Company cultures — whether good or bad — are well entrenched. Yet many financial institutions believe that with a few bells and whistles, cultural change can be brought about quickly.
This belief manifests in a variety of ways, from pizza parties, to employee recognition programs to pronouncements about “re-architecting organizational values.” These approaches are inherently flawed, however. Simply changing things on the surface is akin to putting a band-aid on a gaping wound.
A McKinsey survey of 3,000 executives found that only one in three organizational change efforts succeeds. Changing internal company culture has even lower odds of success. This often leads to a ‘why bother’ attitude amongst leadership — or those “band-aid” efforts.
Yes, it Matters:
58% of employees have left a job or considered leaving one if they felt their company’s culture was consumed by negative or untrustworthy behaviors, McKinsey states.
The pandemic’s long-term effects present an additional challenge to cultural change. Those employees who will continue to work remotely for some portion of the work week will need a new way to stay connected and immersed in their institution’s culture.
So, how do banking leaders make this transition? Actually, the bigger question is what is being done poorly in the first place that shouldn’t carry over to the new work environment? Identifying these issues requires some introspection, candid conversations and a willingness to accept the hard truths, which may be difficult to hear.
Bank and credit union executives also need to clearly establish the outcomes the want to see and sustain as a result of a culture change. This seldom happens beyond sweeping generalities.
Rethinking the Whole Approach to Culture
When financial institution executives talk about internal culture, they often focus on the pain points or perceived deficits, such as these:
- “We don’t innovate enough.”
- “We need people to be more positive and forward thinking.”
- “We need employees to want to go above and beyond.”
- “We aren’t communicating enough across departments.”
- “We aren’t collaborating enough.”
These issues are not the objective, however, nor do they provide much insight into the causes of the problems. Just as with a SWOT analysis, the identification of problems is easy. Determining what you want to achieve with a culture change is a different story. For example, if the problem is “We aren’t collaborating enough,” how do you define what is enough? What is stopping people from collaborating? What do you consider success in regard to team collaboration?
Not that Simple:
No software is going to be a permanent solution to the challenge of changing company culture.
Because culture-change objectives are rarely established up front, the strategy and tactics needed to activate culture change are often superficial or ineffective. Maybe a collaboration platform is purchased and rolled out to the team, for example. Or maybe a series of cross-functional committees are formed to foster collaboration.
All this may prove to be little more than a ‘collaboration panacea’ if the institution isn’t addressing structural issues such as how information flows through the organization, or how teams are incentivized or how the organizational structure impacts collaboration.
Culture Reality Vs. Perception
Having clear culture-change objectives helps shine a light on those uncomfortable truths many financial institutions prefer to disregard, including that the culture you think you have does not actually exist.
One regional bank’s leaders, for example, prided themselves on having a culture focused on the customer. The leaders liked to talk about a special kind of employee, what they termed “the wild ducks” — free spirits who challenged orthodox views and were ready to think “outside the box” in the quest for new and better products and services.
The only problem was this culture no longer existed. Years of stifling bureaucracy at the middle levels of the organization had crushed the “independent spirits” under a mountain of red tape. Conformity was the order of the day, and those who questioned ingrained processes were forced out.
“What happened to the ‘wild ducks?'” ran the question inside the organization. “They all got shot,” was the answer.
Read More: Why Most Banks Fail at Innovation (And Why TD Bank Doesn’t)
5 Major Culture-Change Mistakes
In addition to understanding what you want to really accomplish (outcomes), and what the root causes are to existing problems, banks and credit unions must understand and avoid the most common mistakes that almost every organization makes when implementing culture change.
1. Believing culture change solves all problems
Can’t effectively recruit talent? Must be a culture problem. Having trouble innovating? Must be a culture problem. This viewpoint is a commonly known cognitive bias called ‘Maslow’s Hammer’ — i.e. when you have a hammer, every problem looks like a nail.
Instead, banks and credit unions need to conduct a deep dive into auditing and prioritizing organizational problems, and determine the real causes behind the issues identified. Otherwise, they will be spending good money after bad.
2. Not living the principles and behaviors you expect
The workplace has changed greatly since many senior executives first joined the institution. The traditional, top-down approach to management doesn’t fly like it did before. Employees want to be valued. They want purpose. They want their leaders to model the behavior they’d like to see in their employees, setting the example for the organization.
But many leaders continue to believe that somehow they are exempt from the same standards of behavior as their employees. They can show up late to meetings. They can be unresponsive without consequence. They can contradict or completely disregard organizational process or policy.
Do As I Say…
When leaders don’t embody the institution’s principles through their own behavior, change won’t happen.
3. Not aligning culture with strategy
Consider this: Leadership states they want to build a “culture of innovation.” However, the institution’s organizational strategy is rooted in maintaining the status quo, not making waves, not taking risks.
This misalignment has huge ramifications on the ability to change culture. In short, you can’t be two things at once. Organizational strategy must be clearly aligned with, and reinforce, those cultural behaviors you want to see in your employees. Otherwise, teams will default to those actions which are measured and rewarded — in this case, not changing a thing.
Read More: Culture Is Key to Digital Transformation In Banking, Not Technology
4. Believing brand and culture are two separate things
Similar to the relationship between strategy and culture, brand and culture are also deeply interlinked. Take, for example, a credit union which heralds its brand on customer service, promoting it throughout all marketing channels.
Yet, culturally, the organization focuses and rewards employees for controlling costs. They build in hoops for employees to jump through to volunteer time in the community. They focus on measuring the return of each and every customer-facing idea, and only give the green light when it’s considered profitable. In this scenario, the external message customers see and hear, doesn’t align with the organization’s behaviors and actions.
5. Expecting culture to change by decree
Culture change is a long and often slogging process. Many leaders choose to circumvent this pain by simply directing the organization to conduct the behaviors they’d like to see. This becomes almost a regurgitation of the cultural pain points, converted into directives: “Communicate more”; “Innovate more”; “Have a positive attitude.”
We all know these directives are short-lived. They don’t stick because they lack the necessary infrastructure and structure changes to make them work. It’s unlikely employees don’t want to communicate more, innovate more or have a positive attitude. “How do we do that?” is the problem.
The job of bank and credit union leaders is to show the way.