Article 4: What It Takes to Reshape Corporate Culture

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?

By the way, Enron had published values, too.  They even had them chiselled into marble in their massive lobby: Integrity, Communication, Respect, Excellence.  Enough said!

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.

About johnrchildress

John Childress is currently Visiting Professor in Strategy and Culture at IE Business School in Madrid and a pioneer in the field of strategy execution, culture change, executive leadership and organization effectiveness, author of several books and numerous articles on leadership, an effective public speaker and workshop facilitator for Boards and senior executive teams. In 1978 John co-founded The Senn-Delaney Leadership Consulting Group, the first international consulting firm to focus exclusively on culture change, leadership development and senior team alignment. Between 1978 and 2000 he served as its President and CEO and guided the international expansion of the company. His work with senior leadership teams has included companies in crisis (GPU Nuclear – owner of the Three Mile Island Nuclear Plants following the accident), deregulated industries (natural gas pipelines, telecommunications and the breakup of The Bell Telephone Companies), mergers and acquisitions and classic business turnaround scenarios with global organizations from the Fortune 500 and FTSE 250 ranks. He has designed and conducted consulting engagements in the US, UK, Europe, Middle East, Africa, China and Asia. Currently John is an independent advisor to CEO’s, Boards, management teams and organisations on strategy execution, corporate culture, leadership team effectiveness, business performance and executive development. John was born in the Cascade Mountains of Oregon and eventually moved to Carmel Highlands, California during most of his business career. John is a Phi Beta Kappa scholar with a BA degree (Magna cum Laude) from the University of California, a Masters Degree from Harvard University and was a PhD candidate at the University of Hawaii before deciding on a career as a business entrepreneur in the mid-70s. In 1968-69 he attended the American University of Beirut and it was there that his interest in cultures, leadership and group dynamics began to take shape. John Childress resides in London and the south of France with his family and is an avid flyfisherman, with recent trips to Alaska, the Amazon River, Tierra del Fuego, and Kamchatka in the far east of Russia. He is a trustee for Young Virtuosi, a foundation to support talented young musicians. You can reach John at john@johnrchildress.com or john.childress@theprincipiagroup.com
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2 Responses to Article 4: What It Takes to Reshape Corporate Culture

  1. Good article, John. I’ve just been attending a “guiding social media” event at which one of our clients, a Scandinavian bank, mentioned that one of the biggest difficulties they have is in changing the bank’s culture to be able to handle a new, far more open world of online communication. Basically, the era of brands being built and maintained via one-way communication is largely over. Now, you need to engage with your customers in more open dialog, often joining conversations they are already having with one another. This means one the one hand, encouraging greater openness, a higher degree of “honesty” and directness etc. and on the other, putting place new guidelines and policies for what is allowed and what is not. This new social stage belongs to organizations that can adapt their cultures to become more human and less corporate in their interactions with their customers – and that’s a long, long way from where many banks are today.

    Like

  2. Pingback: Why Banks Should Focus on Culture, Now More Than Ever | John R Childress . . . Rethinking

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