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Guest Blog Post by Jeff Judy

Jeff Judy Associates

I often consult with banks about “how they do things,” their values, strategies, standards, practices, and tendencies – their culture – driving how they actually execute their business. One of the most important determiners of a bank’s success, culture is often misunderstood, and consequently gets overlooked as a powerful business tool. Here are the misconceptions I encounter most often in the banks I work with.

1. “Culture is a nice, ‘feel good’ HR topic that doesn’t really affect our business.”

Few things have greater impact on your long term success than your corporate culture. Culture is how you really do business, not how you talk about it. Culture is what your customers see, what your employees do, what generates the returns your shareholders expect.

Culture is what translates all those plans and strategies from the leadership level into action at the front lines. Without a tight culture that keeps everyone on the same page, your bank will be inefficient at best, and ineffective at worst. In a tight culture, management can accurately predict how any banker, in any location, will handle a given situation. In a loose culture, management sets expectations and hopes for the best, but they do not really know if what they say is what happens at the front lines.

2. “The most important aspect of culture is the values and standards we espouse in the bank.”

What matters most about culture is whether it delivers on your leadership vision, regardless of what that particular vision may be. What matters most about culture is how tight or loose it is. When I consult with banks on cultural issues, it is not my job to tell them to embrace certain values and goals, and reject others. My job is to help them apply their ideas and strategies as consistently as possible across every level of the bank, and in every geographical location.

In a tight culture, any given situation will be handled more or less the same way, no matter where it arises. The solutions front line staff come up with will be highly consistent with what the leadership teams believes the front line staff are doing. Actions match vision, across all levels. And no matter where customers walk into the bank, they will get much the same response (not forgetting that there may be variations in particular market needs and opportunities).

A loose culture has a lot of “leaks,” places where energy and direction are lost as “how we do things around here” is transmitted from one level to the next. Actually, a tight culture not only helps a bank with the right values and standards to succeed, it helps a bank with the wrong ideas and strategies to fail all the faster. A loose culture allows enough slack for a misguided bank to survive, but makes it impossible for even the best goals and strategies to generate meaningful long term results for the bank and its shareholders.

3. “Culture is basically a compilation of ‘best practices.'”

Maintaining a tight corporate culture throughout the organization is in itself a best practice. Preferred practices, procedures, processes, and so on all describe the particular culture you have at your bank. Frequent communication, ongoing monitoring of practices, and continuous attention to the culture are themselves practices that will tighten your culture and give you more control over other activities that are crucial to your success.

4. “Harping loudly, broadly, and often on our values, standards, and practices, just makes it harder to change how we do things when conditions change.”

One of the greatest benefits of a tight culture is that it allows you to change what you do, to implement new practices, much more quickly than does a loose one. Effective, frequent communication, along with monitoring and immediate action when practices deviate from the direction set forth by the leadership, teaches everyone in the bank that a shared vision and shared approach are core elements of how things are to be done.

When staff are aware that bank leadership is actively engaged in making sure front line action reflects board room vision, they take changes in policies, procedures, processes, and practices in stride. When you make a big deal about consistency, about your culture, only in times of crisis or major shifts in strategies and practices, it is hard to push vision and expectations all the way down the line. Front-line staff will take a “wait-and-see” attitude until they know whether the new approach is going to “stick,” or whether it is just a passing management fad.

The more often you combine communicating the bank’s vision with enforcing execution of that vision, the more flexibility you have in tweaking, or even overhauling, how you do business. A tight culture gives your bank a nimbleness that is the envy of your competitors.

5. “We are a small- or medium-sized bank where we are in contact with each other all the time. We do not need to pay explicit attention to our culture the way a large institution does.”

That sounds logical, but in years of working with community banks, I have found that many smaller institutions have significant cultural disconnects. It is the very assumption that frequent contact means shared vision and practices that undermines the culture in these smaller banks. Nobody notices the slippage, because nobody is really looking.The only way to create a healthy, tight culture is to explicitly set out to do just that, in any size bank.

6. “Culture is an internal matter that can support better operations and greater efficiency, but it does not have much direct impact on our customers.”Your marketing department promises one thing, your bankers deliver another. Your customers get handed from one function to the next, and every time, it feels like they are starting over with a new bank. And at each step, they hear that their problems arise with some other employee or department.

Want to find out how loose and divided your culture really is? Ask your customers, especially those who have been with you a long time and use multiple products and services. They live your culture, and your customers have a way better feel for what really goes on at your bank than does your leadership team.

Learn more about what culture means to your business success at www.JeffJudy.com/cultureissues.html, or send an e-mail to Jeff@JeffJudy.com to request my full white paper on culture and your business.