In the AIMA and KPMG paper “Agile and Resilient”, we explored the impact to the hedge fund industry of working in a decentralised environment.
During the survey and the interviews which formed that paper, a resounding theme was that maintaining and optimising the culture of the organisation is a critical priority as well as a challenge for the industry.
We decided to explore this topic further in additional webinars and analyses to determine to what extent firms across the broader alternative investment landscape were managing their organisational culture during these times. Among the key questions that we looked to address included (i) what are the challenges still being faced by firms today in managing their organisational culture? (ii) what lessons did firms learn about how to manage their culture during this period of decentralisation? (iii) how important is culture to a hedge fund, to its constituents, to its investors, the regulators, its employees and to the success of the firm and finally (iv) how do senior leaders continue to deliver the firm’s mission as well as maintain a culture of compliance?
While all these matters and more are important to the sustained growth of a firm, all are continued to be tested as they return to the office or consider a hybrid model of working (working remotely some days and working in the office other days). There are unique characteristics and nuances to hedge funds operating in this environment.
To help us discuss these issues further we hosted a manager roundtable last month underpinned by several polling questions1 taken on the day. Below are the four key takeaways from this discussion.
- Employee wellbeing
- Hiring/retaining and getting the best out of your firm’s talent
- Adapting to a much changed work environment
Culture and collaboration have become an increased priority as firms seek to maintain their differentiators in a decentralised environment. They recognise the need to keep people feeling connected, engaged, and productive.
The impetus for this is not solely being driven by investors, but by regulators too. In the UK, the FCA deems culture to be both a major driver and potential mitigant of risk. Last spring it published a series of industry papers aiming to encourage discussion and inspire financial services firms to take progressive steps in creating more purposeful, diverse safe and inclusive cultures.
In addition, they have extended the Senior Managers and Certification Regime (SMCR) to 48,000 firms that they regulate for both conduct and prudential purposes. Other regulators globally have joined the chorus in asking for the industry to develop better culture, including the SEC in the US and ASIC in Australia.
The COVID-19 crisis is redefining what good business leadership looks like. To maintain the trust of employees and clients, senior management must demonstrate that they live and breathe their organization’s purpose.
As Richard Haas, Senior Advisor to Capeview Capital (Former CEO of Capeview Capital) asserts “One thing I learned early on in my career is that good compliance is good business. No more is that true than today. Continuing to communicate the importance of compliance to employees during this time cannot be underestimated”. While most firms have seen their senior leadership increase the frequency and level of communications during the past year, at the same time, they are keen to make sure that employees are not overwhelmed with receiving too much communication. More importantly is the quality and transparency of communications from senior management.
Duncan Ford, COO, Marshall Wace continues “During this period, we have tried to evolve our communications to keep it fresh, have the appropriate depth where necessary and to be inclusive in our engagement”.
Senior management must listen, be attentive and react quickly to employee feedback. Without the physical contact from working under one roof, this requires an additional effort to transmit messages that are meaningful, informed, and empathetic. It is important also to ensure that any communication does not centre on work alone but on maintaining employee wellbeing.
Communication between employees has also changed during this time. Firms are embracing the availability of virtual environments as well as more traditional forms of communication.
As Rosie Reynolds, Chief Commercial Officer, Aspect Capital elaborates “It is recognising that not everyone receives communication in the same way. Rather it is listening to what works for some and not for others”.
About the authors: Tom Kehoe is Global Head of Communications and Research at AIMA; John Budzyna is Managing Director of Alternative Investments at KPMG in the U.S.
By Tom Kehoe & John Budzyna
Download the full report here.