Jeff Judy

Jeff's Thoughts - November 30, 2016

Are You "Harnessing" Your Culture?

When market conditions change and you alter your practices to respond to those changes, are the new practices implemented throughout your institution quickly? Or does it take forever to spread the new approach throughout the organization?

When you have to adapt to new regulations, when you come up with better procedures for certain credits, when you update your credit process, is rapid, consistent, widespread application of the changes something you can count on? Or is it more like making a U-turn in an aircraft carrier?

To me, these are questions of culture. I strongly believe that culture is far from a "soft" topic for management. The way I look at it, a tight, consistent, nimble culture provides a strong competitive advantage.

But then, I look at the concept of "culture" a little differently. Many people describe their culture in terms of principles, values, and standards, and those things are certainly important. I believe that when we talk about culture, we also have to consider how consistent those values and practices are across functions and locations. We have to think about how well aligned the practices of the front lines are with the strategies and values of the institution's leadership.

In other words, there's a "what" of culture, the chosen standards and values and strategies, and the "where" of culture, which is hopefully everywhere in the organization. A really healthy culture not only shows good alignment across functions and locations, it facilitates the rapid spread of new strategies and practices throughout the institution.

Imagine filling a cart with your policies, practices, standards and values. To get it to everyplace in the organization, you hitch that cart to a "horse", namely, the training and ongoing communication -- staff meetings, memos, etc. -- that disseminate the culture. And now imagine your harness breaks, and that cart full of the current desired culture doesn't go anywhere.

That's what happens when managers and supervisors fail to reinforce that training and communication. Front-line employees adjust their practices to what their immediate supervisors reward and punish. When your leadership tweaks strategy or adapts procedures, do you have regional or branch managers who decide for themselves whether to follow the new direction?

In a loose, inconsistent culture, those middle levels of management focus on their own cultures, for the areas that are under their control. In a tight consistent culture, those managers focus one pushing the guidance from the leadership to all the employees under their control.

With a strong "harness" of management support, change is effected more quickly and more thoroughly. That allows an institution with a tight culture to respond more effectively to changes in market conditions, to seize opportunities and fend off hazards more rapidly, compared to their competition.

The nimblest operators in your credit market pay explicit attention to how their cultures work. They insist on immediate and unflinching middle management support that anchors the responsiveness that makes you the winner in your market.