Corporate Culture
by Rory Rowland
In my MBA program I read a book called “The Silent Language” by Edward T. Hall. The book was about the power of culture, and how it plays a significant role in how people, live, work and relate to each other. Culture is the silent language of every society. You don't notice it when you are part of the culture. We take culture for granted. But it is glaring when you are a visitor.
All credit unions have a culture. That corporate culture controls how boards relate to the CEO, how the CEO relates to the board. Culture determines if your employees can have fun or not. Southwest airlines employees can have fun, other airlines choose not to indulge in a sense of playfulness. It is neither right nor wrong it is just different. It is just their corporate culture.
Here is a good definition of corporate culture. “Culture is a pattern beliefs and expectations deeply held in common by the members of the organization. These beliefs in turn give rise to values that, in the end state, are cherished by their members and the organization.” P. 60
APPLIED STRATEGIC PLANNING by Goodstein, Nolan and Pfeiffer.
As the saying goes, “fish are the last ones to know they are in the water.”
We sometimes are the last to know the impact of culture on our credit union decision making process. Culture plays a huge role in the plans we make and the action we take.
How does corporate culture have an impact on the strategic plan? At first you may think, not much, but it plays a significant role. Plans without culture would be unlimited. But culture gives planning a whole new set of parameters in which to operate. Culture ads form to what otherwise might be a formless mass of ideas, actions and goals.
For example one credit union had been through some difficult times about 10 years ago. This credit union almost failed. But through hard work, focus, and consistent effort they were able to pull out of the tailspin. Some of the decisions they made 10 years ago still impact the credit union today. This credit union is still extremely risk adverse. Who wouldn't be, burned once - avoid the oven. They did not offer leasing because of the risk it entails. They had very few mortgage products, not because they couldn't offer the products, but the conservative nature of the credit union kept them from offering these products. The idea of accepting that much interest rate risk over an extended period of time was just too much to bare. Their organizational culture helped them make that choice.
Corporate culture had an impact on an another credit union as well. Credit union “B” had a strong capital and earnings base, low delinquency, and little growth. They had the opportunity to merge with another credit union that had a community charter. Because the board worked with and was part of a select employee group they choose not to expand their credit union and turned down the merger opportunity. It is not that these decisions are either right or wrong. It is that culture influences how these organizations choose to function. Their organizational perception makes them different from each other.
However, past success is no guarantee of future success. In credit union (A) since some members of the board were so risk adverse they were continuing to make decisions that held them back from their new vision. Some board members wanted to keep the credit union as it has been. Other members wanted to offer new services. The risk adverse group wanted to continue to offer only a select number of products. The risk adverse group wanted products that were easy to assess the risk. However, the board majority had changed, but the perception of being risk adverse had not. The risk adverse group was no longer the majority, but the power of culture still had it influence. But no one had really asked the question of how much risk would the credit union accept. Culture had predetermined the preset parameter, and no one had been willing to challenge the issue. The CEO had worked for years with this board, and had a good working relationship. But was unwilling to raise the issue because she had been shot down so many times before. It wasn't until an outside facilitator asked how much risk is the board was willing to accept that real change occurred. The board took a vote, and realized, with astonished looks on their faces, that they were willing to move on to adding new products, and accept more risk. A new vision had been born, but it took the influence of an outsider to give these different ideas renewed life.
What are some ways to find out about the corporate culture? One way is to have a pre-planning survey filled out by all of your board members. It gives them the opportunity to express their opinions in private. Send the survey to your outside facilitator to assure anonymity. This gives board members an opportunity to share their vision of the credit union without undue peer pressure. It can give the facilitator insights that may not be shared in the public setting. But the facilitator can make sure nothing other than the vision makes it's way into the meeting.
At your next board meeting, just set back and ask yourself, how much of the discussion is logical thinking? And how much of the discussion is influenced by the silent language? Culture. It is an interesting question.
