IN the past year the landscape for Islamic finance has rapidly changed thanks to the disruption brought in by FinTech. With shariah-compliant cryptocurrency[i], robo-advisory services, crowdfunding investments and peer-to-peer (P2P) lending platforms[ii] and rising acceptance and use of artificial intelligence, machine learning and the Internet of Things(IoT) that people are getting used to the Islamic finance industry is trying to play catch-up to their conventional peers.
In tandem with these rapid changes is scepticism, on trust and leadership, which the entire financial services sector is facing. This has created a rising preference, for people, to go with referrals and word-of-mouth recommendations. Thanks to social media businesses, across all sectors including Islamic finance, is taking a hard look at their operating models and bringing a focus on generating social capital in order to ensure sustainability.
As trust becomes more and more critical in business relationships and technology disrupts the business models across the financial services industry, Islamic finance has a pressing need to focus on demystifying itself and present value propositions that are easily understood. Similarities with responsible finance and alignment with the sustainable development goals need to be explained simply and easily in order to create conversation and engagement through which trust is created.
Undertaking such demystification would open up a larger market for the industry and enable it to position itself as a real value creator for the global economy.
Importance of Social Impact
In order to successfully achieve such demystification we need to ask what is the social impact that Islamic finance organizations are achieving and how are we measuring it?
The answer to this starts by looking within the organization or in other words with the employees.
Today employee engagement is a critical strategic organizational requirement for any organization interested in achieving sustainability as without sustainability there is no business continuity. The topic of employee engagement has spawned an industry by itself resulting in myriad ways of how employee engagement can be done. Needless to say for each organization the engagement needs are different and a one-size-fits-all approach simply does not work.
For Islamic finance organizations a good starting point, in getting employees to be engaged, is with its business purpose. Ensuring employees understand the bigger picture or the reason the organization is in business aids in the comprehension of the business strategy and its initiatives.
Such understanding then generates ideas and creates ownership of related initiatives and increases trust among the employees as empowerment comes in. Add a touch of strategic human resource planning, in the areas of functional and behavioural competencies, and the organization can have a clear view of how employee performance impacts on the organizational strategy and purpose whilst the employee gets a direct line-of-sight of individual performance and its impact on organizational result as well as the impact on society.
Whilst comprehension of business purpose, strategy and ownership of initiatives is the first part of employee engagement the second and more critical part is the measurement. One measurement parameter is the organizational performance achieved through employee performance. The second measurement parameter is the value of the social capital generated through the impact of organization activities. The value of the social capital generated can be correlated with forecasting future profitability.
Measure social capital through Brand Advocacy
Research shows that when an employee pitches for the organization, as its brand advocate, it’s the strongest form of recommendation that works. Whether it’s the CEO presenting to the board or it’s a front-line executive answering customer queries, the interaction creates an experience for the recipient. An experience based on which critical purchase decisions are made.
Effective brand advocacy is only possible when there is complete trust, ownership and understanding of the business purpose, strategy and objectives. It is not a media or content channel that is managed through corporate communication. On the contrary it is authentic and trustworthy word-of-mouth recommendation.
It’s tough to build effective brand advocacy but not impossible. Developing it has to be approached in a phased manner as it is based on the level of emotional intelligence, of the organization and its employees, as well as the prevailing work culture. In addition adequate time, from a minimum of 14 months to upwards of 3 years, has to be given to build up effective brand advocacy and obtain results from it.
Engage and Advocate on Social Media for
creating Social Capital
Today developing both employee engagement and brand advocacy involves effective use of individual social media channels by employees and the organization.
Social media today is an extension of the community or tribe where people are concerned. It has also created a distinct shift in communication habits among all.
With the world living on social media, it would be foolhardy to expect employees not be on social media or not have conversations related to their work. Whilst many organizations have strict communication policies, with regards to social media usage at work or on work, all that does is send a message to the employee that speaks about lack of trust. On the other hand corporate social media accounts just sending the standard corporate or product messages are seen as nothing more than just an advertising channel.
To ensure that social media aids in furthering the organizations’ purpose there needs to be conversations.
Conversations create relationships and in turn lead to business value both in terms of money and reputation. To get such conversations and relationships happening there needs to be regular and free-flowing interactions or conversations between real people—employees and the stakeholders.
Brand advocacy enables employees to start such conversations, while an organisational social media account provides the necessary support content and adds to these conversations. What this dual conversation does is provide transparency and authenticity for the brand to communicate its story and have it accepted. Over time as employees and people engage in conversation, feedback and recommendations are made, and a genuine rapport emerges. This process helps build social capital or the preferred status, for the organizations’ product or service, and ensures sustainability.
Given the speed of disruption, in the financial sector, Islamic finance has to take a hard look at how and what business value it wants to create, and work through connecting business strategy employee engagement, brand advocacy and social media.
This article was first published in Wahed Halal Investment Journal on Aug 2017.