The industry has done well for members in many super funds delivering strong long term net returns. However, it has failed other members through poorly performing funds, administrative delays or inappropriate insurance.
It’s time the superannuation industry grasped the challenge of improving all member outcomes more comprehensively and holistically by improving organisational culture.
Organisational culture is often defined as “what really goes on around here”. It is crucial to consider culture through the lens of “why does the stuff that goes on around here happen”. A core part of this the tacit assumptions of an organisation. Tacit assumptions are often formed by the actions, behaviours and mindsets of the most influential people in the organisation. This includes Boards, regulators, trustees, unions, member representatives and any other influential people.
The role of the Trustee Board and how they lead is crucial. The successful relationship between the Trustee Board and senior executives in taking aligned actions in service of members is also crucial.
Adding more integrity and purpose
People are driven by a sense of purpose. This is fulfilling in itself. Remunerate staff adequately for their role and responsibilities. There is no need to layer on monetary incentives as these add complexity and can lead to conflict. The science is very clear on this – over emphasis on extrinsic motivations (for example, remuneration) inhibits intrinsic motivation, such a sense of integrity or purpose.
The importance of developing a good organisational culture has long been recognised as a key element in reducing risk for financial organisations.
APRA makes it very clear in its Corporate Plan of the importance it places on developing a good organisational culture supported by risk management and governance frameworks.
The independent APRA Prudential review of CBA and APRA’s required financial institutions’ culture and governance self-assessments support this. APRA’s findings from the CBA review have been a great place to build awareness of industry culture and governance issues, which can be a base for super funds to plan their own improvement. Graeme Samuel’s APRA Capability Review provided more information to help APRA and the industry work towards better governance.
All these reviews send a clear message: organisational behaviour improvement is urgent. Start with short term behavioural changes, building to medium term cultural changes and deliver long term improvements for members.
Sean is Managing Director of McGing Advisory & Actuarial and is currently Deputy Chair of the ASFA Victorian Executive. These views are his own personal views.
Sean and the team at McGing Advisory & Actuarial provide a wide range of Superannuation support services including administration, investment, insurance, risk, governance and actuarial advice.