How to Improve Conduct

Establishing good conduct can be tricky, but the rewards are well worth it. Here’s a guide to some of the key factors which may determine success.

The first in this series focused on why it can be so difficult to establish good conduct throughout an organisation. It’s an important question to answer because too many companies assume that it’s simply a matter of developing a conduct strategy, posting it on the website and sending it to all members of staff. Sadly, it doesn’t always work out that way, which is why we now need to move from the difficult question of ‘why’ to the even more awkward issue of ‘how’.

There would be enough here to fill several blogs, but in essence companies can get a long way by distilling their strategy into three distinct pillars: the executive team, rewards and oversight.

  1. Start at the top

As with so many things in life it helps to start at the top and work your way down. Conduct needs to be treated as a top business priority, rather than an issue of compliance. That means the executive team needs to take full ownership of the project. They must establish a set of standards to which to which staff will be required to adhere. These set the rules of the game. They are a chance to reiterate to staff members the ways in which they are required to behave but establishing these rules at the start is only part of the process. Whether or not they stick to them will depend on how you back them up.

  1. Reward good behaviour

Establishing a code of conduct sets out how you want your employees to work in theory. But what will really shape their performance is the expectations you place on them in their day to day working life.

Think about how they are rewarded. If you establish a code of conduct but only reward behaviour which drives profit, that’s where their attention will lie. If you place too much pressure on teams to drive up sales, they may start to cut corners. We see this time and time again – a company has a strict code of conduct but appears surprised when its employees behave in a very different way. If employees see that they will be rewarded within the company for acting in a sustainable and responsible way, that’s what they will do.

  1. Overseeing conduct

The final, but perhaps most important, pillar is to maintain oversight. All too often, executive teams claim to be unaware of the actions of their employees. However, regulators are working hard to inject greater accountability into top teams. Under SM&CR, senior executives could be held personally responsible for their company’s actions. The defence that you didn’t know what was happening doesn’t cut the mustard much longer.

This all feeds back into our first point: taking ownership. The more involvement senior teams have in establishing good conduct, the more likely it is that the strategy will be successful. Executives should create a clear line of communication from the most junior members of staff through departmental managers and to the top teams.

Automated systems may also be used to flag up suspicious behaviour, with some of the largest data science teams within the banking industry being focused on covering compliance.

In essence, your conduct strategy needs to be more than just a box ticking exercise. It must be a key pillar of Risk Management. By doing so you can not only avoid fines, but you can ensure your company manage to drive sustainable and ongoing revenues.

Our Head of Risk Management, Oliver Blaydon can be contacted on or +44 (0) 20 7762 3035.

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