A thought piece from the Financial Conduct Authority’s Insight series suggests that it might be a good idea.
Why your COOs should be CBOs looks at the reasons why businesses might need a CBO. Here, we look at the arguments; might your business benefit from a CBO?
Why behaviour matters
The insight piece says that ‘Business leaders increasingly recognise that an understanding of people – both customers and employees – can make or break a business. The importance of the right behaviours can’t be underestimated. Sometimes these are unconscious, as with the behavioural biases that can derail good decision-making. Sometimes, they are overt.
We’ve looked before at the link between remuneration and governance; the way that reward can encourage certain behaviours; as the FCA pointed out in the autumn of last year, ‘there is no doubt that the way an organisation incentivises its staff will drive its culture’.
And with ‘misreading the culture’ identified as one of the five mistakes board directors make most, the need for the board to get behind any initiatives to measure and improve behaviours is clear.
How businesses can improve behaviours
The FCA’s piece cited actions taken by Google to identify helpful behaviours, with team members asked to rate their colleagues anonymously. The intervention saw each team member receive feedback on where they fell in relation to others, which was sufficient to ‘encourage less cooperative staff to improve the quality of their collaboration’.
The FCA identifies a number of concerns common to many Operations leaders:
- How do I design my organisation’s processes to produce good outcomes in an efficient way?
- How do I encourage recycling and waste reduction among staff?
- How do I hire in a way that taps into the breadth and depth of talent in the market?
- How do I ensure my organisation is resilient in the digital age?
Some of these are things we’ve explored in recent blogs, looking at:
- How boards can improve gender parity and why a diverse range of perspectives is vital
- How remote resilience is currently helping organisations to continue operating effectively
- Why digitalisation is central to success
Using behavioural science to improve understanding
The article pinpoints four areas where a Chief Behavioural Officer might focus attention.
1. Tackle uncertainty in organisational processes
What’s meant by this? Tackling uncertainty should be a priority, the article suggests, because ‘research shows that the situations [animals] find stressful are those they cannot predict or control’.
Rats, for example, given a choice between a predictable electric shock versus an unpredictable shock, choose the predictable one – even when it is longer and more intense.
Humans display similar stress responses in the face of uncertainty; something borne out by the FCA’s own research among financial services firms. Uncertainty over FCA authorisation processes, for instance, not only hindered firms’ ability to progress their business plans, but also created extra work for the regulator in responding to enquiries about the progress of applications.
The Authority’s response to this was to put in place a tracking system, enabling firms to see how their application was progressing. Similar systems have been implemented by Royal Mail and other delivery firms; people’s stress – and companies’ workloads – can be reduced by making processes transparent and keeping people informed at all times.
2. Design-in recycling and waste reduction
Most organisations are looking to reduce their environmental impact. Working environments that facilitate a reduction in resources like paper, takeaway boxes and single-use coffee cups and that encourage more recycling can improve working conditions and corporate environmental performance.
The article says that ‘A Chief Behavioural Officer would focus the solution on re-designing the environment rather than trying to educate, train or scare people into better behaviour’. This use of behavioural science is quoted as having an impact on, for example, paper waste, by setting printers to default to printing on both sides of the paper.
We’ve looked before at how behavioural science can help boards, for instance in counteracting the social processes that can undermine your board’s decisions, and at some of the techniques – like situational intelligence – that can help board members counteract this.
3. Get ideas for better recruitment from behavioural science
The article states that the ‘merits of diversity and inclusion (D&I) go beyond fairness. They drive hard business metrics like organisational performance and operational risk’. A very good argument, then, for a focus on inclusion and diversity, something we looked at just a couple of weeks ago.
A Chief Behavioural Officer would be tasked with using behavioural insights to improve D&I; ensuring you hire based on merit, removing potentially gendered language from job adverts, and checking that any barriers to success in the employer-employee relationship are identified and countered.
4. Think beyond digital walls when building cyber resilience
The Insights piece reports that during 2018, UK financial services firms reported 93 cyberattacks. How could a CBO help here? The article suggests that they ‘might highlight that higher digital walls alone are not enough’, with cyber criminals preying on human nature as well as technical shortcomings to attack our firms digitally.
While taking a digital lead can undoubtedly have huge benefits for boards and the organisations they lead, this is a salient reminder to ensure your digital boardroom is secure – as well as to use behavioural techniques to build this security throughout your organisation. Bringing the experience of – say – a phishing exercise to life for employees makes it more real, and increases the likelihood of messages sticking.
Might you already have a CBO?
The Insights authors suggest that in fact, many operations leaders ‘have been Chief Behavioural Officers all along’. For those just starting on that journey, Google’s former head of People Operations, quoted in the Insights piece, advocates mixing ideas from academia with an organisation’s own ideas and testing them during the business’s usual day-to-day operations. The ways that ideas are reacted to and adopted will vary from organisation to organisation.
And firms should realise that ‘cutting-edge applications of behavioural science are not just for leading tech companies like Google. Many organisations can benefit from the insights that behavioural science offers’.
These aren’t challenges that can be magically solved via technology; a combination of innovation and behavioural change will be needed.
Make the new normal a new better
As businesses return to the much-vaunted ‘new normal’, recognising good and less positive behaviours will be key. Giving one of your senior leaders responsibility for this – either as a named CBO or less overtly – could play a role here.
You can read more about how your board can help make the new normal a success in our recent blog. And if you want to read a case study of an efficient, effective board, you can download our case study detailing how ABF, The Soldiers’ Charity, improved their information-sharing processes. The case study is available in our resource library.
Nothing in this document should be treated as an authoritative statement of the law. Action should not be taken as a result of this document alone. We make no warranty and accept no responsibility for consequences arising from relying on this document.