When Uber co-founder Travis Kalanick went on a tirade against one of the company’s drivers, with a camera recording the event as it took place in the back seat of an Uber car, critics focused on the broken culture of the company, not just the poor judgment of the CEO. When the cacophony increased and focused on the company’s treatment of women in the workplace, the board removed Kalanick and initiated a search for his replacement. The board members specifically stated they were looking for a leader to create a new culture.

When a customer, a prospective employee, a visitor or even the mail carrier enters your place of business, what sort of impression do they get about your company and its style and culture? Management guru Peter Drucker originated the saying, “Culture eats strategy for breakfast.” But what is culture? Who develops the culture of an organization?

Culture embraces a certain esprit de corps — a sense of unity, common interest and responsibility, developed among a group of persons closely associated in a task, cause or enterprise. Simply put, what your people stand for defines your culture. A company’s culture steers the business and can determine its success or failure.

In a June 2017 Harvard Business Review article, Changing Company Culture Requires a Movement, Not a Mandate, authors Bryan Walker and Sarah A. Soule provide the following definition: “Culture is like the wind. It is invisible, yet its effect can be seen and felt. When it is blowing your direction, it makes for smooth sailing. When it is blowing against you, everything is more difficult.”

Wells Fargo

A colleague of mine asked me an uncomfortable question about the troubles Wells Fargo has experienced over the past year or so. Wells Fargo employees were found to have opened more than 3.5 million fake customer accounts. They also signed auto loan borrowers up for car insurance they did not need and then repossessed the cars for nonpayment of the insurance, despite proof the customers had other insurance. More recently, the bank’s Merchant Services subsidiary was accused of overcharging small businesses for processing fees. My colleague’s question was simply, “Could that happen here?”

My immediate reaction was to say, “No, of course not! We have controls in place to prevent such a thing from happening.” But after a moment of deeper consideration, I concluded that Wells Fargo, most certainly, had similar controls in place. I wondered how these breaches could have possibly happened. Presumably, a misguided interpretation of the company’s corporate culture contributed to the behavior of more than a few of their employees.

Wells Fargo’s corporate website includes the following reference to the bank’s culture:

We define ‘culture’ as understanding our vision and values so well that you instinctively know what you need to do when you come to work each day…Culture is the attitude we bring to work every day — the pattern of thinking and acting with the customer in mind. It’s the habit of doing the right things, and doing things right. It’s behaviors and attitudes that are core to who we are: respecting differences, honoring deadlines, listening to each other, keeping promises, returning phone calls and emails as promptly as we can, and being actively engaged in meetings.

This sounds pretty good. So how could so many transgressions have happened?

I am not suggesting for a minute that anyone deliberately poisoned Wells Fargo’s corporate culture. However, it’s possible that flaws were seeded deeply within parts of the bank’s culture. Quite possibly, they were limited to certain divisions of the bank, which may or may not have been known, understood or even acknowledged by the management committee or the board of directors. Little flaws, which might not appear to be wrong or unreasonable, were meticulously engrained into the culture. Win at all cost. Compete to the end. Close more deals. Come out on top. If you don’t make your numbers, there will be hell to pay. These little influences on culture can affect behavior. An old adage states, “Environment determines behavior, and behavior determines results.” Perhaps a competitive environment led to the rogue behavior of a limited group of Wells Fargo employees.

Don’t get me wrong. Wells Fargo is a tremendous bank, and its equipment finance business is an outstanding competitor and a market leader. But the news stories about the blunders, the resignation of the chairman and the claw back of compensation paid to senior executives reminded me of a quote from Warren Buffett, “It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.”

Buffett’s quote got me thinking about corporate culture in our industry. I reached out to several industry leaders to gain their insights about how they believe the culture of their respective organizations influences their business results.

GreatAmerica Financial Services

For many years, I have admired the way GreatAmerica Financial Services retains such extraordinary loyalty from employees and customers. Tony Golobic, chairman and CEO of GreatAmerica Financial Services, appears in a video on the company’s website stating, “Back in 1992, when we started GreatAmerica, we set out to build an organization unlike any others, an organization based first and foremost on excellence.” I asked Golobic how he developed the culture at GreatAmerica. “This year, GreatAmerica is celebrating its 25th anniversary and 25 consecutive years of organic growth, reaching $2 billion in assets. Without a question, this success is due to the hard work and dedication of over 500 highly engaged employees who care about each other, our customers, GreatAmerica and relentlessly improving themselves. In other words, our success is due to our GreatAmerica culture,” he replied.

Golobic continued, “Competing with large bank affiliates, we realized early on that our only competitive advantage would be highly engaged employees who cared more about excellence in execution than our competitors. We set out to build what I call ‘culture by design,’ inviting only those to join us that pass a rigorous selection process.” Running a highly competitive leasing and finance business in Cedar Rapids, IA — not exactly a thriving metropolitan area — and choosing to employ an extremely thorough selection process to hire the right type of people are impressive feats!

Golobic wrapped it up by showing how GreatAmerica’s selection process results in high performance employees. “We look for people who are going to work hard, be focused on the ‘why’ of GreatAmerica and truly care about the quality of their output. The result is a consistent and high quality approach that our customers appreciate. We call this the GreatAmerica Experience. It’s a collection of thoughtful and intelligent behaviors that we strive to execute every day.” Engaged employees focused on the customer. It doesn’t seem like rocket science but it definitely works for GreatAmerica.

Boston Financial & Equity

Sonny Monosson, a one-of-a kind entrepreneur, founded Boston Financial & Equity in 1968. The company continues to thrive under the leadership of his daughter, Deborah Monosson, who began her career at BEFC in 1989. I asked her how the culture of the company has changed since the early days when her father was at the helm. Her response was telling: “It has changed as the generations change, even a generation beyond myself, not just between Sonny and me.”

Monosson referenced the impact of technology on her business. “Technology has changed, and with all that the culture has changed. We are a bit more ‘open’ now. We have always had an open office, but we didn’t talk between or across the desks to each other. Back then, we were all on telephones and yelling across to someone was disturbing. Now everyone is using email.”
“We are more open about time off, short Friday afternoons or when business is just super slow, I don’t feel that people should just sit here for the sake of sitting here until 5 p.m. On a summer Friday when more than half of us were out…I told the handful who were slated to be in, they could work from home. We used to not have cell phone usage in the office, now it’s unavoidable. So time has morphed us into a different culture,” she added. Changing with the times, Monosson adapted. She evolved, and her business has flourished.

When Cultures Combine

Merger and acquisition activity has been consistently strong throughout the economic recovery. I wondered how two contrasting cultures uniting through acquisition might meld over time. I asked Bruce Kropschot, senior managing director of the M&A Practice for The Alta Group, how he addresses contrasting cultures when arranging for the purchase or sale of businesses.

“In arranging the sale of independent equipment finance companies, we are careful to explain to management the cultural difference they can expect if they are acquired by a bank or large financial services company,” Kropschot said. “Managers who have previously worked for a bank or other large corporation generally have an easier time adapting. Entrepreneurs who have not reported to anyone else for many years may have difficulty accepting the need to follow the parent company’s policies and procedures. It is also important for the acquirer to understand that it is natural for there to be some cultural issues with the acquired company, particularly if the acquirer wants to integrate the acquired company into its existing equipment finance business.”

Wells Fargo & GE Capital

Kropschot’s response had me once again pondering Wells Fargo, which acquired large chunks of GE Capital last year. Despite the challenges facing its banking parent, Wells Fargo Equipment Finance has always been a successful, conservative, Midwestern, meat-and-potatoes kind of lender. In contrast, GE Capital was known to be aggressive and highly competitive. I was curious to know how the two cultures are meshing a year after their combination.

I received a response from a senior executive at Wells Fargo Equipment Finance who cannot be named since I chose to avoid the process of running his response through the marketing and corporate communication channels of the bank. I asked him whether the company had retained the Wells Fargo culture, adapted a more GE-like culture or fabricated a new culture altogether, following the integration of the businesses. His response was positive and encouraging for the organization and its future: “I don’t believe much has changed culturally as we are all committed to making this work as best we can as we go through the transition phase. Each business approached issues dissimilarly (how we invested our resources, how we were organized and how we processed our business) but, as far as culture is concerned, it turns out we are more similar than you would think. It also helps that the Wells Fargo business has many experienced ex-GE people that makes the transition and the cultural assimilation that much easier and the results speak for themselves.”

It sounds like the cultures are meshing just fine. Wells Fargo Equipment Finance could very well become the next 800-pound gorilla!

UniFi Equipment Finance

Like many other independent lessors, Ervin Leasing was hurt by the credit crisis and saw its assets and new origination volume shrink considerably. Owned by Ervin Industries, a long-established industrial manufacturing company in a mature industry, Ervin was slower to embrace new technology and markets. Following the sale of Ervin to Bank of Ann Arbor in early 2013, RJ Grimshaw was hired to reverse the decline, steady the ship and set new sails. I asked Grimshaw, as CEO of UniFi Equipment Finance, how he transitioned the Ervin culture into the current culture of UniFi Equipment Finance. “Our culture at UniFi takes the word ‘team’ seriously as we are all reliant on the basket of skills each of us brings. We work hard at being an open environment that welcomes free expression of ideas and new ways of thinking about how to best serve our customers,” he responded.

Having moved from an independent to a bank-owned entity, I asked Grimshaw how the bank influences the culture of UniFi. “As a bank subsidiary, we are fully integrated in all activities involving both the business and the community,” he said. “While there are areas of difference between the banking culture and ours, we focus on things that unite our brands to make for a very strong combination with one consistent theme — helping clients.” It appears to be working. UniFi is hitting its growth targets and hiring new people.

When I envision corporate culture, I see a sweep boat with eight rowers and a coxswain. Each rower represents a core value of the organization. Execution by the rowers, navigation of the boat and competitive strategy is dependent on the coxswain . . . the cultural driver who ensures that all the oars are in the water at the same time, pulling in the same direction. When done right, it is a beautiful sight.

Are all your oars gleaming through the water in synchrony with a coxswain at point, mastering your boat’s direction? For the industry’s sake, I hope so.