Understanding corporate culture in banking

24
Jun 16
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If you don’t understand your culture, you don’t understand your business.

The term Corporate Culture is a poorly defined business term and often lumps too many elements together to be useful in understanding how to effectively manage important issues such as ethical behaviour. If anything, corporate culture is a “rear view mirror” concept and can only be understood by observing daily behaviours and how employees consistently approach problems, deal with business opportunities and interact with each other.

Also, contrary to popular opinion, there is no single “corporate culture”, especially in banking (Childress, 2013). Banking is more a collection of strong subcultures, often organised around different functions and business models (commercial banking, investment banking, wealth management, Operations & Technology) and even within functions strong subcultures can exist. When one or more of these subcultures is out of alignment with the values and ethics of the company, problems can and do occur.

Sustainable culture change and the ability to effectively engender ethical behaviour must be tackled from multiple directions:

Push Mechanisms: Top Down

  • Responsible Finance and ethical behaviour established by senior management as a strategic and business imperative
  • Culture to be defined as specific work behaviours, not generalities or platitudes
  • Personal change, role modeling and “active leadership” by all levels of management (Backstage Leadership)
  • Reinvigoration of true organisational purpose (beyond profit and EPS, which are actually outcomes)
  • Reinforcing communications, “branding” and training


Pull Mechanisms: Bottom-up

  • Championing of new behaviours by informal and highly respected peer-group leaders
  • Well designed, orchestrated, “viral” contagion of new behaviours through informal subculture networks within the bank
  • “Living the Culture” engagement and learning workshops

Sustainability Mechanisms:

  • Revised policies and business processes that promote new and desired behaviours
  • Compensation models that foster team accountability for ethical behaviours
  • Hiring profiles that include desired values and behaviours, not just “best and brightest”
  • Culture metrics (gap analysis and tracking)

Experience in behaviour change at scale across many different industries has shown that “active leadership” and “peer-group pressure” are the strongest levers for reshaping culture (Childress, 2013, Hererro 2006, 2011).

Since senior leadership has a significant impact on what is expected, supported and rewarded inside banking groups, it is important to recognise that organisations tend to be shadows of their leaders and therefore the behaviour and active leadership of the culture is paramount to real culture change. Senior leadership teams and managers that are aligned on the importance of behaviour change and who understand the principles behind reshaping day-to-day work behaviours tend to behave and manage in ways that encourage and support a set of clearly articulated ethical and productive work behaviours and professional practices. Too often, however, executives and managers ignore (consciously or unconsciously) risky or “bad” behaviour in direct reports and employees, which can easily lead to a perception that such behaviour is “condoned by the bosses”. In many cases a poor culture starts at the top (Childress, 2013).

You get the culture you ignore! In many cases executives and managers are not aware of how their own behaviour fosters certain behaviours and creates the culture.

John R. Childress will be speaking on ‘Reshaping culture in financial services by linking culture to the business’ at the Culture & Conduct in Financial Services conference this October. Book your place by July 22nd to save $600 on ticket prices. Read his previous blog posts here

Culture & Conduct in Financial Services

Submitted by John R. Childress

John R. Childress

John R. Childress is Senior Executive Advisor on Leadership Culture and Strategy Execution Issues in both the UK and USA.

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