United Airlines debacle has lessons for bank culture

By now, most people have heard of the recent public relations debacle with United Airlines. To recap, the airline company offered monetary incentives for people to give up their seats and take alternative flights. But something went off the rails early and was compounded by one bad decision after another, both on the ground and in the executive suite. The result was a public relations disaster, significant damage to the company’s already damaged brand and a large drop in market value for the company’s shareholders. While overbooking is a unique issue for the airline industry — and this may be an extreme example — there are many company culture lessons to be learned from how this was handled for any service industry, including banks.

The true test of a company’s culture comes when what “always” works, doesn’t. No matter how many policies and procedures are established to address any conceivable event, the fact is that many situations require some sort of individual judgment to handle individual problems. It is these moments of truth that establish and represent a company’s character and values. In the United case, it has been reported that another passenger volunteered to give up his seat for $1,600 instead of the $800 offered. However, the gate agent either could not or would not make this relatively minor decision on the spot. Whatever the reason — lack of authority, fear of management criticism or personal inflexibility — this incident tells you everything you need to know about United’s culture.

On a smaller scale, these moments of truth occur thousands of times each day in bank branches and call centers across the country. It is important for management to understand how these individual decisions are handled, managed and reported in order to determine if they are consistent with the company’s guiding principles and cultural values, or merely a set of random behaviors based on the beliefs or personality traits of an individual employee or manager.

Tim Fadek/Bloomberg

Too often, we have seen banks tout their customer service as a point of differentiation; however, we are unable to define what that means where and when it really counts. Worse, we have seen many instances where policies, operating practices or performance management programs directly conflict with the company’s stated cultural goals.

For example, these days employee “empowerment” is a popular cultural mantra for many banks. However, it is important to define what this word means in a highly regulated industry with significant risk management considerations. To do this, we must establish specific guidelines to help customer-facing personnel understand how and when to allow policy or procedure exceptions and to ensure that performance management systems do not punish employees for exercising rational and informed judgments. Otherwise, “empowerment” just becomes another word that management feels good about.

“Relationships” and “solutions” are two other cultural power words that are part of most banks’ stated values. We can assume that both of these words were prominent components of Wells Fargo’s value propositions and stated cultural norms, for instance. Yet, incentive and performance management systems rewarded individual product sales rather than long-term relationships. This has been characterized by some as a culture run amok. However, the real story here is the complete disconnect between stated cultural values and the actual behavior that was fostered and facilitated by a management team that valued words over actions.

At the end of the day, culture is a concept often discussed but rarely managed. It is not sufficient to discuss cultural values in the board room or produce nice brochures that the HR team feels good about. Culture must be operationalized each and every day or the organization will develop its own culture in ways that management may not like.

To avoid a United Airlines-like incident, the first step is to perform an honest, objective and thorough assessment of the bank’s culture relative to its core principles and day-to-day operating environment. If empowerment is a core component of a corporate culture, a bank must still determine who is empowered to make decisions and what kind. If a bank says it is customer-focused, has it developed policies and procedures that make life easier for the bank but harder for the customer? If simplicity and transparency are core principles, why is the fee schedule three pages long?

Your employees know where these disconnects are; they run into them every day. Ask them to identify what they believe run counter to the company’s cultural values and core principles. You might be surprised at what you find.