Culture - The Big Differentiator
So much seems to be written about culture, and its importance, and the role leaders play in creating it. And yet in my personal experience CEO’s and CHRO’s don’t spend nearly enough time and energy on the subject. And of course whether you actively manage it or not, every organisation has one or more cultures ( large organisations often have subsets of culture within).
I worry that cliché’s about leadership and culture will be to LinkedIn what cat videos are to Facebook. That’s not to say that the subjects of culture and Leadership are not important. (or that some cat video’s aren’t cute). They are. In fact I would argue they are the key elements to ensuring sustainable organisational performance within sustainable communities.
Rhetoric in corporate annual reports and corporate social media abounds telling us about how organisations are changing, how they are driving diversity and inclusion. How they support wellness and mental health issues. And they are saying the same things to staff, investors and regulators. But the reality is, the fact is, that progress in all these spaces is painfully and inexcusably slow. The short term pressure for profits causes organisations to take actions which often destroy trust.
In fact businesses would not tolerate such lack of progress on business issues it viewed as critical and core to their success! And this is for me one of the greatest ironies. This lack of honesty is the first problem within organisations.
Culture change programmes are notoriously challenging to manage to the extent that they create real positive sustainable change. One of the reasons is that Executives frequently do not take the time to measure and analyse data to help them fully understand current culture. They may simply assume they know. In fact Executives would not tolerate such a lack of data on any other key aspect of their business but it is almost taken for granted when it comes to culture. And I would argue that if you don’t fully understand in detail your current culture mapping out a proper culture change programme is nearly impossible. Fortunately there are increasingly providers that allow for the collection of real time meaningful data relevant to understanding Culture eg Temporal.
Coupled with this inherent lack of honesty is I believe also a lack of empathy. The last few decades have seen management practices creep in that have eroded organisational empathy, more so the higher up you go in an organisation. Companies of today feel nothing about taking executive bonuses shortly before declaring bankruptcy, or announcing thousands of job cuts, but would never even consider lets say, a 25% cut of senior management bonuses/pay to preserve jobs. In fact the job cuts may well in part be in service of protecting those bonuses. And people are not ignorant. They know. They understand. Professor Frances Frei from Harvard speaks eloquently about the importance of culture, the bedrock of which should be trust.
I believe that this disconnect (organisations saying what they know their people want to hear but their people seeing behaviours and actions which contradict what they promise), is leading to disengagement and in the UK at least, low and declining productivity indicators ( see my article “I don’t want to be a Killjoy but….”) In fact Frei also talks about the almost universal problem of low engagement, worse even than job dissatisfaction, being caused by Leaders and the culture they create/allow. The work she has done with Uber and WeWork illustrate these points so clearly.
The world of work is changing at increasingly rapid rates. Driven by technology including AI, changing employee expectations, globalisation including mass displacements, political uncertainty, to the extent that we have never seen before. Those stayed, hierarchical, stable, massive organisations succeeding through market share and geographical dominance have to change or face having their customer relationships and thereafter income challenged by disruptive lean smaller agile companies.
It is ironic that perhaps in many cases the change they need to sustain themselves is often the change they seek to resist or underinvest in. Traditional hierarchical structures organised functionally and or geographically are not nimble or responsive enough to ensure survival and sustainable performance. The second challenge is that senior leaders, with so much personally at stake, are unlikely to “vote” for agile nimble boundaryless organisations.
I love this quote “We need, in every community, a group of angelic troublemakers.”, Bayard Rustin, and think it sits at the heart of real systemic courageous change. Genuine adaptive change requires a courageous change in culture which has to take place from within. Leaders carry this responsibility.
Organisations, led by CHRO’s, should be thinking about org design, work design and capability requirements, and culture, simultaneously and in a holistic way. I am sure there are some examples where this is being done but in my experience they are few and far between. Changing one of these elements, or changing a combination of them without holistic thinking will I believe put many organisations at real risk for the future.
Some organisations are I believe making progress in these areas. The story of Patagonia, Inc suggests that managing values and culture, and sometimes sacrificing short term profit, delivers a sustainable business. (Read about it in - Let My People Go Surfing: The Education of a Reluctant Businessman Paperback by Yvon Chouinard)
And organisations need to get better at balancing pressure for quarterly results with that of building a sustainable business for the long term.