Banks regularly take active measures to manage and minimize risks that are inherent in our industry. These include credit risks, interest rate risks, operational risks, compliance risks, legal risks and even reputational risks.
However, I believe there is one key risk that is the most neglected risk of all from a performance management standpoint: internal political risk.
What is internal political risk? It's a very weak operating culture, and it results from ongoing and unsettled disputes among different departments and individuals within the bank. Poor communication and weak leadership are to blame, as it nurtures the constant quarreling, disgruntled relationships and failure to fulfill organizational goals.
I have noted in my years of consulting experience that less than 10% of banks have a truly effective culture, while the rest are inhibited by selfish attitudes and organizational ineffectiveness. Banks must take a stand against this shattered culture syndrome or suffer the repercussions of a fractured chain of command, low employee morale, reduced productivity, high employee turnover, weak customer service and poor work quality.
Establishing a solid operating culture starts at the very top of the organization. The board of directors and senior management must come together to define the values and characteristics the bank intends to operate under and grow with long term. More specifically, values need to be integrated with shared beliefs and a powerful business mission into an energizing narrative that uniquely positions the bank for growth and profitability. Without this integration, real change is unlikely to occur, leaving the bank to continue floundering in a toxic culture that will undoubtedly preclude it from reaching its full potential.
Once a cultural framework is established and corporate values are identified, a detailed plan can be constructed to fully immerse all relevant parties in the new culture. Coordinated, purposeful and comprehensive internal communication must be established to signal to the staff that a meaningful cultural change is underway. A key element of this plan may be a companywide employee engagement event focused on getting staff to also serve as brand advocates. This will instill a strong sense of employee pride in the organization and build a deeper emotional connection between the employee and the bank.
Additionally, efforts to reward sound values and behaviors, in the form of an established employee recognition program, can contribute to strengthening your culture. In my opinion, these steps counteract the most widespread banking industry weakness: a lack of accountability for results.
I urge you to actively and thoughtfully design the culture you want, one that promotes your values, teamwork, customer satisfaction, innovation, change, accountability, employee achievement and effective communication. Build it into your branding and marketing efforts. Feel and see the difference. Make the message of your strong culture resonate profoundly with your customers. Keep it vibrant, trendy, topical and fresh. Make it fun. Renovating your bank's culture will elevate your bank's performance. And in the process, you will have one less risk to worry about.
L. T. "Tom" Hall is president and CEO of Resurgent Performance Inc., a bank performance advisory firm.