Most community banks have two cultures and don’t even know it
So often community bankers spend time worrying about the competition. How do we beat the big banks? How do we keep up with their resources and technology? They worry about other community banks and losing market share and all worry about new regulations and how that affects the bottom line. Community bank leaders have plenty to focus on and deal with. However, most ignore or are possibly just oblivious to one of their greatest threats and challenges to sustained growth. That threat is the subculture that exists within their bank. Those who are leading and supporting an agenda that is counterproductive to the bank’s stated culture, are leading the subculture. They may appear to agree with the strategic vision, but they believe they have a better way of achieving it.
Two distinct and competing cultures exist in most community banks. The first culture is one endorsed and planned out by the executive team within the strategic plan. The other culture, or sub-culture, is the one that is often ruling the day within the bank or at the very least, competing with or slowing down the implementation of the board approved culture. This subculture normally protects the status quo and it usually controls where the rubber meets the road, the customer experience. Unfortunately for the CEO, the subculture is sometimes led by rogue board members. If this is the case, you have a long, tough road ahead. Someone will win and someone will lose… we wish you well. However, the more common scenario is a sub-culture that is often led by a senior executive, a mid-level manager, or some unauthorized, non-managing, center of influence.
Identify the two cultures
Many community bankers understand and believe what we are saying about the subculture. Unfortunately, most will think it doesn’t exist or isn’t a factor in their bank that will have significant impact on the approved culture. The reality is that the subculture is a very real and direct threat to your bank’s bottom line. Smart leaders identify threats to their organization so they can be dealt with. Shining a bright light within the culture will quickly illuminate the subculture and its leaders. One of the best ways to do this is by placing a score in lights for all to see. A relationship-based culture which includes an incentive plan, phone shops, surveys, and tracking will bring an amazing amount of clarity to any community bank. Once the light shines, the roaches of the subculture will begin to run. Now you can see who they are. So, how do these subculture leaders operate and how can you spot them? Here are a few key identifiers…
- The integrity of your top performers is questioned – Whether it’s your best performers in your incentive plan or your top lenders. Pay attention to those who have “concerns” about how the performers are achieving success.
- A mass marketing campaign in a relationship-based culture – If your bank professes to have a relationship-based culture while some continue to contradict the culture with various mass marketing campaigns, you’ve just identified the sub-culture and its leaders. They believe they have found a better way.
- Consistently poor scores on phone mystery shops and cross-selling – This is a clear indication an employee or manager of that employee has not embraced the culture. The odds are high that these employees are active members of the subculture.
- Busy critics – They have time to question the integrity of the relationship-based culture, and generally waste time with “what ifs” and hypotheticals with the sole goal of discrediting the culture and its leaders. While this occurs the same employee will emphasize how busy she is.
- They make excuses as to why they can’t – See our Top 10 Cross-Sell Excuses.
Eliminate the sub-culture
Once the subculture has been identified, the process of destroying it should begin immediately. We still find it amazing that many leaders and managers hesitate or become indifferent even after discovering this threat. A leader who doesn’t take action will soon become a former leader or a leader in name only and is directly supporting the subculture. When implementation of your strategic plan begins and your culture is communicated and adopted, the employees should get on board. At this point the board and senior executive discussions have already taken place. Leadership should now be in agreement. Shedding light on the situation is the first step. Once the roaches start to scurry, action must be taken. There is a good chance that these roaches will be found at different levels within the bank and at each level should be handled appropriately. At the leadership level, where the strategic plan and the culture has been vetted, your best option is to move the roaches out. We haven’t met many roaches at that level who have turned into butterflies. At the other levels in your community bank, begin with a 90-day implementation plan. During that process, you’ll discover many roaches. Some will actually begin to see the light and will get on board. Sadly, others won’t. Here’s the key… get rid of the roaches with the understanding that if you don’t, they will multiply and infest your bank with a subculture that will battle against everything you’re trying to implement. If you allow a strategic plan to be infested with this subculture you will never get anything done moving forward.
Implement a relationship-based culture
A community bank’s competitive advantage is its relationship-based culture. If your ROA is below 1.0; if your non-interest bearing deposits aren’t growing; if you’re not keeping score of cross-sells; if you’re not conducting telephone shops; if you don’t have a deposit and loan acquisition strategy; if you don’t have all of these, then you don’t have a relationship-based culture. It’s impossible to have one without them and it is quite possible that your bank is dominated by a subculture. The subculture is sure to end, once proper implementation begins.
