A Culture Blueprint for Banks
9/19/2024
When it comes to managing risk, banks know that sometimes the most significant threats can come from within. Employee misconduct, whether intentional or accidental, can severely damage a bank’s reputation and create regulatory headaches that no institution wants to face. That’s why fostering a strong company culture is increasingly seen as a critical tool for better risk management.
It starts with hiring and onboarding. Building a robust culture begins with the hiring process. As Tracy Saale from Charles Schwab emphasized at RMA’s GCOR conference, discussing company culture and ethics during the job interview sets clear expectations from day one. It’s not just about skills and experience—cultural fit is equally vital. Once employees are on board, ongoing ethics training should be a cornerstone of their professional development. Regular updates and refresher courses, especially when employees take on new leadership roles, help keep ethical standards top of mind.
Simplify and clarify expectations. Complex policies can be a barrier to ethical behavior. Doug Seefus of First Citizens Bank advised that keeping guidelines simple and straightforward can make it easier for employees to adhere to them. A clear, easily understood code of conduct, supported by consistent enforcement, ensures everyone knows what is expected—no exceptions, even for top performers.
Monitor and respond proactively. Effective risk management requires vigilant monitoring. Will Ellis, head of conduct and reputation risk management at Ally Financial, suggested setting up conduct checkpoints to spot potential issues before they escalate. Pay attention to areas where high turnover or disciplinary actions are common—they might indicate deeper cultural problems. Grading misconduct by levels of intent can also help in assessing and addressing different types of behavior.
Empower middle managers. Middle managers play a crucial role in maintaining day-to-day ethical standards. Equip them with problem-solving techniques and encourage them to integrate ethics discussions into regular meetings. They are the linchpin in ensuring that ethical behavior is not just a top-down directive but a lived reality within the business units.
Encourage speaking up. Creating a culture where employees feel safe to report concerns is essential. Anonymous hotlines and clear anti-retaliation policies are must-haves. As Seefus points out, when employees trust that their voices will be heard, the organization is better positioned to address issues before they spiral out of control.
