CULTURE & COMPETITIVE ADVANTAGE

If you used to think of "Culture" as a fuzzy idea that didn't impact your bank's success, the recession probably changed your mind. I have noticed a significant increase in client requests for help in assessing and building the cultures of their institutions.

Management teams at many banks now recognize that culture has been part of the problem, and will be part of the solution . . . but simply are not sure where to go next. After working with clients on culture assessment and culture development for decades, I offer clear ideas, useful tools, and extensive experience to help you find your way.

A common misconception is that "culture is a "soft concept" with no practical business application. I believe that culture is a key determinant of success, and a powerful source of competitive advantage. Download my free Culture Matters article to learn more about "Six Common Misconceptions About Corporate Culture That May Be Holding Back Your Bank."

Why "Tight" Beats "Right"

The most important thing about the culture of your institution is not the particular beliefs and strategies espoused by bank leadership, nor is it the actual practices of your front-line employees.

What really matters about culture is consistency in how different employees across different levels, locations, and functions handle similar situations

When you can expect the same business situation, the same customer need, the same kind of internal interaction among staff to get more or less the same treatment in different locations, or at different levels and different departments, you have what I call a "tight" culture. There are only minor differences in vision and practice between different employees or groups of employees in their respective understandings of "how we do things around here."

A tight culture provides two major benefits that can help you thrive, not just survive, in tough times:

1. A tight culture makes you nimble, able to respond quickly to changing business situations by rapidly implementing revised strategies.
2. A tight culture prevents ugly surprises, when your leadership plans one thing and employees do another.

Where "Loose" Cultures Come From

Every organization intends to set strategy at the top and see those strategies implemented throughout the company. But there are many ways that inconsistencies in vision and practices arise between levels of the organization and among physical locations. The symptoms and causes of loose culture are discussed in more detail in my White Paper, "Build Your Culture, Build Your Business," described in more detail here. You can get a free copy of the White Paper by dropping me a line at Jeff@JeffJudy.com or by calling me at 952-903-0113.

The cause of your "drift" is important if you want to strengthen your culture. The reasons for differences in "how we do things around here" are important when it comes to addressing them:

• Differences can be strong when the current organization is the result of mergers and acquisitions. That may demand standardized training on core banking topics to ensure that everyone is taking the same approach. (You can see a sample of the topics I teach here.)
• Communication systems may not be effective. The message is not getting across to everyone who needs to hear and apply it. Consultation and training in more productive communication approaches may be needed.
• Like the famous "telephone game" -- I whisper something to you, you whisper it to the next person, etc. -- important messages, the vision of the leadership, may have become distorted and diluted simply because no one is paying explicit attention to whether different parts of the institution believe and do the same things. Effective communication, shared vision and practices, have been assumed. An explicit assessment of the culture is the first step in testing that assumption.

How to Establish a Tight Culture

To read more about what I have learned from decades of working on culture issues with banks of all sizes, about the power of culture, what goes wrong, and how to make it right, visit my Culture White Paper & Articles page.

If you are ready to move forward, you will want to:

1. Assess the "gaps," the weaknesses, in your current culture;
2. Nurture your communication practices and reinforce core principles and practices with training and coaching;
3. Capture and reinforce culture with credit policy and process;
4. Schedule "culture maintenance" on a regular basis.

Jeff Judy & Associates can assist with each of these steps.

Continue to Assess Your Culture or learn more about Risk Management and Culture ...

Tough times have reminded all of us that culture really matters. Please contact me for help in assessing and strengthening your bank's culture.