Culture critical to investment success

Culture is a vital factor shaping investment stratregy and therefore performance, according to a new paper written by Towers Watson’s Roger Urwin for the 300 Club, a group of long-term investors.

Urwin said that extensive discussions with investment leaders around the world suggests that much greater focus is needed on culture. “Culture is a unique ingredient in the struggle for competitive advantage among institutional investment organisations. In a world of more complexity, specialisation and urgency, culture matters a lot more than it did before, and with regulators taking an increasingly keen focus on this aspect of the financial industry, firms would do well to address this fundamentally important issue sooner rather than later,” Urwin said.

In the paper, The culture of sustainable investment performance, Urwin highlighted strong leadership as the driving factor behind any organisational culture. He commented that for culture to be influential, leadership must be active in both living its values and putting them into action. He added that increasing assets under management can lead to greater complexity at investment organisations: “Complexity breeds silos, which can damage culture and in turn sustainable performance. Growth generally has the same effect.”

Looking ahead, Urwin said that there is a shortage of top investment talent that can compete for the best staff, which can damage the overall culture of an organisation. “Above all, talent must be embedded in a team structure to be successful and sustainable. All talent needs a particular infrastructure of front- and back-office support. For an investment organisation to excel, and remain consistent and sustainable, the whole team must become the embodiment of that talent,” he said.