Big Brother is watching, but are you?

Key issues with remote supervision and oversight

Working from home is not new, but it is something that many more of us have been forced to adopt over the past year. It’s here to stay too. 

Last year’s Gartner CFO survey found that 74% of companies surveyed will move 5% of staff to permanently remote positions, and nearly 25% of companies surveyed will move 20% of their workforce to permanently remote positions post pandemic.

With changing working practices comes new challenges for Senior Managers.

Back to basics

Senior Managers will be well versed with PRA/FCA conduct rules requiring them to take reasonable steps to delegate, oversee any delegations effectively and to ensure their business is effectively controlled. Breach of these rules may lead to enforcement action and potential individual liability.

Most Senior Managers will already have a framework in place evidencing how they delegate responsibilities and oversee individuals within their business area. Oversight frameworks typically include job descriptions, delegation letters, training programmes, performance reviews and regular one-to-ones with direct reports and delegates. These are all ways to evidence a Senior Manager’s “reasonable steps”. 

Whilst the WFH environment does not change Senior Manager obligations or the standards to which they will be held, Senior Managers should consider whether their existing framework remains fit for purpose in the new environment. 

Food for thought

There is no “one size fits all” model to ensure effective supervision and oversight. However, there are some common challenges which are heightened in the WFH environment. 

  1. The importance of small talk: Effective oversight does not require Senior Managers to spend all day peering over their delegates’ shoulders. It does require an appropriate framework for testing and monitoring delegates’ performance and acting when things go wrong. In an office environment, one tool of effective supervision is informal check-ins. It is often through such ‘small talk’ that leaders are informed of potentially material issues, especially in the arena of workplace misconduct. While these day-to-day interactions are difficult to replicate at home, Senior Managers should consider: (i) whether they are receiving the same number of escalations they received when working from the office – if not, why not?; and (ii) how they may create an environment for escalations to be made. For example, a standing weekly invite for more informal group check-ins or a more regular cycle of check-ins so as to create an effective environment for staff to speak up (see here for more details on the importance of an effective Speak-up culture).
  2. Taking the temperature: This phrase got a real workout during 2020! But its application to Senior Managers’ roles is important. As people WFH, it becomes much more difficult to assess morale and shifts in the culture of the firm. The FCA has sent a strong message to firms of the link it sees between developing a positive, purposeful culture and conduct risk management (on which, see our Ethics in Banking and Finance paper). What Senior Managers say and do directly impacts on a firm’s culture. Senior Managers will need to re-assess how they promote good culture in the WFH environment – how do you “walk the walk” from behind a computer screen? Whether it be role modelling positive behaviours over a recorded video or celebrating successes over team email, Senior Managers must create new ways of promoting a positive and purposeful culture.
  3. Missing misconduct: WFH may promote a lack of “visibility” of staff, which may easily turn to lack of “transparency”. The physical distance between managers and delegates risks an “out of sight out of mind” attitude with the potential for staff to lose a sense of personal accountability. The first defence in preventing misconduct is by Senior Managers setting the open and transparent culture described above. However, this cannot be the only line of defence and Senior Managers must consider whether their existing control framework is still fit for purpose. For example, do controls in relation to market abuse, bullying and harassment and fraud need to be adjusted to meet the different risks associated with WFH? Strong relationships between the first and second lines in this context will assist Senior Managers with the identification of new risks and the adjustment of controls required to meet such risks.

How can we help?

We work with Senior Managers at various organisations on their reasonable steps frameworks to ensure they are able to demonstrate compliance with their conduct rules obligations. We also work with second line assurance functions to design testing and monitoring plans to assess the quality of supervision and oversight in practice. We regularly advise firms on the adequacy of their control frameworks on a range of issues including anti-money laundering and bribery and corruption controls, market abuse or employee/client fraud.