Leadership = culture

RMA Journal, The, Dec, 2003 by Edward E. Furash

It is very easy to confuse a business leadership style with leadership substance. That is, when managers discuss leadership, they tend to think in terms of style types: heroic, analytical, intellectual, stubborn, laissez-faire, partnering, coercive, courageous, plodding, inspirational, charismatic, sneaky, caring, thoughtful, manipulative, and many other descriptions that come to mind. But while we admire those who have left an indelible impression on us and our society--great political leaders such as Washington, Lincoln, Roosevelt (pick one), Kennedy, Truman, Eisenhower, and Reagan, or business leaders such as Walter Wriston, "Engine Charlie Wilson," Jack Welch, and A.P. Giannini--we do so because of the distinctive style they exhibited in leading from the "top down."

Style in itself is not leadership. Leadership is the act of creating a culture, ethos, and the values that permeate a business and energize everyone to achieve the right results with the best possible ethics. The business of a leader is to turn weakness into strength, obstacles into stepping-stones, and disaster into triumph. These are the substantive results. Many leadership styles can produce such results. Leaders use style to get their business colleagues to think right and act right. What an organization thinks and does makes it what it is and is the end result of good leadership.

Culture?

How do you create the right culture? A bank's culture is built in tiny pieces, such as doing and saying the right things day after day until everyone knows in their bones good from bad, proper from improper, right from wrong, ethical from unethical, and caring versus uncaring in terms of customer service and employee relations. As one highly successful CEO said, "You get what you expect and inspect. When you ask repeatedly about something, pretty soon everyone understands that they better not talk to you unless they have the answer to your question. And just about the time you are tired of asking the question, they are just getting the message."

Creating a lasting and proper culture is no easy task. A few extraordinary leaders can produce a revolutionary change; most ordinary leaders take years to shape the proper attitudes and environment. There is no easy how-to formula. There are, however, dimensions of achievement that are hallmarks of each culture--good or bad. Leaders who are coercive and deceptive create a management culture in which coercion and deception are perceived as the winning style. Leaders who have a partnering and sharing approach and who are steadfast in their conviction of where they want the bank to go can usually persuade managers to follow. But if there is no hard-and-fast list of how to do it, there are hallmarks of "good culture" that can be recognized in banks. Let's look at nine hallmarks of good leadership.

Risk

We all know that an essential component of culture is managers who anticipate and mitigate risk. This means more than paving attention to the easily recognizable risks of credit, reputation, operating, rate, and earnings. It means embedding in the people closest to the customer the responsibility for thinking about the unanticipated consequences of their decisions and actions. This cultural hallmark is the first line of defense against risk, because it's the unanticipated consequences that are frequently the source of major problems for a bank.

The "I didn't think of that" or "I never thought that would happen" excuse should not be tolerated. Rather, all personnel should be thinking about risk, although not always in the sense of always preventing risk or taking no risk at all. As we know, banking is a business of managing risk. For example, adopting fees and charges just because everyone else in the industry is doing it doesn't serve as an excuse when a class action suit comes along over a practice that you have had in place so long that no one remembers its origins. Emphasis in the culture should be on managing risk by turning risk to strategic and profit advantage.

Care

If all bank employees take responsibility for their own actions and those of others, an environment of caring is established. The motto of "It's not my job" often prevails in banks where people are content to perform just their own functions as best they can rather than also seek responsibility for overall ownership of the customer's experience with the bank.

The assumption of responsibility must be a way of life in the bank's culture. Whether applied to customer care or employee relations, a hallmark of good leadership is to create an explicit and implicit atmosphere where "giving a damn" about customer service and employee treatment is a reason to stand up and make things right.

This standard of care is especially difficult to achieve in banks with large direct-marketing sales channels. For example, subjecting customers to "voice-mail hell" may be cost effective for the bank, but unbelievably frustrating to the customer. When a live person finally comes on the line, does the customer get the feeling that the person on the bank's end is taking the burden on his or her shoulders--listening hard and not just trying to get rid of the customer with a standard answer? Is the customer given a name? Is the customer told, "I will call you back with the answer" and then called in a timely fashion? Even better, does the call end with "Feel free to call me back directly with any further questions"?