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BirdsEye View

 Organizational culture has been the topic of much conversation over the years.  Wise, long-term investors take the culture into account as they select investment targets.  For example, BlackRock states that “over the long-term, how a company does business is as important as profit at any point in time”.  It is also said that organizations with strong culture enjoy more loyal and engaged customers and employees alike.  All are coveted results.  The problem – “culture” is an allusive target, especially considering its intangible nature.

The textbook definition of “culture” is “A series of assumptions individuals make about the groups in which they participate, visible through artifacts (including public statements, organizational structures, and key processes), stated goals and aspirations, and basic (i/e/ taken-for-granted) beliefs” (Edgar Schein).  Culture is observable through the behaviors of employees at all levels and the rewards and punishments associated with them.  If values are about the “what and why” of an organization, then culture is the “how” – the daily reflection of those values.

Culture is extremely valuable to any organization when it works, because it’s the glue that unifies all employees toward a common goal.  As such, it becomes a core asset since it can contribute to the success and franchise value of a company the same way a good product or customer base do.

Attention to culture has increased in recent years, especially as social media, Glass Door and other information sources now reveal the cultural reality of any organization.  Multi-generational workforces further contribute to the need for a stronger cultural statement, as does the consolidation trend in our industry.  As acquiring banks absorb more employees who were not acculturated in a similar environment, cultural integration becomes paramount to the success of the merger and employee integration.

Bringing your culture to life requires several overarching actions:

1.     Alignment.  The company’s mission, vision and values should be aligned with the desired culture (as in the corporate culture statement) and the real culture, as in the way people within the company interact with each other.  Consistency between the statements on paper and the facts in the field is the key to success.  Management and the board need to create mechanisms to oversee the cultural nurturing within the organization and ensure the entire team lives up to the stated values.

2.    Accountability.  All too often, strong performers who are cultural rogues are allowed to continue working within the organization even if their daily conduct flies in the face of the company’s stated culture.  This should not happen.  Culture is a shared responsibility that starts from the very top of the organization and extends to every single employee and the board.  It’s everyone’s job.  A healthy culture of accountability is one where digressions are identified and handled throughout the organization without negative ramifications or blame.  There is no fear or criticism when an employee raises their hand to point out cultural inconsistencies.  Such accountability is critical to cultural persistence.  In its absence, even a well-established culture can collapse (Wels Fargo is a sad example of that phenomenon).

3.    Transparency.  Strong cultural foundation requires effective communication mechanisms up, down and across the organization, as well as communication with external constituents. The tone of communication is as important as the content, since tone conveys the unspoken but nevertheless real aspects of the organization.  The speed by which bad news travel is a great indicator for transparency.  The faster problems are reported and escalated without fear of reprimand and negative consequences, the greater the transparency.

4.    Integration into the fabric of the organization.  Peter Drucker is quoted as saying, “culture eats strategy for breakfast”.  This says it all.  If we want culture to become a competitive advantage for us, an energy source behind strategy and toward its execution, we need to live it every day.  It should be integrated into daily lives and into conversations about strategy, value proposition, product design and even compliance.  The way in which results are achieved is as important as their very achievement.  I like to say, “I’d rather lose than win the wrong way”, and I do hate to lose…

Lots can be said about integrating culture into the organization.  The best example I’ve seen of such integration was Cullen/Frost’s previous CEO, Dick Evans.  Dick carried with him at all times the company’s culture values booklet called “The Frost Philosophy”.  The booklet was old and tattered, held together with a clip, replete with yellow highlights and notations.  Dick used it all the time – in prospect interviews, recruiting, customer visits and his famous annual all branch visits.  It was his guiding light for any major decision he made.  He wrote in the introduction:

“At Frost, everything we do begins with this book, which is a simple yet powerful statement of our operations philosophy.  Here you will find a definition of how the philosophy defines our relationships and affects both actions and decisions throughout the organization.  As you begin to fully understand our company, you will learn to embrace what this book contains and o experience relationships shaped by the guidance in this book”…”The Frost Philosophy…is not the same as out corporate culture.  Rather, the Frost Philosophy is the foundation of our culture…Using this philosophy as a guiding principle, we can build for the future and ensure the continued success of this great company”.

I couldn’t have put it better myself!