Following the financial crisis of 2008, where large financial organisations collapsed and had to be bailed out by national governments, demand for compliance professionals boomed as the sector sought to safeguard themselves against future reoccurrences and large fines. But, eight years on, are things as robust as they could be? And could the causes of the crisis ever repeat themselves?
Why did the crisis happen?
According to the leading academic Pierre Dussauge of the French business school HEC Paris, one of the reasons for the financial crisis was the prevalence of “herd mentality”. This term refers to the lack of diversity, or abundance of similarity of thought, that can cause a workforce to follow reckless practices because everyone else seems to be doing so as well. Though Dussauge specifically cites the financial sector in his examples, claiming that, “even the individuals largely responsible for the crisis seem to have little genuine grasp of why it actually happened”, his core message not only hits home with issues of financial compliance, but the compliance function itself.
So how can we protect against this herd mentality?
One way to tackle this problem is to ensure that there is proper workplace diversity. This doesn’t mean that problems can’t arise in a workforce comprised of many different ethnicities, ages, genders and sexual orientations. But it is diversity of thought that makes it more likely for an organisation to question malpractice or challenge outdated procedures.
But is this enough?
Desirée van Gorp, another top academic based in Nyenrode in the Netherlands has pointed out that, “You need a mix of gender, age, professional aspirations, nationalities, industries and educations if you want to make a group look beyond common boundaries and reconsider how to approach what they’ve always known.” This translates to the compliance arena as well; only when we look beyond the obvious “tick-box” attributes can we have true diversity. It is not advisable to hire merely on the grounds of positive discrimination because the person sitting in front of you is the only female candidate, but because they have a different way of looking at and solving problems, or even of working in general, than others in the company. This is the single attribute that is most likely to facilitate discussion and debate about outdated policies or ineffective processes and ultimately lead to improvement.