Over the weekend, Berkshire Hathaway released our (and everyone’s) favorite shareholder letter that never fails to serve as a World Class education in the high-art of capitalism.
Earlier this week (HERE), we highlighted how an employee handbook can have a colossal impact on culture that can radically alter your bank’s trajectory. We talked about how culture alone allowed Zingerman’s, a little Michigan deli, to have a worldwide following. We showed employee handbook examples from Netflix, Zappos and Nordstrom to demonstrate how their cultural tone can be leveraged into a strategic difference.
You have probably experienced this at your bank - You hold a shareholder meeting and of your 1,000 shareholders, only twenty people showed up and ten were directors, two were past employees and five were there for the free lunch. Your chairwoman shrugs at the turnout and then jokes that at least you don’t have any activist in the crowd. You all have a quick meeting, a good lunch and then get back to work. However, on the way back you just feel like there is something more. The reality is – you are missing something.
A traditional bank is organized along a hierarchical structure. The CEO presides over executive vice presidents that head up various divisions supported by senior vice presidents, then vice presidents and so on. Commercial loans, retail, branches, mortgages, etc. all report up to their chain of command. Most banks are essentially organized along product lines with a rough geographical overlay so that every region has a representative for each product. This worked well for the first 175 years in banking, but now the organizational structure is starting to fail us.