The Wall Street Journal recently reported that big banks are focusing more on their corporate culture and monitoring employee values and attitudes. They hope to avoid more years of bad headlines, bruising fines from regulators, losses and layoffs. It turns out that they have good reason to focus on their culture and values.
Last October, New York Fed President William Dudley warned bank executives that regulators would consider breaking apart the big banks if their executives didn’t do enough to root out wrong doing. Mr. Dudley mentioned the word “culture” 44 times in his speech. Bank regulators are particularly looking at how bank leaders monitor and measure risk-taking in employee behaviors. They want assurance that banks won’t create another economic downturn that requires government bailout. An army of consultants is working with Wall Street to help figure this out.
The good news for bank executives is that leaders can change a company’s culture, but it takes strong, visible and determined leadership. What executives say and don’t say, do and don’t do, promote and don’t promote, reward and don’t reward, sets and changes culture.
When I worked at Medtronic, former CEO Art Collins set an example of strong, visible leadership. He engendered ethical behavior by frequently emphasizing to employees the importance of developing quality products and “doing the right thing.” He delivered this message often in small groups and at all-employee meetings that were broadcast around the world.
Art would say that what kept him up at night wasn’t the failure of a well thought-out strategy or hitting quarterly financial goals. What kept him up was the thought of an employee making a bad decision regarding product quality. He believed that quality was the Achilles heel of a medical device or pharmaceutical company. He constantly reminded employees of Medtronic’s mission, “To contribute to human welfare by application of biomedical engineering in the research, design, manufacture, and sale of instruments or appliances that alleviate pain, restore health, and extend life.”
The Medtronic culture was reflected in the behaviors of everyone in the company, from executives to assemblers. Every weekly executive staff meeting began with a detailed quality review. Employees in manufacturing had the power to stop the line if they believed that a product looked amiss or suffered from poor quality. Dedication to The Mission, quality and ethics was featured in employee orientations and measured with employee surveys.
Each year, Medtronic reminds its employees of the importance of “doing the right thing” by inviting patients who have Medtronic products inside them to tell the workforce how the products eased their pain and restored their health. These patients emphasize the positive impact the company has had on themselves and their families.
Are the executives of the big banks on Wall Street setting this high of a standard for ethical behavior? I hope so. Their businesses and everyone else will benefit by it.
Do you have a story to share about how a company’s executives changed its culture to support higher ethical standards? What was the subsequent impact on the business? I would love to hear from you.
Victor Assad is a strategic human resources consultant and coach who works with key decision makers and human resources leaders on talent management, accelerating change, leadership development, and merger and acquisition initiatives. Please e-mail Victor at firstname.lastname@example.org or visit Victor’s website at www.victorhrconsultant.com.
 Emily Glazer and Christina Rexrode (February 1, 2015) Markets: “As Regulators Focus on Culture, Wall Street Struggles to Define It. Big Banks Try to Monitor Employee Attitudes to Avoid Future Problems.” The Wall Street Journal.