Jeff Judy

Jeff's Thoughts - October 28, 2009

Seeing Culture

Do you believe in culture? Whatever your answer, I can tell you from personal experience that the recession has made believers out of quite a few former skeptics!

By "culture," I'm talking about how the strategies of an institution's leadership are reflected in the practices of employees at the front lines. Do these different levels of the organization share the same views of what employees are supposed to be doing? Faced with a decision involving a customer, a business decision, an ethical dilemma, or a regulatory issue, do employees in different locations, and at different levels on the org chart, generally come up with the same answers? Do they have the same vision of how things work, of what is important, of what principles are sacred, of what goals the organization is really pursuing?

If you don't think culture exists, you haven't been paying attention for the last couple of years. Some major financial services firms have disappeared as a result of practices that were embraced by everyone in the organization, from top to bottom. Some huge embarrassments, and some near disasters, can be chalked up to very strong cultures, cultures that happened to be focused on the wrong values, the wrong goals, the wrong ways of doing things

And personally, I have seen the realization of the power of culture dawn in the eyes of some banks headed for trouble. I do a good bit of consulting about culture, including administering surveys to executive and frontline levels, comparing views of key issues across the organization, and recommending steps to build more consistent, unified cultures. In the last year, a couple of banks approached me for that analysis when they realized that they could be on the path to disaster.

Unfortunately, for these banks, they didn't believe in culture until it was too late. By the time they asked me to look into their own cultures, they were flailing around looking for any way to understand, and change, the way they worked. They didn't have the time, or, in some instances, the commitment to really strengthen their cultures -- which is challenging work, to be sure -- with the result that they eventually received Cease and Desist orders from the regulators.

Oh, they had cultures in place, all right, we all do. Theirs were particularly unhealthy, and broadly neglected, until they realized, all too late, that culture matters.

The behavioral indication of a strong culture is the ability for the entire organization to change direction quickly. When the recession hit, institutions where communication was frequent, where common vision was valued, where top-level strategies and front-line execution were closely matched were able to adopt new practices much more quickly. A strong culture means that everyone in the boat is rowing to the same stroke count, you might say, so that stopping, speeding up, or changing direction are all easily done.

Where culture is neglected, all the staff listen to their own internal stroke counts. Change is difficult to effect, meaning that opportunities are hard to grasp, and hazards hard to avoid.

Some institutions have actually strengthened their cultures during the downturn. They enter the recovery as more nimble, responsive institutions that will be fierce competition for the culture skeptics.

Nurturing your culture should be a key element of your strategic plan. If you don't accept the endorsement of the concept of culture by the survivors of the recession, accept the validation of the concept by the banks that are no longer with us.