Changing The Culture

“I Don’t Want his job”

~Warren Buffet

Another casualty:

          Headline: Wells Fargo CEO Tim Sloan Steps Down
As to why a CEO at one of the biggest banks in the land would give up the mahogany desk in the corner office:

          Lead: A ranking member of the House Financial Services Committee said in a statement that “..the bank needs a change agent. The bottom line is that we’ve not seen the type of cultural or institutional change so desperately needed at Wells Fargo,”
(From USA Today, March 28)
Long story short, Mr. Sloan was handed the top job after a big scandal involving setting up new customer accounts which caused the Board to jettison his predecessor. It came to light those were new accounts the bank’s good customers didn’t apply for, ask for, or even want. But each new account did earn bank employees bonuses.  
So much for ethics, integrity, let alone customer relations.
Mr. Sloan was tasked with cleaning up the mess. As a practical matter, that meant changing the culture that produced such behavior. Something the CEO did not accomplish, at least not to the satisfaction of the Board of Directors or the bank’s regulators. 
Now, Mr. Sloan gets to do what you would dearly love to: hunt, fish, and play golf every day of the week that ends in “y.”  
And contemplate the question: How come a CEO can’t change the culture in his company?
The Story
There is so much in this story, it’s hard to know where to start. Don’t be fooled by appearances: this isn’t just about a bank and a now unemployed CEO (two actually, as Mr. Sloan’s predecessor was let go because of what happened on his watch.) Their misfortune offers an important lesson in culture change. Sub out “a bank” and sub in “safety”, put yourself in the role of the leader, and the lesson will become obvious – and useful.  
True, other than the headlines, we don’t know much about the story. No doubt there’s plenty, likely found in a deep dive into the root causes that necessitated a solution in the form of “desperately needed” culture change.  You can bet the Board knows all the ugly details.
We don’t need to. Consider this: an admired and trusted brand name, whose biggest shareholder, Warren Buffet, has for a long time been their biggest fan, now has a big culture problem. Something like that doesn’t happen overnight. Nor does it happen because one or two executives went rogue. This is the stuff of pattern and practice, new and different.
Think culture never changes? 
Truth is, a culture is always in a state of change. Culture is continuously evolving, sometimes in fits and starts, sometimes in small, imperceptible steps. 
The thing is, top management is not always in charge of what the culture is changing into. Or even aware the culture is changing the way it is. Or capable of changing it to be what they want it to be. 
Don’t take my word for that: the resumes of two former CEOs at Wells Fargo prove that true.
Culture – In Plain English
Mr. Sloan’s mission – impossible for him – was to cause “desperately needed” culture change at his bank. As the CEO, he couldn’t change it. But it’s not like the culture hadn’t changed. It had. Which begs an important question: how did that happen?
We aren’t in a position to know. But raising the question begins to suggest how to find a solution to the problem of “desperately needed” culture change. Understanding how the culture changed would be, to say the least, helpful to the process.
So would having a proper and useful definition of culture.
The textbook definition of culture goes something like this: organization culture is found in the beliefs, assumptions, norms, values, all of which guide people in how they do business. That answer will get you a good grade on the Organization Behavior prelim in business school. But it will fail miserably at the point of execution.
Translating that definition into strategy puts a leader in the business of religious conversion. Seriously. In the case of Wells Fargo, it would involve changing the belief system of 262,000 employees working the world over. That’s one tough undertaking – even if you happen to believe in the power and control of the guy at the top. How much time and effort will it take before change starts showing up? 
More time than the Board was willing to give Mr. Sloan, that’s for sure.
In a 2009 interview on his investment in Wells Fargo, Warren Buffett observed, “…the real insight you get about a banker is how they bank. You’ve got to see what they do and what they don’t do. Their speeches don’t make any difference. It’s what they do and what they don’t do.”
Leave it to Mr. Buffett to cut through all the fog and obfuscation, and get to the heart of the process of management, leadership, and culture.
Despite what you might have read, as management principles go culture is one of the simplest things to explain and comprehend. Try thinking about it this way: culture is what most people in an organization do – most of the time. It is that simple. Because it is that simple. Culture is found in what people do, and don’t do.
Consider the implications of that simple definition for a big bank employing a quarter of a million people the world over. For that matter, consider what it suggests about the safety culture in your operation.
For openers, that simple definition makes determining what the culture is easy: look. 
Be sure to look at “most of the people” and what they do “most of the time.” Throw out the outliers, good and bad: don’t let them deceive you into thinking your culture is something different than what it really is – better, or worse.
The next thing about that definition is that you’ll find there isn’t one culture in an organization, but a series of sub-cultures. Different divisions, different regions, different sites, different departments, different shifts will have certain behaviors in common, and some behaviors that can be strikingly different. People talk about corporate culture, but that’s really a matter of throwing all of those sub-cultures together into one big pot, stirring them up, and describing the mixture as “our culture.” 
Don’t take my word for that: book a business trip and see for yourself. Compare behaviors at the best site in the company, the worst, and then stop by headquarters. QED, as we used to say in geometry class.
I suspect that, had Mr. Sloan taken that approach, he’d have found that he didn’t have a corporate culture problem but rather a problem with culture in certain parts of his company. If nothing else, that approach reduces the scope of the problem to manageable proportions. 
It also eliminates the practice of punishing the innocent along with the guilty. Seen that a time or two. Sure you have, too.
Finally – at least as far as understanding culture goes – this definition makes it clear why it’s doing something to change the culture that’s so darn hard. What has to be changed is “what most people do, most of the time.”
And that has to be changed to exactly what the leader wants them to do – or not do.
The Illusion of Control
Back to where this story started: the most powerful leader in the outfit who couldn’t change the culture. What does that say about organization power? Who’s got it? How much do they have?
There’s a belief perpetuated and propagated by all sorts of people – people who should know better, and people who know differently – “The higher up in the organization, the more power the leader has. The leader at the top is the ultimate source of power and in control over what goes on in the organization.”
So, “Change has to start at the top.”
The problem with that belief is that all kinds of real world experience contradicts it. Political, religious, and social change seldom works that way: change comes from the outside in, or the bottom up. Want examples? Political, the American Revolution; religious: Christianity; social: the British Invasion, led by John, Paul, George, and Ringo.
Mr. Sloan’s experience adds one more data point. In his case, the stars were perfectly aligned to his benefit: he and his Board were on the same page on the matter of vision and values – not to mention mission. Everyone knew what he was hired to change.
Actually, transform, which implies both direction and speed.
If top down change worked the way a lot of people say it does, all Mr. Sloan needed to do to change the culture in his bank was to put out an edict: “Stop doing that. Start doing this.”  Transformation would naturally follow, and Mr. Sloan would today be sitting behind that fine mahogany desk in the corner office, checking emails. 
Or writing a speech about culture.
But that’s not how things work, out in the real world.  Not that it stops a lot of people from acting like they believe otherwise. 
But we are repeating ourselves. 
Changing The Culture
As to the lesson in this story, by now it should be clear. A leader wants to change the culture in some part of their organization, “what most people do, most of the time.” Instead of a program, what’s called for are allies. Leaders who can actually change what people do – in their neighborhood.  That’s where the leaders, who can see the existing culture for what it is, live, and are in there to do something right on the spot to change that behavior.  
You know who those people are, don’t you? 
Those people are the leaders down in the chain of command. They’re the keepers of the culture – and the changers of the culture.
If you’re one of those leaders, you have far more power over the culture than you think you do. Probably as much, if not more, than the CEO. Use that power to make the culture what it should be.
If those leaders work for you, enlist them as your allies. Tell them what you want to see; what you don’t want to see.  
In Mr. Buffett’s words, that’s simply, “How they bank.”
Then, ask them, “What can I do to help you make that happen?”

Paul Balmert
April 2019

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