Michelle Gardiner, chair of the investment committee at CareSuper, offered a five-point plan for super funds to maximise their performance and member engagement. It was an “anthropological” view, presented at the AIST’s Australian Super Investments conference.
Gardiner spoke at ASI’s popular Women in Super breakfast, sponsored by J.P. Morgan. Her talk dove-tailed nicely with the previous afternoon’s panel session on mergers, run by Ken Marshman (see separate report this edition). Her plan included the “secret ingredient” for funds to make sure that they keep the “line of sight” to their members. The unanswered question is: can mega funds do that as well as smaller funds?
Gardiner’s story is an interesting one. After a successful career in financial services, starting as a researcher with what was then the Sydney Stock Exchange in the 1980s, and spanning stock broking, asset consulting and funds management, Gardiner decided to have a sabbatical and do a part-time degree in anthropology.
She had observed that “there was something not quite right” with the finance world, mainly to do with the cultures at most firms, but she struggled to delve into it. She felt that studying anthropology might help her better understand the working world in which she had spent all her adult life. She started her university studies in 2012, which was the year when the media started to delve into some of the malpractices of the banks and other financial institutions.
“It was also when the regulators started to talk about ‘culture’,” she said. “Now, anthropologists can’t agree on a single definition of ‘culture’. There are hundreds of definitions. But they do agree on this: the role of the anthropologist is to make the strange familiar and the familiar strange.”
Her favourite definition is “values, beliefs and behaviours”. That says it all, she says. But ‘behaviours’ is the only one of the three which is legible. ‘Values’ and ‘beliefs’ are subjective and contestable.
Over the past few decades local and global banking became disembedded from society, she said. In her observation this was because of the power dynamics, where a small pocket of society got the social and economic power which eventually led to chaos. For the outside world, corporates had long been “a weird mob”, but from within the participants didn’t see that.
There had been a transfer of power from governments to corporations, particularly in the finance sector, which accelerated because of the state privatisations of the 1980s and 1990s, give a group of professionals more power over the dissemination of wealth. Society granted formal ascent to the primacy of the profit motive. By the end of the 1980s corporations had become sole-purpose vehicles to deliver value to shareholders. “Shareholders had become both the indirect perpetrators and the victims. For decades, society stood by and watched finance professionals become the main beneficiaries of their activities through their fees and clipping the ticket.”
She said that society had been educated to believe that a natural outcome of capitalism was the cycle of booms and busts, even though it was investment bankers who made the market, as they publicly claimed. Gardiner calls it “the political construction of hopelessness”. Since the GFC governments had been given little choice but to reclaim power through regulation but the gatekeepers – the banks – showed an unwillingness to respond.
She believes that “cultural competence” for an organisation is now a competitive advantage as well as a compliance advantage. But government regulation and ESG monitoring are blind on culture. “The only way we can change a culture is from within. We shouldn’t have a cookie-cutter approach to culture either. Culture is not static; it’s ever changing. We have to constantly reinforce our culture, she said, as she presented her five-point plan to improve the culture of organisations:
- Elevate the importance of culture in the recruitment process
- “Mind your language” – culture creates language and language. creates culture; it has the ability to shape the beliefs of an organisation.
- Move beyond compliance – there are three stages of compliance: box ticking; a defensive risk culture, and; a cognitive risk culture where everyone understands where he or she fits in with the organisation’s risks. This mean that whistleblowing needs to be elevated.
- Constantly seek diversity, not only gender diversity but also diversity in education, social and economic backgrounds.
- The secret ingredient: “keep the line of sight to members”. The processes of capital creation have become too removed from the original sources of capital. Many investors may not have eyeballed an investor for a long time. If a fund is building out its investment team it is important to wheel them out in public from time to time.
“Culture guides behaviour when rules and regulators can’t,” Gardiner said.