For an introduction to this series of articles, please view Why Banks Should Focus on Culture, Now More Than Ever. See also Article 1, Article 2 and Article 3 in this series.
So where’s the silver lining in the dark cloud of bank regulation and reform? We believe this is the perfect time for bank leaders to ask two fundamental business questions:
- What kind of culture do today’s global banking institutions need to win in the marketplace with their clients and to win hearts and minds within our own company?
- What is our enduring purpose – why do we really exist as an organization? (And remember, profit is a by-product, not a purpose!).
We believe the current crisis and aftermath represents one of the most important opportunities in decades for ambitious and courageous CEOs to strengthen and deepen their franchises. It is also the perfect time to begin to shift the culture of banking internally, before drastic and costly regulatory measures are passed out of public frustration and anger. The sensible and we believe workable solution is for regulation and self-regulation (internal culture change) to work hand in hand to bring about both opportunity and stability.
Reshaping culture is the role of the CEO and the senior team. It is not an HR or OD exercise as much as it is a leadership responsibility. What is the “best” culture for the bank? One that is aligned with and fully supports the Strategy and Structure of the organization. With a little help from outside experts, the CEO and senior team can quickly come to grips with what processes, actions and behaviours most fit and support the strategic interests of the business.
If a bank decides to shift its internal culture, we suggest they NOT begin by issuing lofty mission statements or long lists of core values. Begin instead by taking a hard look at the current culture (particularly its strengths and weaknesses) and also the existing business processes and the work attitudes and behaviours they foster.
Then the CEO should take a hard look at the senior leadership team. What shadows are they casting over the organization? What is the culture they allow (and foster) as a result of the way they work and behave? It’s also a good idea for the CEO to take a hard look in the mirror: assess your own leadership style, the processes used to run business and deal with issues and people. An important question is: What “shadow” am I casting?
Fast Break Culture Change: And if you find room for improvement, don’t buy into the commonly held view that culture change takes years and tons of senior management time and effort, plus endless workshops and all-hands communication meetings. It can happen relatively quickly if you take the right actions and are truly committed.
Take a page from the playbook of the New York Police Department’s “Broken Windows” policy on reducing violent crime. The theory is simple (and even easier to enact inside a company than it is in a sprawling metropolis like New York City):
“Broken Windows Policy: untended disorder and minor offenses give rise to serious crime; therefore dealing with minor offenses now is a significant deterrent to serious crime later.”
This is how the banking industry got itself in trouble, by ignoring its “broken windows” with an eventual build up of tolerance for outside the norm behavior and risky deals, finally leading up to the excessive risk taking and blatant disregard for governance and self-regulation. The result being the recent global financial meltdown, the disappearance of once venerated institutions and the colossal bailout using public funding.
Once you have decided on the culture you want and have defined the leadership activities and business processes you need to run the business and build a high-performance culture, take a “high visibility” approach to holding people accountable.
The first time you terminate a senior executive for flagrantly acting against the desired culture, you will have fired the shot heard round the cubicles. Everyone will know that this company is serious about its values and building a high-performance culture.
And it won’t be long before employees start holding each other, and themselves, more accountable, just as community anti-crime groups began to spring up all around the City after the police began to take a “highly visible” approach to minor crimes. Deal with your broken windows before they become serious crimes.
Clarity of purpose is critical in helping to define the culture most appropriate for your business strategy. If you are clear on “why we exist as an organization” then your values will easily follow, as will your culture. We have seen too many sets of values and mission statements that have no connection to the actual running of the bank other than they are a “nice to have” and look good on the lobby wall.
Every time I speak to a group of bankers, or any business executives for that matter, I always begin with the same activity. I ask them to take out a blank sheet of paper and without conferring with anyone, to write down all the Values of their company. More often than not I get first blank stares, then uncomfortable coughs and shuffling of chairs. The fact is, in all the years I have done this exercise the group average has rarely been above 50%! What if an employee at a shareholder meeting or a town hall meeting asked the senior team to do the same exercise and got a 50% response. What would be your excuse?
Today in most organizations the message inside is clear – corporate values are nice words, but actually are quite meaningless in connection to the everyday running of the bank. We can remember the dates of our kids’ birthdays and our wedding anniversary because they are important to us, but we can’t remember the company values!
So spend some time getting very clear on your purpose as a business and then build your values based on that. If it’s what you are really passionate about and what you really believe in, then you will easily be able to rattle off all your values, and you will even have personal stories and examples to illustrate each one. Then build other examples of day-to-day situations within your bank that show how the values are meant to be applied. Make a list of executive behaviours that are in-bounds (that are consistent with the purpose and values of your bank) and those behaviours that are “out of bounds”. Talk about values at every staff meeting. Talk about how values support every part of your business: sales, new client development, client satisfaction, revenue generation, productivity, and of course profitability. If you make the connection, so will your people.
Why is this critical? Remember that it is impossible to treat clients any better than we treat each other so instilling the values of your culture into everyone will actually show up in radically improved service to clients. And after all, they pay the bills (and the bonuses).
Bringing culture into alignment with strategy and structure is the role of leadership. Culture can’t be managed, but it can be led!
Want to start on the path of rebuilding the brand of banking? Take a stand on the right things to do. Invest in rebuilding the culture of banking. If banks don’t begin to self-regulate and shift their culture and practices, I am afraid it will be attempted through government regulation, and that is definitely not the most effective or efficient solution.