Numbers. Capital ratios; margins; spreads; ROA; ROE; CAMELS ratings; LTV ratios; liquidity ratios. The list goes on. Investors have historically rewarded better performers based upon the more favorable numbers they produce relative to many of these metrics. Investors are doing just that today… and tomorrow too.
What if your bank’s numbers are not up to par? How do you transform your bank into one that consistently delivers better digits? A large part of the answer rests within your operating culture. It is time to build a better one.
Producing better numbers begins with aligning your bank’s culture with its strategic goals based on market realities. The history of banking is full of examples of great strategies and initiatives that were not properly executed due to a weak culture. Just look at the bank acquisitions that failed to produce planned earnings. Also, many banks attempt too many opportunities, creating a large number of sub-groups within the organization that have competing interests. Resentment among the different departments turns the orchestration of these divergent interests into a catastrophe.
Once a harmonious balance is struck between culture and goals, a concerted effort to instill the desired culture into the bank’s DNA is imperative. At the heart of this effort is a comprehensive exercise in engaging the bank’s staff and management in the process of adopting the key values that form the foundation of the desired culture. This process goes well beyond a mass emailed memo. Staff surveys and interviews will determine the perception employees have of the current culture and training will clearly articulate expectations to the realization of the chosen values. Honest communication, bold leadership, and a visible reward system built around the desired culture and values are absolutely essential.
On the flip side, if you consider ‘honesty’ a core value your bank operates by and yet there is frequent criticism from customers and regulators about disingenuous fee disclosures, then ‘honesty’ really isn’t a foundational value within the culture. Hence, the cultural foundation is weak and the operating strategy is not being driven by the values you have chosen to frame your culture. “Disconnects” between values and practices cannot be tolerated. From my work with dozens of banks, I can affirm that the “Culturally Disconnected Banks” outnumber the “Powerful Culturally Connected Banks” twenty to one. Bank management’s lack of leadership on this issue, and a general resistance to change has enabled this disappointing, but fixable situation.
Equipped with a synchronized culture and an engaged workforce, your bank could be poised to begin living the new culture and properly executing the strategy that will drive better performance. When employees have clarity in the expectations in fulfilling their responsibilities, and a well grounded belief in the core values guiding their work, they will perform their duties with a greater sense of purpose. Employees in an organization with a strong corporate culture operate, and a comfort zone that nurtures their efforts towards greater innovation, will be empowered, and motivated to represent the bank in the highest regard.
To top it off, a true cultural transformation can enhance your relationship with not just your employees and customers, but your regulators as well. It’s simple- when your bank becomes value driven, and more transparent, it opens up more open and honest conversation with the regulators. Talking candidly about your successes, problems, and potential risks will establish a more trusting relationship with your examiners, shareholders, employees, and other stakeholders. Few too many bankers do this, as it is uncomfortable. Holding each accountable for value commitments and results is uncomfortable too, but the time has come to do just that.
Bank leaders take a stand on values, beliefs, mission, and goals. Integrate it into your culture, initiatives, hiring practices, and day to day operations. Change your culture and you will change your numbers – for the better!
What if your bank’s numbers are not up to par? How do you transform your bank into one that consistently delivers better digits? A large part of the answer rests within your operating culture. It is time to build a better one.
Producing better numbers begins with aligning your bank’s culture with its strategic goals based on market realities. The history of banking is full of examples of great strategies and initiatives that were not properly executed due to a weak culture. Just look at the bank acquisitions that failed to produce planned earnings. Also, many banks attempt too many opportunities, creating a large number of sub-groups within the organization that have competing interests. Resentment among the different departments turns the orchestration of these divergent interests into a catastrophe.
Once a harmonious balance is struck between culture and goals, a concerted effort to instill the desired culture into the bank’s DNA is imperative. At the heart of this effort is a comprehensive exercise in engaging the bank’s staff and management in the process of adopting the key values that form the foundation of the desired culture. This process goes well beyond a mass emailed memo. Staff surveys and interviews will determine the perception employees have of the current culture and training will clearly articulate expectations to the realization of the chosen values. Honest communication, bold leadership, and a visible reward system built around the desired culture and values are absolutely essential.
On the flip side, if you consider ‘honesty’ a core value your bank operates by and yet there is frequent criticism from customers and regulators about disingenuous fee disclosures, then ‘honesty’ really isn’t a foundational value within the culture. Hence, the cultural foundation is weak and the operating strategy is not being driven by the values you have chosen to frame your culture. “Disconnects” between values and practices cannot be tolerated. From my work with dozens of banks, I can affirm that the “Culturally Disconnected Banks” outnumber the “Powerful Culturally Connected Banks” twenty to one. Bank management’s lack of leadership on this issue, and a general resistance to change has enabled this disappointing, but fixable situation.
Equipped with a synchronized culture and an engaged workforce, your bank could be poised to begin living the new culture and properly executing the strategy that will drive better performance. When employees have clarity in the expectations in fulfilling their responsibilities, and a well grounded belief in the core values guiding their work, they will perform their duties with a greater sense of purpose. Employees in an organization with a strong corporate culture operate, and a comfort zone that nurtures their efforts towards greater innovation, will be empowered, and motivated to represent the bank in the highest regard.
To top it off, a true cultural transformation can enhance your relationship with not just your employees and customers, but your regulators as well. It’s simple- when your bank becomes value driven, and more transparent, it opens up more open and honest conversation with the regulators. Talking candidly about your successes, problems, and potential risks will establish a more trusting relationship with your examiners, shareholders, employees, and other stakeholders. Few too many bankers do this, as it is uncomfortable. Holding each accountable for value commitments and results is uncomfortable too, but the time has come to do just that.
Bank leaders take a stand on values, beliefs, mission, and goals. Integrate it into your culture, initiatives, hiring practices, and day to day operations. Change your culture and you will change your numbers – for the better!
