Culture is the shared values and norms that shape people’s behaviours. It is the topic of much boardroom debate, the subject of daily news headlines and top of the ‘watch’ list for regulators.
Despite the growing need to draw attention to culture, organisations are at times unsure about how to measure, investigate and report on something that is often seen so subjective.
Behavioural risk is focused on identifying people-related risks arising from the way people behave. Having a deep understanding of what influences staff and management’s behaviours (the ‘behavioural drivers’) ensures:
- effective processes can be put in place to drive better performance and outcomes
- risks are minimised
- systemic issues (where the root cause is typically traced back to poor behaviour) are addressed.
As people are at the heart of every organisation, behavioural risk is prevalent across all organisations.
Behaviours, which are the direct result of an organisation’s culture, are tangible and can be measured. KPMG’s Behavioural Risk Advisory team helps clients address their cultural issues by assessing the way people behave and how these behaviours either positively support or compromise organisational performance, key processes and the control environment.
How KPMG can help
We understand that every organisation’s people are unique and different. We can help you:
Assess the current state of behaviours in your organisation and determine how to create an environment that fosters the desired behaviours in line with your values and strategy.
Embed behavioural considerations into existing frameworks/structures including governance committees, executives, risk, compliance, internal audit, HR – to hold everyone accountable.
Define how your data can be used to predict behaviours and potential behavioural risks to help you take a proactive approach in managing cultural and behavioural issues in your organisation.
KPMG's Behavioural Drivers and Controls Model
KPMG has developed a model that helps to understand, identify, measure and monitor organisational culture, behaviour and its impact on organisational performance, key processes and the controls environment. The models consists of eight elements that have a real or potential impact on behaviour:
— clarity — leading by example — commitment — achievability — transparency — open to discussion — accountability — enforcement.
The model is based on extensive research by Prof Dr Muel Kaptein, Partner, KPMG Netherlands and global subject matter expert, who studied 150 derailments within organisations – frauds, non-compliance, and collapses – and researched to find what the 'human' root cause of the derailment was. Based on this analysis, it was identified that the root cause of the 150 derailments linked back to one of eight 'soft controls'. He then built a framework and methodology around this that helps us to understand, identify, measure and monitor organisational culture.
The model looks at the extent to which the following behaviours are active and embedded in an organisation.
Enforcement — Is desired behaviour rewarded and undesired behaviour sanctioned?
Call someone to account — Are people being held accountable by others in the organisation for misconduct?
Open to discussion — Do people feel comfortable to voice their opinion, raise issues and discuss dilemmas?
Transparency — Are people behaviours visible to others?
Clarity — Are rules, procedures and desired behaviour clear?
Role modelling — Does management set a good example?
Commitment — Do employees feel motivated and engaged to uphold organisational standards?
Achievability — Are activities and targets realistic?
Our model gives organisations a valid tool for getting a clear picture of the current organisational situation, confront it, and break through the silence and passivity.
For more information about the Behavioural Drivers and Controls Model and how KPMG can help you understand, identify, measure and monitor organisational culture and behaviours, contact Maria Basil.