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Ongoing management of talent, in keeping
with a firm’s culture, is as important as hiring the
right people in the first place. Nurturing the team,
rather than the individual, and creating the right
internal culture, will lead to more cost-effective
and profitable organisations; companies that
have lower staff turnover rates; and companies
that spend less on training and recruitment. For
instance, if a firm has an annual investment team
retention rate of 80 per cent, the entire team will
turn over in five years; if the retention rate is 95
per cent, it will take 20 years for the investment
team to turn over.
Cultivating performance through a culture of
meritocracy ensures that incentives are aligned
with investment and business objectives, and
investors remain motivated.
Culture gets to the heart of risk management.
In the aftermath of the 2008 global financial
crisis, asset owners have placed particular
emphasis on sound risk management, which
includes a consistent and repeatable process to
manage risk. Within a strong risk-aware culture,
risk management is not a compliance issue, an
afterthought or an add on. It is embedded in the
process. It means that a portfolio manager will
evaluate risk as part of their research, and see
new opportunities, rather than constraints.
To actively manage a strong risk culture,
there needs to be a shared responsibility for risk
with the following key attributes:
• commitment of senior leadership
• alignment of incentives
• independent oversight
• integration in the investment process
• clear objectives.
Culture also cuts both ways – it should serve as
a compass for achieving business objectives and,
increasingly, assessment of culture informs the
selection process in our investments.
More broadly, companies are starting to
realise that culture isn’t only about how you do
business, but how your business is viewed by the
community and asset owners. It has a cumulative
impact on value and share price, as well as your
reputation and brand.
A COMPETITIVE ADVANTAGE IN VOLATILE
Australian and global markets are at something of
an inflection point. The most successful businesses
will be those with a coherent and adaptive
business strategy for their operational
environments. Cultureis a necessary condition for
superior long-term performance.
As we look out into the future, the increasingly
global nature of the 21st century has spawned
the need for a deep understanding of industries
and companies from a global and regional
While decisions based on research, analysis
and judgement are at the heart of investing,
collaboration, together with a long-term horizon,
creates an analysis advantage. The ability of an
investor to meet with the external management
team of companies and equity colleagues will
ensure a broader understanding and global view.
Couple this diverse knowledge with the views
and analysis of internal teams, and embrace
collaboration across the investment platform, and
you have the ability to mitigate behavioural biases.
Ultimately, a sustainable culture needs to be
based on the right values, behaviours and beliefs
demonstrated by everyone at every level. How
firms make decisions to achieve their business
objectives is very much dependent on the type of
culture they have and, ultimately, a determinant
of success. Culture drives business strategy and
neither can operate alone. An individual is only
as good as the contribution they make towards
a team and a team is only as good as the values,
behaviours and beliefs of individuals; it doesn’t
work without teamwork, diversity and mutual
respect. Culture is difficult to create but easy
As we look into the future, it is worth keeping
in mind some adages from the past. Henry
Ford, no stranger to upheaval and significant
market change in the last century, is credited
with saying: “Coming together is a beginning.
Keeping together is progress. Working together is
Marian Poirier is head of Australia and New
Zealand at MFS Investment Management.
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