Leverage culture as a competitive advantage
According to data recently compiled by Houston-based consulting firm PDR Corp, a strong positive culture can enhance employee engagement by 30 percent, resulting in up to a 19 percent increase in operating income and a 28 percent increase in earnings growth. In order to see these results, however, the company's leaders must be intentional about fostering a culture that fits their organizational goals and strategy. As margins shrink, customers grow more demanding, and competition creeps in from outside the industry, leveraging your bank's cultural potential could be the best tool you have to increase your competitive advantage.
Driven in large part by Silicon Valley's tech start-ups, the predominant perception of "company culture" today consists of foosball tables, smoothie bars, and endless after-hours entertainment—but those are superficial perks, not culture. "Company culture is the intangible, but very real, feeling or vibe of an organization," explained Carver Smith, partner, Baker Tilly Search & Staffing. "It's what employees experience, which may or may not be in line with a company's stated values." That disconnect between what the company says it values and what employees experience occurs most often when leadership ignores their organization's culture. "Culture either happens by design or by default," explained Steve Jones, leadership coach and consultant and a keynote speaker at the recent WBA BOLT Leadership Summit. "You're either intentional—talking about it and growing and improving it—or it just happens." Odds are, a 'culture by default' is not optimized for your institution's goals.
Benefits of Intentional Culture
One of the most important benefits of being intentional about your bank's culture is also a prerequisite for the success of that culture. When assessing their company culture, the most valuable question for management to ask isn't "do we have a great culture?" but rather "does our culture fit our strategy?". They must be aligned in order for either one to be successful. "Culture eats strategy for lunch," said Mark Mohr, president/CEO, First Bank Financial Centre, Oconomowoc. "We can't successfully execute our strategy without a positive culture." Doug Gordon, president and CEO, WaterStone Bank, Wauwatosa, agreed. "You might be a great CEO in strategy, but you can't create the culture necessary to execute those strategies from behind a desk," he said. Both FBFC and WaterStone Bank have been awarded a "Top Workplace" by the Milwaukee Journal Sentinel for nine consecutive years, a feat only 18 companies have achieved. The Journal Sentinel compiles the list based on employee surveys, so this terrific achievement demonstrates the positive impact of culture at each institution.
Related to achieving strategic goals, another benefit of a healthy, well-aligned company culture is a measurable positive impact on profitability. That comes, at least in part, from employees feeling empowered to push one another to perform better. "In really strong cultures, psychological safety allows employees to hold one another accountable to meet the standards of the organization," said Jones. "That's when companies really thrive." Gordon says he considers the bank's 50 percent efficiency ratio—which measures better than their peers—a sign that they're heading in the right direction. "Profitability and the success of the bank are an indicator that our culture is working," he explained, noting that WaterStone's leadership make sure employees understand they are the bank's priority. "We stress that employees come first, customers come second, and shareholders third," Gordon continued. "If we have competent, invested employees, they'll provide excellent customer service, which then leads to profits for shareholders."
Finally, culture can be a powerful tool in your HR department's arsenal with respect to recruitment and retention of top-performers. "Culture is everything when it comes to attracting and retaining quality professionals," said Jones. The primary reason is because employees who enjoy their work are more likely to actively promote opportunities to their networks. "A great culture creates employee advocacy," said Mohr. "Much of our recruiting is referrals from existing employees, and to me that's a high compliment." The key is for bank management to be strategic about forming their culture based on the kind of employee the bank needs in order to meet its goals. "Banks need to play to their strengths and determine what type of personality they really need," Smith advised. "They should ask themselves, 'do we have the culture that would appeal to our target employee?'." When a company achieves alignment between culture and the type of professionals it needs to recruit, that's where turnover drops and engagement rises, and profits along with it.
When leveraging culture as a recruitment tool, it's important for management to follow through—that is, hire for culture as much as use it to attract quality candidates. "People want to work with people they get along with, so you should hire people who fit your culture," said Gordon. "When we're recruiting, we're looking for the most qualified candidate who fits, not necessarily just the most qualified."
Designing Your Culture (Action Steps)
Intentionally designing your bank's culture is a simple undertaking, but it is far from easy. "You have to put the experience before the brand," said Smith.* "You can't just say 'we're X' and have it be true. People have to experience it." To achieve that, Jones recommends creating a culture plan, just like you would a strategic plan, and following it just as diligently. "If you focus on the culture, the profits will follow after," he said. While each institution's plan will differ, there are three basic actions for executing it:
1: Lead from the top
"Listen, observe, and above all, lead by example," Smith advised. "Leaders drive the culture," Jones agreed. "Culture starts with the leaders' vision and everyone understanding that the leaders care about the people within the culture. After that, everyone down to the bottom has to understand that they own it every day." In order for any culture shift to happen, the people at the top must make it a daily priority. "I look at creating a culture where our people feel valued and can succeed as one of my most important jobs," said Mohr.
2: Communicate often
One of the most effective ways to identify and build an organizational culture is to open up communication channels. Both Gordon and Mohr say they meet with employees on a regular basis to solicit feedback and facilitate discussion specifically about the bank's culture. "I visit all of our branches at least once a month to hear what everyone has to say, because my vision might be different from what they see," said Gordon. Sometimes, a different vision can be a good thing. "So many good ideas have come from employee suggestions," Mohr said. "They're really participating in improvements we're making."
3: Adapt as needed
"Culture is not static in any way, shape, or form," said Gordon. Whether it's reacting to exit interviews or making changes based on employee surveys, the bank's culture must be mutable. As part of that, management must be willing to make cultural adjustments as the workforce becomes more diverse. "Embrace all aspects of diversity and realize culture is not a one-size-fits-all solution," Smith advised. "Understand the differences in people as individuals, not as buckets to be 'dealt with' as is often the case with generational differences."
To make culture changes as smooth as possible, as the culture at the institution shifts, bank leadership must ensure that no employee feels left behind. "You might ostracize some staff unless you help them see the benefits of the changed culture," Smith cautioned. "Make them a part of the change management exercise, not a victim of it." He advises weighing the risk of losing those employees against the value the new culture will create. "Culture comes down to an organization's shared vision and value systems, language, and beliefs," said Jones. "It's ultimately about getting everyone to move in the same direction."
Building Blocks of Culture
The experts interviewed for this article shared their thoughts on the key features of successful cultures. A few of the most common are:
Clarity of Purpose - "This past year we updated our mission statement to 'make lives better' and that helps everyone understand our purpose." (Mohr)
Growth - "Personal growth is important, and we're very proud of the opportunities we present for people to advance within our organization. Employees value an organization that devotes resources to them." (Mohr)
Language - "Having a common language everyone understands is also important. If you go into a meeting and everyone's using acronyms and jargon you don't understand, you just become a wallflower." (Jones)
Psychological Safety - "People have to feel valued and safe to take risks knowing that failure won't define them." (Jones)
Teamwork - "Our tagline is 'one team, one vision.' We foster a culture of celebrating each other's successes rather than being jealous." (Gordon)
Ubiquity - "Those that do it successfully discuss it, recognize it, and celebrate it in everything that they do." (Smith)
Values - "Culture spreads when people are accountable to the values of the organization." (Jones)
* Smith credits his friend Will Ruch, owner of marketing firm Versant, with this idea.
Baker Tilly is a WBA Silver Associate Member.