The key to Investment Management

Friday 9 June 2017

'It's not an overstatement to say that culture drives everything'. Mark Zinkula


Culture matters. It drives the ways that we behave and has a direct impact on our clients’ experiences. Little wonder then that it is also of increasing interest to policymakers and regulators.

But what is it and how can we address it when managing money and managing firms?

Most people would say that culture is the shared values, behaviours and beliefs of a company’s employees.

At CFA UK’s 2017 Professionalism Conference, Mark Zinkula, CFA, CEO of LGIM, one of Europe’s largest asset managers, listed some business activities that are driven by its culture:

• How strategy is set
• How they think about social purpose and stakeholders
• How LGIM communicates and engages – with customers and staff
• How products are developed and managed
• How problems are spotted and dealt with

‘In short’ says Mark ‘it’s not an overstatement to say culture drives everything’.

While most of us get a sense of a business’ culture when we engage with it as customers, partners or potential employees – and most of us will have called time on a business relationship because of concerns about its culture – it’s a surprisingly difficult thing to measure.

Direct information on culture is thin on the ground. According to Mark, just 14% of FTSE 100 companies reference culture in their annual report despite the fact that intangible assets represents a much large part of their balance sheet than in the past.

But it’s important that we try. Adds Mark, ‘To get culture right, define it, communicate it, hire and promote based on it, measure it and hold leaders accountable. All of the efforts around culture will be wasted if it isn’t embedded in the fabric of the firm.’

The key measure for LGIM are employee surveys. Academic research suggests that companies with positive employee scores on culture generate better financial figures over time. Other proxies include client service scores, employee turnover, customer complaints, control failures and code of conduct (or regulatory) breaches.

But how many of us are incorporating these measures into our security analysis? Do we give cultural analysis sufficient weight in the CFA Program? Could we do more to provide continuing education in this area?

In addition, we also need to examine and care for our own cultures. In his closing remarks to CFA UK, Zinkula noted that investment managers have an obligation on clients’ behalf to hold Boards and leadership teams accountable for their behaviours. As he said, ‘we can’t credibly do this if we don’t lead by example’.

Want more content like this?
Watch webcasts from the 2017 Professionalism Conference.

About Mark Zinkula, CFA
Chief Executive Officer, Legal & General Investment Management 

Mark Zinkula is Chief Executive Officer at Legal & General Investment Management (LGIM), the largest UK based asset manager. Mark has led LGIM’s expansion across multiple investment capabilities, client channels and regions, notably building LGIM’s business in the US and Asia. During his tenure, LGIM has also strengthened its corporate governance team, broadening its influence on environmental, social and governance issues.

Mark is an Executive Director of Legal & General Group Plc. He is a member of the boards of the Financial Reporting Council and Investment Association and is an advisory council member of the FICC Markets Standards Board and the Diversity Project. He has also served in a variety of positions in the non-profit and higher education sectors.

Mark Zinkula