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June 8, 2017 By Richard Bowen

Culture Is the Way We Do Things Here

“Culture is in fact the basis of an organization and it absolutely influences people’s day to day behavior,” comments Veronica Melian in an article originally published in Deloitte’s “Directors’ Alert 2017: Courage Under Fire: Embracing Disruption.”

She says, “Organizations have traditionally devoted considerable time and effort to developing sophisticated strategies to capitalize on market opportunities and mitigate market risk, but many have tended to pay less attention to the organization’s culture… Today, there is a renewed recognition of the importance of culture in driving strategy and the board’s role in aligning strategy with an organization’s culture.”

A recent study published by the U.K. Financial Reporting Council concluded that, “The strategy to achieve a company’s purpose should reflect the values and culture of the company and should not be developed in isolation. Boards should oversee both.”

I applaud her view. If an organization’s culture does not permeate the entire organization at every level from the C- Suite to the front line – well, we only have to look at all of the companies recently and  not so recently – from Enron to Wells Fargo, Volkswagen to Fox News, not to mention many of the TBTF – to see the results.

So what’s the problem that in so many organizations culture doesn’t work and is only paid lip service to? Ms. Melian says companies ”pay less attention to the organization’s culture, which can be difficult to measure and manage and was often left to evolve on its own.”

Yet culture must be managed for the good of the company, its customers and its employees. In fact, culture is the number one determinant of future shareholder value. The article notes “misaligned incentives were a primary factor behind the unethical behavior demonstrated during the 2008 financial crisis and are often cited for influencing corporate failure.”

I can attest to that. While culture has to be set and led from the top, as we have seen too often performance incentives influence and, many times, drive the culture, witness Wells Fargo’s addiction to performance incentives. And I have seen this influence with my personal witnessing of the “making your numbers” manifesto which drove Citigroup’s behavior.

Warning signs about risks related to a company’s growing and profitable business model will likely be ignored by senior managers because any actions taken to curtail the risks may also curtail the profits and thus, the managers’ incentive compensation driven by the business model, so culture goes by the wayside and greed takes over.

So how do you measure and define culture when it’s just part of the ethos and how things are done around here, regardless of codes of ethics and corporate guidelines? The article informs us that just “19% of CEOs and human resource leaders who responded to Deloitte’s 2016 Human Capital Trends survey indicated their organizations had the “right culture,” and more than half noted that their companies were attempting to change the culture in response to shifting talent markets and increased competition. Only 28% of respondents indicated they truly understood their culture, although 87% believed that “culture is a potential competitive advantage.”

So it follows that very few companies talk about culture in their annual reports, nor do they get the Board of Directors involved in the company’s actual culture guidelines and measurements. I predict that would change if the Board knew how culture impacts future shareholder value.

Ms. Melian says, “Boards can ask a number of questions to understand and help address an organization’s culture issues, from… Is culture considered in how the organization evaluates and rewards the CEO? Do leadership succession strategies include culture and ethics as criteria when selecting a CEO? It starts at the top.”

In short, everything that is said on social media about the company, turnover, brand, customer service, profits – in every area of a company, culture counts. Are employees encouraged to give feedback and is that feedback valued?  Are transparency and disclosure welcomed? Does the company have a periodic culture diagnostic and are the results shared?

Ms. Melian suggests that periodically the company assess what people will do in real life situations, such as meeting performance measures, awareness of unethical behaviors, and pressure to do what is not above board.

What do the World’s Most Admired Companies share in common?

1. Apple

2. Amazon

3. Starbucks

4. Berkshire Hathaway

5. Disney

6. Alphabet

7. General Electric

8. Southwest Airlines

9. Facebook

10. Microsoft

Culture… that values the employee, the customer and shareholders profit.

A company’s culture today is public. Culture counts!

Why Is the Fed Ignoring What Goldman Sachs Is Up To Now?
Whistleblower Program Wins Telly Award

Tagged With: culture

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Richard Bowen is widely known as the Citigroup whistleblower. As Business Chief Underwriter for Citigroup during the housing bubble financial crisis meltdown, he repeatedly warned Citi executive management and the board about fraudulent behavior within the organization. The company certified poor mortgages as quality mortgages and sold them to Fannie Mae, Freddie Mac and other investors.

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William D. Cohan"Richard Bowen is one of my heroes. His is a story of human fortitude at its best and Wall Street at its worst."

~ William D. Cohan, NY Times Best Selling Author
2017-06-30T10:08:59-05:00
"Richard Bowen is one of my heroes. His is a story of human fortitude at its best and Wall Street at its worst." ~ William D. Cohan, NY Times Best Selling Author
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Eileen McDonnell"Richard Bowen reinforced my motto that "there is no right way to do a wrong thing.” Long after his presentation, the conversation has continued about personal responsibility and the courage to challenge things that appear to be wrong. We encourage this dialog and rely on it to help make our business stronger."

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"Richard Bowen reinforced my motto that "there is no right way to do a wrong thing.” Long after his presentation, the conversation has continued about personal responsibility and the courage to challenge things that appear to be wrong. We encourage this dialog and rely on it to help make our business stronger." ~ Eileen McDonnell, Chairman, CEO, & President, Penn Mutual
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Jim Farrell"Richard's speech at the April Financial Executives International dinner was informative, interesting, riveting, and fast moving.  The feedback from members was overwhelming positive, and Richard received one of the few standing ovations given by our membership."

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2014-12-28T19:48:17-06:00
"Richard's speech at the April Financial Executives International dinner was informative, interesting, riveting, and fast moving.  The feedback from members was overwhelming positive, and Richard received one of the few standing ovations given by our membership." ~ Jim Farrell, Program Chairman, Dallas Chapter, Financial Executives International
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Dennis McCuistion"Richard Bowen has been there, done that, and has the scars to prove it, and his message of corruption at the highest levels of industry and government needs to be heard. I only wish that more bankers had the courage that Bowen exhibits. He is not only one of the most talented bankers I have ever met, he has more integrity than all the bankers on Wall Street put together. If his former employer had listened to him taxpayers would not have had to bail out Citi for the third time in the last 30 years."

~ Dennis McCuistion, Host of the McCuistion TV program
2014-12-28T19:48:06-06:00
"Richard Bowen has been there, done that, and has the scars to prove it, and his message of corruption at the highest levels of industry and government needs to be heard. I only wish that more bankers had the courage that Bowen exhibits. He is not only one of the most talented bankers I have ever met, he has more integrity than all the bankers on Wall Street put together. If his former employer had listened to him taxpayers would not have had to bail out Citi for the third time in the last 30 years." ~ Dennis McCuistion, Host of the McCuistion TV program
https://richardmbowen.com/testimonials/533/

Betty Garrett"Richard Bowen is a dynamic, entertaining speaker and story-teller - a CPA with a great personality!"

~ Betty Garrett, Garrett Speakers International
2014-12-28T19:47:50-06:00
"Richard Bowen is a dynamic, entertaining speaker and story-teller - a CPA with a great personality!" ~ Betty Garrett, Garrett Speakers International
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fred-timmons"I believe Richard Bowen is the only keynote speaker to ever receive a standing ovation from the Texas Society of CPA’s at any of its annual conferences."

~ Fred Timmons, Chairman of The Texas Society of CPA's
2014-12-28T19:47:22-06:00
"I believe Richard Bowen is the only keynote speaker to ever receive a standing ovation from the Texas Society of CPA’s at any of its annual conferences." ~ Fred Timmons, Chairman of The Texas Society of CPA's
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Presentation Topics

Playing for High Stakes: The Principles and Practice of Ethical Leadership

Dark Citi: The Story of a Whistleblower

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Now an ethical leadership speaker, Richard Bowen was Citigroup's Business Chief Underwriter during the housing bubble.

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