Financial institutions are constantly searching for ways to increase the success of their business, whether by trying to increase profits and return on capital or simply pushing into uncharted territory. To accomplish this and ensure that there are no surprises, traditional audits usually focus on areas such as asset-liability management (ALM), Bank Secrecy Act (BSA) compliance and information technology general controls (ITGC). However, a bank or credit union’s corporate culture is a factor that is often overlooked and, if evaluated, could prove to be a useful tool in the journey to success.
IS YOUR WORK CULTURE AS GOOD AS YOU THINK IT IS?
Made up largely of repetitive habits and emotional responses, a corporate culture is the culmination of shared beliefs, values and standards held by members of an organization that determine the institution’s nature. The root of an institution’s culture lies in its goals, administration, codes of conduct, strategies, relationships with clients, and its overall community. The benefits of a positive work culture a vast. A good culture will energize employees, encourage ethical decisions and instill confidence and pride in the workforce. Adversely, a bad work culture could damage productivity and employee commitment, undermining the chances for long-term success.
HOW TO IMPROVE WORK CULTURE IN AN ORGANIZATION
The creation of an institution’s culture starts at the top. The board has complete oversight of the culture and should establish and monitor an ethical framework. Senior management then implements and maintains the desired behaviors, and hopefully leads by example. The human resources department is then tasked with shaping and reinforcing work culture improvements.
When creating a positive work culture within a financial institution, there must first be an established code of conduct. Furthermore, employees must be fully trained on this code, and the rules set out should be enforced at all times. Institutions with the best work culture have clear and consistent communication between employees and management, and the desired behaviors of the culture are directly exemplified by executives.
Once these elements are in place, the internal audit team (IA) should assess whether the lived culture is aligned with the desired culture. To do so, it is crucial to analyze the effectiveness of those elements and suggest possible solutions to any problems that arise. Are prior audit report ratings strong, weak or a mixed bag? What are the SOX and compliance testing results revealing? Are they sending up red flags? Are there things that are poorly controlled or designed? Or are you getting a lot of positive feedback that says operations are well-controlled?
From there, IA needs to begin searching for patterns and connecting the dots between all of these assessments in order to implement the next steps to assess the corporate culture and finally apply the best work culture practices. Why is a particular finding problematic? Are people stretched too thin to do what is required of them, so they cut corners? Is management taking care of it by making the fixes that need to be made and making sure those fixes work?
It is critical to determine the root cause of the problem, and not just treat the symptoms. Data analytics and continuous controls monitoring, internal audit risk assessments and even whistleblower hotline reports are all exceptional ways to keep track of an institution’s cultural well-being.