As community banking continues to find its way back from the turbulent years of the financial crisis, optimism about the future is returning. History has proven time and again that remarkable changes emerge from times of adversity. For some financial institutions, there is a renewed interest and pursuit of mergers and acquisitions; for others, change means finding innovative ways to grow in order to meet the needs of clients, regulators, and other key stakeholders, including employees. Whatever the direction, future success is about change, and success will largely depend on the ability to change culture. So why do leaders seem to pay more attention to developing strategy and less attention to changing culture? The problem is many leaders think they know the culture of their financial institution, but may not know how to change it.
At its basic level, culture is defined as “the way things get done around here.” Even more simply, culture reflects experiences, beliefs, and actions. The day-to-day experiences of people at the lowest level in the financial institution rarely reflect the experiences of leaders at the highest level. Leaders have different demands, and the very nature of the job is to focus on strategy, while delegating the day-to-day management and execution of responsibilities and tasks. Inherently that can keep leaders removed from the way things are really done, and they can develop false or inadequate conclusions about the culture of the financial institution. Leaders are inherently biased toward their own experiences, beliefs, and actions, which may be disconnected from or misaligned with how things really get done. So relying on their perspective of the culture alone is not enough. Changing culture has to start with a clear understanding of what the culture is today for all employees, at three levels—individuals, teams, and the overall financial institution. Accurate and objective understanding provides the greatest opportunity for leaders to identify what needs to change and the actions needed to achieve the change.
An emerging practice today is to engage in formal processes to assess culture by identifying the experiences and beliefs of all employees. These processes can add objectivity as well as a means to measure changes in culture. Similar to employee satisfaction or engagement surveys, formal culture assessments can help to identify where a financial institution’s stated values and the employee experience may be misaligned. When there is misalignment between what a financial institution states as its values, and what employees actually experience, the result is often an environment that is highly bureaucratic, lacks innovation and empowerment, and has a culture that is hard for new employees to learn. Culture assessments identify the disconnects and can help frame the change process.
Whether a financial institution conducts a formal assessment or not, there are a few central questions that can identify the need for change:
1. How well do the financial institution’s espoused values and beliefs reflect what employees experience?
2. How deeply is the business strategy understood by all employees and reflected in their actions?
3. Do all actions resulting from policies, procedures, and processes reflect the financial institution’s values?
4. How are employees recognized and rewarded for the behaviors that reflect the ideal/desired culture?
There are several best practices we have found to change and sustain the culture needed for achieving strategic priorities:
1. State the ideal—know what you want. The old adage is as true for culture as anything else: If you don’t know where you’re going, any road will take you there. Experiences, beliefs, and actions need to be defined in ways that most people can understand, internalize, and see practiced in the work environment.
2. Seek continuous feedback. Ask about the culture from others inside and outside the financial institution—and ask often. Reach down into the organization; ask questions; listen actively. Culture exists at a lot of levels.
3. Explore and leverage the six key organizational influencers of culture: Strategy, Structure, Skills, Staffing, Leadership Style, and Management Systems (policies, programs, and processes). All need to reflect the beliefs and values of the financial institution.
4. Remember culture is relative. There is no such thing as a bad culture or good culture; culture is either strong or weak. Strong cultures have shared values at all levels and show up in the experiences and actions of individuals, teams and the financial institution.
5. Focused on values. Day-to-day behaviors are influenced by many variables. Staying focused on the big picture and keeping the day-to-day context in mind will keep a financial institution focused on culture.
Peter Drucker’s famous quote “Culture eats strategy for lunch” is as true today as ever. Changing culture to support a financial institution’s strategies is critical to success. It is culture that produces results, so knowing what it is today and what may be misaligned with the experiences, beliefs, and actions of employees is the first step to realizing change. A financial institution needs to take the time to assess and identify the changes needed to strengthen the culture and ensure it is supporting success in its business strategies, not getting in the way of change
Wipfli Editorial Team