The mark of culture is often defined by the smallest behaviours management is prepared to accept. While corporate culture is being tested in new ways during the pandemic, a much larger culture test awaits.
Why? Cash flow in most businesses is under pressure, people have been laid off, the market has shrunk across many industries and some businesses have gone under. However dire the situation is though, there will inevitably come a recovery. The challenge for many companies will be the potential cost of taking short cuts to get ahead quickly and the behavioural trade-off they are prepared to make for quick returns.
Corporate behaviour and, by implication, culture will be severely challenged, and with it looms reputational risks. In the interim, management’s challenge is how tightly they manage the behaviours that shape their culture and how closely it aligns with the values and purpose of the organisation now and into the future.
Culture is moulded daily by management and individuals. It is set by the values and norms these teams and individuals want and act upon. Sadly, the benchmark is often set by the worst behaviour the business is prepared to tolerate.
This pandemic has brought with it a lack of certainty and ambiguity about the future of the business, let alone our future as individuals, families and society. It’s our nature not to trust what we don’t understand; as a result, management teams will need to deliver even greater clarity on expectations around culture and how they manage the behaviours which reflect it. They will also need to consider new customer expectations in a post-COVID-19 world.
The financial services sector, which has come under intense scrutiny over the past few years culminating in the Hayne Royal Commission, is an interesting case in point. In a talk recently to the Trans-Tasman Business Circle, APRA Chair Wayne Byres said: “It is often said that central banks exist to take away the punchbowl just as the party gets going. Prudential supervisors have a similar role — acting to ensure the temptation towards risk-taking and leverage that is inherent in the financial system is countered with appropriate financial strength and resilience.”
It is the “temptation when the party gets going” which will pose the biggest challenge to how much cultural creep and resultant risky behaviour will be condoned in the interest of profits and bonuses as they make up for the post pandemic blues. There will also be added pressure on the government and regulators to fill the coffers in the face of the biggest deficit the country has faced.
The big question is how banks and other financial institutions will behave in a post pandemic recovery. Will they, and others, avoid the temptation to bend the rules and condone sometimes nefarious behaviour to play catch up, or will the reputation lessons of the past keep them on the straight and narrow?
I don’t know the answer, but what I do know is a strong culture is a powerful differentiator, it’s difficult for competitors to replicate, it’s one of the best magnets for new talent and a great retention strategy for existing employees, and it is ultimately very attractive for suppliers and customers alike.
Culture determines behaviour and the behaviour of businesses during and after this crisis could have significant and long-term impacts on their reputations. We should act now to make sure that the culture we create reinforces and rewards behaviour that begets our best reputation.