Why Culture May Finally Be Getting Its Due

When implementing the Balanced Scorecard or any strategy or performance management system, for that matter, organizations often struggle with defining the vision for their culture and how to measure it.

Financials are easy to measure—that’s what dollars and cents are for.  And processes, we’ve gotten pretty good at measuring them over the years with metrics such as cycle time, throughput, and percent of on-time delivery.  We’ve even gotten better on customer measures by using tons of surveys to obtain customer satisfaction rates, repeat purchases, and likelihood to recommend to a friend.

Wall Street Banks are starting to measure culture

However, when we start thinking about how to measure culture, we sometimes say it can’t be done and just forget about it.  Or, we use the old Supreme Court Justice Stewart comment about pornography:  “I know when I see it.”

But, as most business strategists know, and Peter Drucker said, “Culture eats strategy for breakfast.”  And now, with federal regulators focusing on organizational culture as one of the enabling aspects of recent bad behavior of banks, and not just a few bad apples, Wall Street has no choice but to pay attention and get a handle on it, according to the Wall Street Journal.

In a February 1 article, “As Regulators Focus on Culture, Wall Street Struggles to Define It,” Emily Glazer and Christina Rexrode state that “big banks are trying more than ever to monitor employee attitudes and values to avoid future problems.”

According to the article, some banks are tracking how often employees go to happy hour, how often they use the word “workaround”—a major red flag according to one bank—in internal communications, and even a “happy-to-grumpy” ratio.

While a management professor at Dartmouth, Sydney Finkelstein, states that “nobody has cracked the code in the way the banks are trying to do now,” he admitted that getting good data on this issues is really hard.

The lesson in all of this, I think, is that it is in the best interest of organizations—whether they are nonprofit or for-profit—to try to get a handle on culture before they are forced to by regulators.  It may be by trial-and-error, but an organization’s culture is its foundation that can help determine its success.