Senn Delaney and Heidrick & Struggles publish new thought paper stressing need for culture change in banking industry
Oct 28, 2013
October 28, 2013
Senn Delaney and Heidrick & Struggles International, Inc., the premier provider of Executive Search, Culture Shaping and Leadership Consulting services worldwide, have published a new thought paper, Leading Culture Change in Banking, to help financial services leaders understand what it takes to successfully shift a culture in the wake of broad calls for banking reform.
According to thought paper authors, the banking industry that historically has changed at a conservative pace now is trying to address massive changes that require agility and innovation. “Faced with narrow margins, tighter regulation, wary customers, and major technology-driven changes, big banks are forging new business models, transforming operational processes and re-orienting around service,” states thought paper co-author David Boehmer, Heidrick & Struggles regional managing partner of the financial services practice. “In working with bankers today, we hear the word culture come up repeatedly. They know that strategies, operating models and organizational structures are only as durable and effective as the culture that holds them together. And they know that when you dramatically change those fundamental elements of business, you must also change the culture that underpins them.”
Article co-author Dustin Seale, Senn Delaney partner and managing director EMEA, notes that many big banks, including Deutsche Bank, Citi, Barclays and Lloyds, are responding to calls for reform with sweeping culture change strategies to restore trust, accountability and put customers at the forefront. “Despite these efforts, UK finance regulators have recently renewed calls for banks to do more to change a culture of profits over ethics and regain public trust, and to walk the walk,” he says. “When it comes to making culture change actually happen, big banks run into some disconcerting challenges. Cultures typically resist making the changes they most need. Resistance can be particularly hard to overcome in financial services organizations, many of which have default cultures that are decades old.”
The thought paper examines these unique industry challenges in detail and provides a framework for culture change based on four key principles of success.
According to the authors, banking leaders who seek to create a culture that will enable new strategic, operating, and organizational models to flourish, will need to:
provide purposeful leadership that models the culture from the top down
change the collective culture by genuinely creating individual change
build pace, momentum, and engagement across the whole organization
create flexibility within divisions to ensure sustainability of the overall culture
Leading Culture Change in Banking also provides a case study of a U.S. based financial institution that decided to go through a culture transformation following the 2008 financial crisis. A culture transformation process brought about the culture change needed for a vigorous turnaround with strategic focus on creating long-term earning power by improving profitability, productivity and efficiency. As a result, the financial services company returned to profitability and improved performance and is now better prepared to adjust with agility to significant industry changes in the future.