Hello 2019. Hello SMCR

Like every New Year, the next month or so is a time when many of us are stopping something, or starting something, or changing something with noble aims of improving health, well-being, relationships or finances. On top of making those changes, in 2019 many senior managers will be considering other behaviour changes to respond to the challenges of the Senior Managers and Certification Regime (SMCR) so that they define, accept and demonstrate greater personal accountability for standards of conduct and outcomes.

Change is hard.  In James Clear’s very good (and award winning) book “Atomic Habits” he sets out a simple yet effective model for understanding and then setting or breaking habits. James describes the feedback loops between four steps – cue, craving, response, reward – and demonstrates how thinking about each fundamental part supports an understanding of what a habit is, how it works, and how to create new habits (or break old ones).  He advises that whenever you want to change behaviour you ask yourself:

Q. How can I make it obvious?

Q. How can I make it attractive?

Q. How can I make it easy?

Q. How can I make it satisfying?

He does admit that his approach may not be an exhaustive framework for changing any behaviour, but he thinks it’s very close. 

TORI like the simplicity of Clear’s model and believe that senior managers can successfully use it to guide their own behaviour change and form effective SMCR habits.  For example:

How Can I Make It Obvious?

Clarity of responsibilities will be created by thorough mapping and allocation of prescribed and other responsibilities, further cemented by inclusion role profiles and personal objectives.  More can be done by clarifying the use and effectiveness of delegations, so that those supporting the delivery of outcomes are identified and their activities properly managed and overseen.  Further, a clear personal guidebook of regular steps to take, and when, can be a handy reference guide to the actions, decisions and behaviours required on a daily, weekly and monthly basis.  Frequent self-assessment will ensure that senior managers remain clear about their aims and ways of working, enabling resetting or refocusing where needed.

How Can I Make It Attractive?

The penalties of non-delivery / non-compliance with the expected behaviours are clear and unattractive.  However, in our view focusing too hard on only negative consequences of actions can create levels of anxiety and fear-of-failure that slows down effective working or paralyses decision-making.  Focusing on the beneficial outcomes of actions, to customers or other stakeholders, and not just on completing tasks will ensure that senior managers continue to see the attractiveness of their efforts.  For example, recognising that the review of QA results will have ensured customer outcomes have been met and that staff competency can be assured, instead of simply ensuring that the report was read.

How Can I Make It Easy?

Sticking to a habit is hard; research results vary but many suggest a minimum consistent period of delivery of 30, or 60, or 90 days is needed to create a habit.  Senior managers can refer to their personal guidebook of the actions, decisions and behaviours required on a daily, weekly and monthly basis to breakdown the habits in to simple tasks.  Reflection in frequent self-assessment sessions, will also create an easy way to stay on track forcing senior managers to step-back and consider: what did I do well?  What can I improve or change?  Further help in making it easy will be provided to those that establish a core set of indicators that provide real-time information about activities so that senior managers can satisfy themselves that processes are being adhered to and controls operating as expected.

How Can I Make It Satisfying?

There are many ways to ensure that the new ways of working are satisfying, including: Continuing to see the bigger picture and focusing on the long-term customer outcomes of the right behaviours and not only on the task at hand; Taking personal time to reflect on a job well done, rather than drifting on to the next task or meeting;  Celebrating successes with teams, however small and in whatever way, will create a shared sense of purpose and shared satisfaction.  Questions must be asked too about those senior managers that can’t also take satisfaction in simply delivering their role objectives and prescribed accountabilities: and isn’t that the whole point of SMCR?

At TORI, we help clients deal with their most important and difficult operational, regulatory and change challenges. We work with clients to build effective control environments and make sense of the complex web of day-to-day processes and controls. We help clients create strong leadership and governance mechanisms, including the design of operating models and accountability frameworks that manage delegations. And we help clients design and deliver effective change.

If you would like to explore how TORI can help you be ready for, and make a success of, SMCR then get in touch.

Note: From December 2019, SMCR is being extended to all 47,000 FCA regulated firms – meaning that banks, deposit-takers, lenders, insurers, investment firms, asset managers, brokers and consumer credit firms will all now be captured.