Stephen Sidebottom has held HR leadership roles for major wholesale financial institutions since the early 1990s, culminating in his most recent role as Global Head of HR for Wholesale Banking at Standard Chartered plc, where spent eight years based at the firm’s global headquarters in Singapore. Previously he worked with Nomura International, Dresdner Kleinwort and Barclays Capital, having started his career as a banker with Standard Chartered in the late 1980s. He has seen at close quarters the many twists and turns and changes the banking industry has undergone over the last three decades and has been deeply involved in defining the conduct agenda, especially over the course of the last decade, in collaboration with Boards and Executive Committees. He took time to speak with us over coffee in London on the lessons he has learnt from his career and what the future might hold for the HR discipline from his perspective.

HK: What are the big people-themed trends on the way in financial services, in your opinion?

SS: The financial services industry is going through an extraordinary transformation, fuelled by game-changing technology and new entrants who are often operating with innovative business models. To compete, incumbents need to be able to respond rapidly and effectively but without losing business momentum. This technological transformation may have started in retail banking, but these challenges are also affecting wholesale businesses. In terms of people strategy, this means incumbents have to create agile and more meaningful jobs in order to keep their best people. As a result, we are now seeing changes in structure to allow more flexible working environments and more innovative cultures. In the medium-term, I think the biggest issue is the impact of AI and digital labour. Businesses will need to plan the work they need, the skills required to deliver it, and how to transition existing workforces to meet these new requirements.

HK: How has the HR function evolved since you began your career in the discipline?

SS: It’s hard to separate my sense of the evolution of the function from the development of my own thinking. It’s a truism to say that there’s generally much less focus on the administrative aspects of people management, most of which are now automated and outsourced. There has also been a huge development in theory around the structure and roles of HR professionals, most of it informed by the models proposed by Dave Ulrich, a prominent thinker and academic focused on the HR discipline. These new theories have allowed HR functions to occupy a more consistently strategic space in the business ecosystem. When I first started in HR, I met some hugely commercial and impressive HR leaders who inspired me to hold on to the fact that HR is about the people part of the business, not some separate supporting or purely administrative role. Good HR functions have been doing that job for decades. The main things that have changed in how the function now works are the same things that are changing everything: technology; globalisation; new business models, and the identification of new sources of customer value.

HK: How do you think you and the HR function have been perceived by your ExCo-level colleagues over the years? As a necessary evil or a valued colleague?

SS: That’s a great question. To be honest, I would say the perception, and the way in which people have engaged with me of the years, has been mixed. Not all the senior managers I’ve worked with understood HR, although somehow most of them believed they were excellent people managers! I’m sure challenging some of those pre-existing ideas and prejudices felt like a necessary evil for some people at the time; senior people sometimes like to feel as though they have all the answers and don’t always enjoy having their assumptions tested. Mostly though, I have been able to work very closely in partnership with other Exco-level colleagues in developing people strategies and practices that deliver sustained business performance. If you can help your senior colleagues achieve that for the business they run, they usually value your input. When I sit on an Executive Committee it’s as a business leader, the same as everyone else. I just happen to have people management as my core area of technical expertise. My advice to HR business partners is that the key to success is not to start with the relationship with your stakeholders, but with the impact you can potentially have on their business. I have also always coached my teams to be comfortable with ambiguity and to accept that they will sometimes clash with their internal clients as they bring their professional perspective to bear on people management issues.

HK: What’s the value-add from HR in the boardroom at this point in the industry’s evolution?

SS: People with a deep understanding of HR disciplines can bring a huge amount to board discussions. Good people management and organisational thinking requires the recognition that this is all about complex, unpredictable, open systems. Actions always have unintended consequences, big interventions are often no more effective than apparently small ones, and the regulation of the system requires constant recalibration. For example, when boards talk about culture and the many associated issues of conduct, they need to able to think much more holistically. The immediate value-add has to be in places such as meaningful discussions about culture, about the impact of organisational practices on issues such as transparency and accountability, and genuinely how to create inclusion and achieve the dividend that comes from building teams with cognitive diversity. People professionals should have real insight into managing human behaviour in organisations and how, for example in the context of culture, the wrong actions can lead to outcomes such as ethical fading or purity spirals. There’s also a big contribution we can make to businesses on the ‘future of work’. Changes on the scale we are seeing are hugely disruptive, especially to large, established businesses. Navigating through the issues of what work is needed and future skills planning is already a critical strategic issue for most significant businesses. The development of new technologies and the capacity to automate large amounts of previously manual work mean that the human aspect of ‘work’ is more important than ever.

HK: With the above in mind, should boards of directors be adding more people with HR experience to them in the future?

SS: It’s not going to be a surprise to you that my answer is categorically yes! People in HR see pretty much all the issues going on in an organisation and they don’t usually ascend to senior leadership levels without developing and deploying practical, hands-on problem resolution skills and a strategic mindset. I think that would be very valuable experience on most boards, coupled with that awareness of the future direction of the workplace, as previously mentioned. A strong people management person might also be able to contribute to the working of the board itself, given their knowledge of human relationships and some of the psychology that underpins such interactions.

HK: You have been in the industry for a long time, working at senior levels and dealing with a wide range of senior decision makers – business leaders, traders, deal makers and the like. What changes to senior executives’ behaviour within financial services businesses do you feel would be most beneficial to business and society?

SS: Most banks have done so much work since the financial crisis to change their culture and address the mistakes that were made. The SMCR has put real focus on the tools needed to manage and assure this and, in my experience, the best senior executives have used it as way to achieve meaningful improvements in the effectiveness of their oversight and management controls. Financial services and banking are part of the core infrastructure of our society and have been for hundreds of years, and it’s important that the sector recognises its own importance and its responsibility, and continues to work to earn respect and recognition. But as a single behavioural change, I’d love to see core people management skills being much more valued. These are often described as ‘soft skills’ but I see them as fundamental to business performance. It’s wonderful to work with senior leaders who coach their people, who are approachable and welcome ideas, and who demonstrate empathy and kindness. To me that’s the definition of strong and effective management behaviour and leads to happier and more productive people, teams, and by extension, families and society, if you want to extrapolate that far.

HK: What are the most effective leadership development tools and techniques you have seen in action over the years?

SS: The most effective leadership or talent development activity is the one you actually do. A nine-box talent grid used to facilitate leadership conversations about talent and hold managers to account for developing their people can work so much better than a massive development programme that never really seems to land. As a broader point though, I think the most effective leadership development tools start with enhanced self-awareness and knowledge. The better that leaders understand how their own behaviours impact on their success and wellbeing, the better they can understand and support their colleagues to succeed. Being a better leader all starts with being a better human being and learning from this how to respect and support those in your charge.

HK: That’s a fascinating insight – the idea of stepping back from the role at work and examining the person doing that job. With this in mind, what should compliance, risk and other controls functions be doing at the moment from a leadership development perspective?

SS: I am not convinced that there’s a need for a different approach to leadership development for control functions. The issues at hand at leadership-level are quite similar and the skill sets are quite transferable. Maybe some skills such as managing conflict come into higher focus, but apart from that I would still talk about the need to develop self-awareness and self-mastery as a key initial step. I would really like to see all leadership development build in an understanding of how to think about dilemmas. This is certainly very relevant to control functions in the context of, for example, the fundamental dilemma of freedom versus control. On the one hand freedom is needed for innovation, for risk taking, to encourage creativity, for autonomy and job satisfaction, and on the other hand, control is needed to ensure rules-based compliance, good judgement, assurance, and safety. The reconciliation of this dilemma into organisational practices is critically important. Too much control and people switch off critical judgement; too little control can allow people to do whatever they like. We see this time and time again playing out in real life in financial services, where obedience to the requirements of fixed objectives or targets creates risks. Leaders need to encourage practices that mean people think for themselves and line managers exercise good judgement.

HK: You mentioned conduct earlier, which has been a major focus for the regulator in recent years and seems to have driven real change across the industry. How does HR drive a firm’s conduct agenda?

SS: That’s a trick question! It doesn’t and shouldn’t. Driving the conduct agenda is firmly the responsibility of the board and executive, with HR as a component of that team, but by no means the sole driver. The role of the HR function, along with other control functions, is to help develop and articulate the framework, make sure it’s working well, and to recalibrate it as needed. At times this may feel quite a lot like driving the outcome, but it can’t work if the conduct agenda is simply handed over to a team or function to deliver. Responsibility for an organisation’s conduct has to come from the top.

HK: What is coming next on the conduct front for the industry?

SS: Two things come to mind. The first is an all-embracing view of conduct to take into account misconduct such as discrimination, bullying, and sexual harassment, that were previously seen more as the domain of HR and employment courts than of regulators. The second is that the framing of conduct management needs to become much more sophisticated. Much of it is still predicated on collecting data – some of questionable value – and keeping the issue in executives’ minds. Both are necessary, but a system-wide view using real-time data about ongoing activity will allow better insight into emerging high-risk practices and behaviours.

HK: Do you see much pushback from senior executives? Perhaps unsurprisingly, we hear about a bit of ‘regulatory fatigue’ out there generally; is ‘conduct overkill’ perceived?

SS: This is a journey, so frankly it would be astonishing if there wasn’t some pushback and overkill along the way. After all, just because a control function wants to do something one way, it doesn’t actually mean it’s necessarily the most efficient or effective way of achieving the objective in question. In truth though I’ve seen no real pushback against the intent of managing conduct much more effectively. Sometimes it has been a question of developing understanding amongst the people affected, and that can require a genuine debate about the trade-off between more bureaucracy / process / controls, and the benefit in terms of improved outcomes for all involved, especially for customers and clients which is where our true allegiances ought to lie. Overall my experience is that senior executives do get it and want to do everything they can to ensure high standards of conduct are achieved and maintained. There are bad apples and pockets of resistance but these are in the minority.

HK: Has conduct improved in the industry over the course of your career?

SS: Without a doubt. Attitudes and behaviours have changed so much on so many issues, and the focus on conduct over the last decade has led to a huge improvement.

HK: Is there ever a place for questionable conduct in the interest of profitability?

SS: The short answer is no. A longer answer would acknowledge that it’s important to draw the boundaries on what is or isn’t questionable conduct clearly and appropriately. Catching people on what might amount to a technicality isn’t really what we are trying to do. The other factor in this is timescale. In the short-term, ‘questionable’ conduct – perhaps stretching the rules to deliver something quickly for a customer – might lead to desired outcomes, but in the long-term it never will. This raises the question of establishing clear alignment between long-term conduct outcomes and short-term performance objectives, and that certainly is a big issue for the industry.

HK: What’s the worst conduct issue you have had to deal with and what did you do about it?

SS: I’m not going to lie; I’ve seen people do some dreadful things. My response is always the same. Own it, address it, shine a light on the issues, and make sure they are dealt with quickly and effectively. I’m sure you’ll understand that sharing lurid details publicly is not part of the deal. The conduct issues that worry me most are those that arise out of silence, obedience, and conformity. If people fear raising issues they see, or believe that to do so would be futile, then you have an environment that is going to encourage misconduct.

HK: What’s it like emotionally being on the HR side of a challenging conversation?

SS: Challenging conversations are difficult for everybody. HR professionals often have more experience of them and one of the features of the job is that avoiding a challenging conversation is not really an option. HR professionals might therefore be better or more practiced at being honest and listening carefully to what people have to say, but that doesn’t make it any less difficult. For me, the key thing is to have an emotional or challenging conversation from a position of respect and care, rather than from one of anger, fear, frustration or avoidance. I still recall a redundancy meeting from my early career where the very senior manager started the conversation by telling the person that he couldn’t wait to fire him and wished he had done it years ago. That wasn’t helpful, nor appropriate, and I got him out of the room quickly. It’s also useful to have a place to debrief, and when HR people are delivering redundancy messages or dealing with difficult events it’s part of my leadership role to sit down and talk with them about it afterwards.

HK: Where do you think the millennial generation will take the HR function within financial services?

SS: It’s an inevitability: so much is going to change in the next few years. I’m not sure how much is about the millennial generation moving into more senior roles in the profession and how much is about megatrends across the world of work. The obvious ones are the impact of AI, much longer working lifetimes and the collapse of traditional careers – the multi-decade tenure with one firm is all but a thing of the past. Dealing with the consequences of the climate crisis will be a major preoccupation for tomorrow’s workforces and HR functions. Some of this will be tough, but there are also massive opportunities. Ubiquitous remote working, for example, changes everything about how people will work together and allows people from all over the world to work as part of connected virtual teams. We know that skill requirements will change and that the focus of development will be on agility, adaptability, teamwork, problem solving and self-mastery rather than meeting the need for significant numbers of people with extensive technical skills since many of those areas will have been automated. We will also experience four generations working together and need to become better at valuing the different skills and experiences, and different forms of wisdom and energy that all these amazing people can bring to the table. I think HR will consequently become much more focused on the human experience and much less on the procedural and operational aspects of people management. In time, blockchain technology will remove the need for many current core people management processes, such as pre-employment screening, which will free up time to focus on the people themselves.

HK: Blockchain seems likely to become pervasive across all walks of life as far as they are informed by technology. Can you think of an enhancement to HR technology that you think would make a material difference to the discipline in years to come?

SS: In terms of the function, I think that the key thing is that HR technology tools will remove a lot of the remaining operational activity of HR. Many large HR functions are undergoing transformation processes, including implementing significant upgrades to their core people management systems. The thing I’m most looking forward to though is the opportunity to use technology to redesign how performance management processes work. In a dream world, this will include shifting agency back to the person being managed, so that they ask for advice on how to improve their performance and thereby recast managers and colleagues as coaches, rather than judges and assessors.

HK: Thank you for these viewpoints Stephen, this has been hugely insightful.