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Divisions between actual and ‘desired’ culture in financial services Back  
You accept that the culture of the organisation matters a lot to business success, but what if the culture you want is not the culture you have?
The areas where the gaps are greatest between desired culture and actual culture in financial services are described by Mary Fulton and Mark Campbell,
who recommends that companies adopt a ‘learning culture’.
An important, but often overlooked, aspect of change management is the effect it has on the culture of an organisation. If an Irish insurance company was taken over tomorrow, for example, what would the culture of its finance department be – that of the old organisation, that of the new, or an amalgamation of both?

Increasingly, in a world in which intellectual capital is becoming the most valuable asset that an organisation can have, questions about culture will become important for senior and middle managers. These are questions like: can culture be defined? What creates culture? Can it be measured? And perhaps more importantly, can it be changed?

Definitions of culture

The word ‘culture’ carries connotations of a ‘taken-for-granted’ quality in an organisation that can be hard to recognise, except by contrasting it with a different culture in another organisation. We can immediately identify Charles Scwab & Co as an innovative, entrepreneurial broker following its foray into e-trading, but can we really say why it is different from other securities firms?

What we define as culture is the less tangible aspects of an organisation’s way of doing things, and in particular, the shared cognitive, interpersonal and value orientations of its members.

Sources and levels of culture

There have been various attempts by management theorists to categorise what organisational culture is. To understand culture, you have to look first at where it comes from. Every organisation has an ‘Actual Culture’ – the paradigm which is a definition of where it is and what it is. Research has identified a number of key components of culture:

National cultures and national systems of management: In the 1980s it seemed that the way to make money was to write a book entitled ‘Why Japanese Companies are Better Than US Companies’, but even at a regional level, few people can argue against the fact that Irish and UK banks have a very different culture than continental European banks in areas such as governance, management style, values and behaviour.

Occupational cultures: Say a simple statement to yourself: ‘Sean the accountant.’ Immediately your mind will conjure up a visual image of a person who you consider to be a typical accountant. Now try ‘Gillian the engineer’. A different picture emerges. Yet both people could be working in the same organisation. Do the senior partners in a law firm consider themselves to be ‘professionals’ or ‘managers’? You might expect that the two groups would hold very different values that might easily lead to tension, yet they are part of the same corporate culture.
Industry cultures: Members of software companies are very different from insurance brokers. In fact, there are numerous cultures and sub-cultures that exist in any organisation, based on social class, gender, age and any number of variables.

Corporate cultures: Think of any large, successful, truly multinational company that you know and you will tend to define their culture in organisational terms. There is such as thing as an IBM person or a Microsoft person, but examples are harder to find in the financial services. For all the talk about globalisation, most financial services companies remain primarily domestic or regional. Most of the world’s largest financial services organisations have been formed by mega-mergers in the 1990s and have not yet had the opportunity to bed-down their mergers fully. In fact, post-merger, they usually spend years trying to reinforce the old, traditional values of both old organisations.

Derived v actual culture

In light of the foregoing, the case for a strong culture is confused. If culture is something an organisation is it describes little more than the shared meanings, belief, symbols and folklore that the members of that organisation have negotiated from each other through social interaction over the years. There can be little or no opportunity to plan for, manage or control culture.

If, on the other hand, culture is something an organisation has, then it can be treated as another variable which can be ‘owned’ by management.

The problem with managing culture, is that it is both. There are elements of culture which are all encompassing, that derive from personalities, national values, beliefs and interpretations. There are also ‘corporate’ elements in an organisation’s culture, particularly senior managers’ values, interpretations and preferred ways of doing things.

The question, for senior and middle managers is whether you can truly understand the former, and manage the latter.

Address the gaps

So, when an Irish retail bank merges with a French retail financial operator what is going to happen? Can the new organisation’s culture be ‘managed’?

Traditionally, senior managers have used a combination of methods such as:

• Communicating: communicating corporately in the form of mission, value and policy statements, in-house newsletters, annual reports, briefing sessions, etc

• Rewarding: encouraging appropriate behaviour through formal and informal rewards and disapproval of actions

• Role modelling

• Promoting or recruiting staff who embody a new pattern of values and marginalising or making redundant staff who do not conform

• Changing organisation structures by removing status distinctions, reorganising functions and introducing new procedures and methodologies.

But that is not enough. Deloitte & Touche has assisted a large number of financial services organisations around the world to manage change. What we have learned is that to succeed, financial services organisations have to align their needs with those of their workforce. This is the key to creating people value.

What the Deloitte & Touche research has shown is that in some areas there is a close alignment between the actual culture the organisation has, and the culture desired by their staff e.g. believed to be open, have integrity, have the right balance of formality, profit orientation, vision, etc. It also shows that the needs of the workforce and the organisation are not aligned in many areas:

• Managers are not perceived to be supportive, to respect and dignify their staff, to give recognition or reward, or to resolve conflicts well

• There is less teamwork than desired and political power is often used as a means of management

• Organisations are not innovative, competitive nor customer centric.

It is by addressing these issues, and more closely aligning the needs of the organisation and the workforce, that success can be achieved. Where there is strong overlap between the individual’s goals and the mission of the organisation, motivation is high and little time and effort is spent negotiating roles and tasks.

No more ‘master-servant’

The traditional model is characterised by a ‘master-servant’ relationship in which being the leader means knowing all the answers, being in power, being in control and respecting the hierarchy. This leads to dependency on those with positional power, decisions referred upwards and over-reliance on the system.

In contrast, in a learning organisation the old manager-subordinate roles have been dropped. The individual is responsible for his/her own career. They set their own goals and the manager and others supporters adopt the role of mentor and coach around an interactive learning programme. Technology plays an important role by making distance learning and computer based training feasible. The individuals in such organisations tend to be empowered, team-workers are action oriented, learning centred and successful.

Best to work for

So rather than allow the culture of the organisation to be a melting pot of external influences, managers need to create a culture around a learning organisation. Deloitte & Touche’s research indicates that where there is a strong correlation between an organisation and its people it leads to greater profitability. By looking a the Fortune 500 list and comparing it with ‘America’s Most Admired Companies’ or the Fortune 100 best companies to work for’ we can see that there is a strong relationship between average annual return and being the most desired company to work for. What characterises the culture of these companies is that they are adopting a new model – that of a learning organisation.

Culture for going global

What does it take to succeed on a truly global scale? Deloitte & Touche and the World Economic Forum recently completed a study of successful global companies across many industries. These points might equally apply to a domestic organisation that wishes to incorporate and build a diverse corporate culture. Among the key questions companies need to ask themselves about their culture is:

• Is the board of directors sufficiently international- both in origin and experience?

• Do managers treat the world as a single economic and operating unit?

• Are responsibilities for profitability and sales assigned on a global basis?

• Are the company’s procedures and policies designed to serve local needs, yet measured against a standard of global excellence?

• Does the company identify and develop future leaders wherever it operates?

• Does the company foster innovation by enabling knowledge sharing?

Examples of successful companies within the financial services sector that are following these strategies are HSBC and GE Capital. Transferring best practices and creating a common culture will be key for all organisations if they are committed to succeeding globally. In an era where the demand for bright, talented individuals outstrips supply, organisations must seek to create a culture in which employees intuitively share and understand a set of values that are closely aligned with those of the organisation.

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