Corporate culture has long been identified as a critical ingredient in successful companies. It is particularly important in service industries, including financial services - but here it is often neglected.
In the context of corporate culture, commercial bankers may well have something to learn from Disney World.
All Disney employees spend weeks learning "the Disney Way." They create a "happy atmosphere" that, although admittedly contrived, does create a pleasant environment at the park. Guests want to stay longer, and the longer they stay, the more they are likely to buy.
Banks also want to keep customers. Consultants may debate the link between customer retention and profitability, but intuitively one assumes that the longer a customer stays with a bank, the more services and products he or she is likely to buy and the greater will be the bank's profitability.
A greater number of accounts, larger balances, more customer referrals, reduced operating expenses per account, and greater flexibility in rates all may result from customer retention.
A strong corporate culture mobilizes a company's resources in one direction. Having all the soldiers march in the same direction is valuable in making the most of what you've got.
Most executives agree that corporate culture is important. The problem is: How can a sustainable culture be created so that the entire organization is immersed in it?
The concept of culture is fuzzy compared with factors bankers are accustomed to, like loan-loss reserves and gaps between assets and liabilities. Culture is qualitative, not quantitative. Bankers have difficulty accepting it, in part, because implementation seems unclear.
But a decade ago, strategic planning was for bankers what corporate culture is today. With a push from regulators, most bankers learned to accept strategic planning.
Corporate culture also is a managerial concept that bankers need to internalize in order to improve organizational efficiency - a critical element for a bank's survival.
The first step in building a strong corporate culture is for management to decide which culture is right for the bank. The key component of corporate culture is a set of shared values.
These values may range from "non-negotiables" like asset quality to expected levels of customer service, the importance of teamwork within the company, or management by the numbers. …