Strategic planning is a time to harness the thoughts, ideas, and energy of your financial institution’s leaders to identify key strategic issues, develop strategies and actions plans to address those issues, build capacity to implement action plans and create a single-minded team focus on desired outcomes.
Strategic planning is a dynamic period of time when your team comes together to answer many of these questions: What are we going to do differently this year to knock the socks off the competition? How are we going to differentiate ourselves within the market? How are we going to position ourselves to attract, retain, and motivate high-quality talent in this competitive environment? Is merger and acquisition right for us?
At the end of any strategic planning process, participants are excited about the future and the steps they will take to secure that future. Yet, so often, plans are not implemented, goals are not achieved, and the same key strategic issues surface year after year. The million dollar question is, Why?
Financial institutions frequently cite that normal business operations got in the way, their institution experienced turnover, business priorities changed, and any number of other reasons. In the end, however, the result is the same: The strategic plan sat on the shelf.
Why? Because culture eats strategy for lunch!
Organizational culture is a concept that can be observed, but until the late 1980s was not easily measured. With the emergence of social media to attract talent and employees spending more than 40 hours a week at their workplace, organizational culture has never mattered more. Culture is ingrained in all areas of a financial institution―its values, mission, and communication―and is one of the key factors determining its long-term effectiveness. With culture’s strong linkage to profitability, employee engagement, productivity, and customer satisfaction, leadership must be proactive when it comes to managing change within an institution.
The Organizational Culture Inventory® (OCI®) circumflex, designed by Robert A. Cooke, Ph.D. and J. Clayton Lafferty, Ph.D., identifies 12 behavioral culture styles of organizations. Their research found that higher constructive culture styles lead to effectiveness and productivity, while higher aggressive/defensive and passive/defensive styles result in greater volatility, ineffectiveness, and mixed performance.
So, how should your institution assess its culture? The first step is identifying the problems that currently exist in your organization. The OCI® measures a culture in terms of the behaviors required to fit in and meet expectations within your organization. This assessment can help identify the current behavioral norms that are preventing your organization from reaching its ideal cultural state. The results can also help identify behaviors of work groups/units within the organization to understand why some groups perform better than others. The next step in measuring culture is assessing the ideal state. This is where leadership is instrumental in identifying the behaviors that are necessary to help your institution become the best that it can be.
The biggest challenge that you may have is how to move your culture from its current state to the ideal state. It is easy to feel overwhelmed, but the goal is to start small. Cultural change may take years, but it is important to start with one or two targets to focus on at a time. By implementing change at a lower level in the organization, the impact of that change is felt throughout and impacts other cultural factors. Several key areas that your financial institution may want to start with are:
- Articulation of Mission and Vision
- Definition of Values and Expected Behaviors
- Identification of Strategic Priorities
- Tracking of Organizational Metrics
Once these goals have been defined, your institution can begin to embed them within the existing culture and continue to track and measure their progress. Over time, as the constructive styles of working become habits, the institution can begin to experience the profits of its hard work. An example of this is demonstrated below with improved culture and financial performance at Lion, a beverage and food company that operates in Australia and New Zealand.
“The only thing of real importance that leaders do is create and manage culture. If you do not manage culture, it manages you, and you may not even be aware of the extent to which this is happening.” – Ed Schein
Take a step back and think of the strategic initiatives that are in place at your financial institution. Is the executive team having a hard time moving those “big rocks”? If it feels like the institution is trying to push them uphill, the current culture may be the obstacle? If you need help or would like to discuss further, please contact Heather at email@example.com, Susi at firstname.lastname@example.org, or your Wipfli relationship manager.