The Importance of Corporate Culture in Financial Institutions

This article discusses the significance of corporate culture in financial institutions and how it affects the success and safety of the organization. It explains the pillars of corporate culture, its impact on the behavior of employees, and how it can be enforced. The article also highlights the importance of maintaining the brand and reputation of the company, recruiting desired employees, and coordinating the operations of the firm. It concludes that a sustainable organization is the one with a sustainable corporate culture.

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According to Alvesson (2012), corporate culture in general refers to the different beliefs and
behaviors that gages how the employees and the management of a given organization relate or
interact outside the business operations or daily transactions. In most cases the culture of the
organization will be identified in the way the employees dress, the structure or set up of the
organization, the decisions made in hiring, the satisfaction of the clients, how the clients are
treated and lastly the operations of the company or the organization. In addition corporate culture
will include the shared values and attitudes that determine or identify the members of the
organization. It is one of the most important components of a business or organization as it helps
to determine the success or the failure of the business. It is important for all financial institutions
and all the supervisors to put more effort in understanding the culture of an institution and how it
affects the soundness and safety of every person. The pillars that make up the corporate culture
involve the corporate ethics which entails the corporate values and lastly the corporate image
(Eccless, 2012).
The operation of any company especially banks is adversely affected by the corporate culture.
This issue has come back in the banking industry and is widely discussed as it is important in
enhancing the financial stability of a bank and also bringing back trust of members of the public
in the banking systems of a bank. The corporate culture in banks is incorporated from the top
management to the lower staff .In this case it is takes time to incorporate the corporate culture
since it is difficult to achieve and requires strong leadership. There is need for corporate culture
due to the above reasons; the organization or the company would like to maintain the brand and
the reputation of the company hence the need for corporate culture. Another reason is trying to
maintain and recruit the desired employees. The organization would also want to coordinate the
operations of the firm and create a better working environment for the employees in the
organization. The organization would finally want to do the right thing to the organization in
making the right decision that would be in line with the set up goals and objectives of the
company (Carlos, 2014).
Culture in banks not only determines the ability to produce a desired result of compensation
when trying to influence the behavior of the employees, but it can also persuade all the workers
to work in a way that is consistent with the values of the organization that are clearly stated. This
is very costly if a bank decides to achieve it through formal contracts as it involves bargaining,

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putting together disjointed information and observability state that is not perfect (Song &
Thakor, 2016). With the existence of cultural differences, it is very easy for two or more banks
with the same incentive based compensation scheme, to come up with very different behavioral
outcomes.
In order to enforce the corporate culture the company especially the banks should consider the
generally accepted values in the organization, the treatment of the customers, suppliers, clients
and the workers in general. Also the organization should identify its internal and external
relationship for example how the company manages its finances or operations. In the bank set up
the corporate culture of the organization can be enforced through written agreements between
two parties which may be the supervisors and the banks who agree to put up measures that they
can adapt in making the corporate culture. Another way in which banks can implement the
corporate culture is by the desist order where restrictions are imposed on the banks after hearing
of unsafe practices (Gusto, 2015).
In conclusion an organization that is the banks cannot survive well and fulfill its objectives and
goals if it does not incorporate the corporate culture within the organization. Having a strong
culture will effectively take care of the bank’s growth strategy and play a role in influencing the
behavior of all employees. This will give assurance to all the investors wishing to take risks in
the bank as they will have trust in all activities undertaken. A sustainable organization is the one
with a sustainable corporate culture.

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References
Alvesson, M., 2012. Understanding organizational culture. Sage.
Bolton, P., Brunnermeier, M.K. and Veldkamp, L., 2012. Leadership, coordination, and
corporate culture. Review of Economic Studies, 80(2), pp.512-537.
Carlos Pinho, J., Paula Rodrigues, A. and Dibb, S., 2014. The role of corporate culture, market
orientation and organisational commitment in organisational performance: the
case of non-profit organisations. Journal of Management Development, 33(4), pp.374-
398.
Eccles, R.G., Ioannou, I. and Serafeim, G., 2012. The impact of a corporate culture of
sustainability on corporate behavior and performance.
Fiordelisi, F., Raponi, J. and Rau, P.R., 2014. Corporate culture and enforcement actions in
banking. Culture, p.1.
Guiso, L., Sapienza, P. and Zingales, L., 2015. Corporate culture, societal culture, and
institutions. American Economic Review, 105(5), pp.336-39.
Thakor, A., 2015. Corporate culture in banking.

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