. Speak up is crucial. Organisations need to create cultures where everyone is encouraged to voice any concerns
5. Miscreants must be named and shamed. Organisations need to make an example of people that don’t meet their ethical standards

Trading Conduct

1. Trading activities require their own codes of conduct
2. Individual traders should be discouraged and trading in a team encouraged
3. No trade should take place that cannot be explained in a simple sentence to a boss or colleague
4. Pay should be linked to long term overall company performance, encouraging traders to contribute to the company’s goals overall
5. Trading environments must have strong processes to avoid both personal and corporate conflicts of interest 

Regulation breeds a culture of avoidance, with businesses focussing on ways round the rules rather than the way their business is done. We need a change of culture that requires companies to be responsible for the integrity of their business conduct and demands that senior executives know exactly what is going on. From the scandals we have seen recently, it really is about how a company behaves when no one is watching. At the moment, the answer to that would seem to be pretty badly