Does culture really eat regulation for lunch?

By David Ainsworth, Sector Specialist, CFG

Last month, I attended two different voluntary sector conferences; the Institute of Government’s conference on voluntary regulation, and the CFG Annual Conference. For me, the prevailing attitude at both was summed up in a quote I heard more than once: "Culture eats strategy for breakfast and regulation for lunch". It’s a great soundbite, and I think correctly summarises the vital importance of consciously working across your organisation to build a strong culture. But is it completely true?

It prompted me to ask two things. First, is there a prevailing culture in the voluntary sector, and is it exactly the culture we want? And second, I want to look at whether charities underestimate the power of rules and regulation (and other external incentives which affect culture and behaviour) and whether, as a result, we do not use those tools enough.

Is there a prevailing voluntary sector culture?

Culture exists at every level. Every team of people has one, every department and organisation. And therefore, by extension, every sector, too.

Obviously, the culture of a team or department can be very different from the organisation it’s part of, and an organisation can have a very different culture from the sector it’s part of. But an overarching culture still exists.

In the book Black Box Thinking, the journalist and former table tennis champion Matthew Syed outlines huge differences between cultures in the health and aviation sectors. One, he says, is fearful of failure and tries to hide it. The other is open to failure and tries to embrace it.

We can all look at the risk-taking culture of the finance sector and the sell-your-granny-for-a-story culture of journalism, and see how a whole industry can develop an approach which is problematic for those it interacts with.

What does the voluntary sector’s culture look like?

I can’t produce a lot of evidence, but I can say what I’ve observed in my decade as a professional observer of the sector. I would personally characterise it as warm, tolerant and gentle, intensely introspective and self-critical, comfortable with complexity and ambiguity, and great at collaboration and partnership.

George RR Martin, author of the Game of Thrones saga, says that there are two types of storyteller – the architect and the gardener – and maybe these approaches hold true in how we like to solve problems, too. The charity sector is full of gardeners – people who like to solve problems through the power of values and relationships. Charity finance departments may have more architects, who prefer structures and plans. Both approaches have merits. Neither has a monopoly on good ideas.

Where does the sector's culture come from?

One powerful driver of culture is values. I believe people choose certain behaviours, based on their values, and that influences the behaviour of others, and before you know it, you have a set of norms. Because the voluntary sector tends to attract people with certain values, you would expect the sector to be driven in a certain direction.

Culture and behaviour exist in a kind of virtuous circle. Behaviour drives culture and culture drives behaviour. When we talk about culture eating regulation for lunch, we mean that regulation can only affect our behaviours – making us take certain actions not to break the rules – but that if the culture underlying those behaviours isn’t supportive of them, then we end up with a compliance-based system in which rules aren’t internalised. The morality behind the regulations isn’t understood and they aren’t followed when no one is watching. Or people just start to follow the rules blindly, without asking why they exist. So regulation can be a very unsuccessful tool.

This isn’t the whole of the story. Both culture and behaviour are affected by structures and incentives.

Our aims are one set of incentives. The work of the sector is often slow and long-term, focused on systems change and complex problems, with sometimes difficult to define concepts of success, that affects culture and behaviour. It might make us more introspective, more tolerant, or less inclined to swift action, for example, than if we ran a business supplying widgets.

Structures are another set of incentives. Everything from how you report to who you sit next to has an effect on how you communicate and behave.

Then there’s funding. Customers are often not consumers. Charities are competing for funds with organisations delivering completely different services.

We can see the effect of these incentives in the challenges faced by the fundraising sector in recent years. It’s a case study in how incentives and values can be at odds. Seemingly against the will of all involved, some in the profession were pushed by drivers such as data, targets, and weak regulation and scrutiny, into short-term, volume-based behaviours which did not always do enough to think of vulnerable people.

Even so, fundraisers still struggled to retain a culture which was all about long-term relationships and making the world better. With a change in external incentives, the industry is gratefully returning to something truer to its values.

So we should not be too quick to disdain the powerful incentives of structure, regulation and reporting. These set the rules of the game. They have a powerful effect on behaviour in and of itself, but they also affect culture.

To get the culture we want, we must ensure our values match our incentives.

Do we have the culture we want?

Of course, all of the above only matters if we are not happy about behaviours in the sector. But it seems many of us are not.

Last year in the Civil Society Futures report, helmed by Julia Unwin, a longtime charity leader, demanded widespread change in the sector's behaviours: to transfer power, increase accountability, form better connections and engender more trust.

In recent weeks we've had concern over trustees' ability to deliver what's needed, and over fundraising departments' inability to make themselves accessible to disabled individuals.

If culture is indeed the dominant force in determining behaviours – if it does indeed eat regulation for lunch – then we need to look for cultural change to address these issues.

How do we get that change?

The way we prefer to create change is itself a cultural choice. As I mentioned above, I believe the sector is full of gardeners, who like to draw on the toolbox of persuasion and development. The result is that in recent years we’ve seen a number of reports which identify a problem, show the shift in behaviour and culture needed to address that problem, but are relatively quiet on the structural barriers and incentives which might explain why that shift has not occurred.

Regulation, the architect's tool, is one of those incentives.

We can go back to the example of Black Box Thinking, above, in which Syed highlights the rules changes introduced to encourage learning in the aviation industry, such as no sanctions for those pilots who report near-misses promptly, and the change in culture which fed from that. We can look at how the recent introduction of GDPR produced not just regulatory compliance, but also in many cases a wholesale introspection around our attitude to data. Or how pay gap reporting has started to change behaviours in some sectors.

Importantly, regulations are levers we can lay our hands on. Charities cannot change our objectives. We struggle to change how funders and donors behave. We can influence changes within our own charities by changing structures, and we can try influence the culture of people working in other charities by discussion and persuasion, but we cannot always get them to listen.

Because one lesson from the fundraising challenges of 2015 is that we cannot focus just on ourselves. We sometimes need to influence the wider behaviour of our sector, too.

This is about a virtuous circle. It’s about using the most appropriate approach – architect or gardener – and, if one of them hasn’t worked, giving the other one a whirl. It’s not as simple as saying that culture eats regulation for lunch. It’s about the fact that to get the results we want, we need culture and values and regulation – and all the other incentives – to all align, and point us in the same direction.

This post was last reviewed on 20 June 2019 at 14:23
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