Leading and Managing the Corporate Culture

Leading and Managing the Corporate Culture Corporate culture simply means, "This is the way we do things around here", or

"A set of acceptable behaviours we expect people to do." There are always two cultures in a company, family or group. The first is the "espoused culture" - i.e. "people are our most important product." In an "espoused culture," what we say doesn't fit with what we actually do or what people are rewarded for. So if we say "people are important" but we treat them badly what is said does not fit with what we do. The result is cynicism, resentment and dis-engagement - KaChing$$$ - cash down the toilet. The second is the "real culture" in which behaviours reflect the stated values. Outcome: Alignment, engagement and loyalty. KaChing$$$ - money in the bank. A "real culture" points the way to an ideal and 'better' culture that will lead to a sustainable business that has a great "Invisible Balance Sheet." The "invisible Balance Sheet" A term coined by Carl Sveiby, is made up of three families of "invisible" or intangible assets: (1) Internal Structure - Consists of patents, concepts, models, and computer and administrative systems. These are created by the employees and are thus generally "owned" by the organization, and adhere to it. (2) External Structure - the relationships with customers and suppliers, brand names, trademarks and reputation, or "image". Some of these can be considered legal property, but the bond is not as strong as in the case of internal assets because investments in them cannot be made with the same degree of confidence. The value of such assets is primarily influenced by how well the company solves its customers´ problems -or avoids creating problems for customers. There is always an element of uncertainty here. Reputations and relationships can be good or bad, and can change over time. Peanut butter or "mad cow" being cases in point. (3) Individual Human Competence - or intellectual capital is people's ability and/or willingness to act in various situations that add value to the company. It includes skills, education, experience, values and social skills. Competence cannot be owned by anyone or anything but the person who possesses them, because in the final analysis, employees are voluntary members of the organization, Why Build a Healthy Culture? The results can be magnificent if top management enshrines and rewards the right behaviours i.e. Disney, Apple, Google. Disastrous if the company leaders are incongruent, inconsistent and duplicitous. i.e. Ford, GM & Chrysler One successful example is Northwest Airlines, which has built its culture on the development and motivation of the individual in order to contribute to team success. Southwest has produced 97 consecutive quarters of profits while other airlines floundered in bankruptcy. One purpose of articulating and fostering a healthy culture is to lead employees to adopt "the mind-set of owner-operators." The hired guns of global financial institutions failed miserably in this regard. Culture Differs from One Organization to Another. Cambridge Design Partnership, in the UK, employs only 25 people, mostly top-class engineers. Its culture is built on the goal of attracting and keeping customers for contract research. Keeping is the key element here, because in the engineering design business the sales cycle is so long - often years. CDP has never had a failed project and has many repeat customers. The "real" and the "espoused" definitions of culture share an obvious link. If you change the culture from whatever exists, i.e. from unclear purpose and shoddy results, to clear purpose and consistently outstanding results, then you change the "way we do things round here." Progressive, effective top managers understand and behave in ways that show that they are responsible for building and maintaining a healthy culture. If some aspect of the business is broken, they will introduce some new ways that will produce the desired results. They work with people to fine-tune the culture. Any wise, experienced business leader worth their salt will tell you that people cooperate best when executing policies and procedures devised with their collaboration. The Present Exception to the Rule - Sort of. Right now, in this economic malaise there is an apparent and major exception to the collaboration principle. Businesses in trouble require a quick, marked cultural change to drive the turnaround - now. A faltering company can be made more effective if everyone puts their shoulders into the tasks. Collaboration is essential, but prolonged consultation is not so useful in this instance. What top management must do is tune into, and turn up the volume on that radio station - WII-FM - (What's In It For Me?) so that every employee understands that now is the time for all good people to come to the aid of the company. When the house is on fire, you don't sit around debating about what to do next! You make sure people don't get burned because they're frozen in fear. However, crisis management is not a strong foundation for constructing a lasting, healthy culture. When the crisis is successfully dealt with, the urgency and commitment that everyone brought to the turnaround quickly dissipates. The organization and culture can quickly revert to the status quo - which was the source of all the trouble in the first place. CDP and Southwest Airlines have one thing in common. All their employees, from the CEO down, have a deep knowledge of the business, its objectives and its practices - to most of which they give their wholehearted support. The leadership team can, because of a common cultural understanding and commitment, pursue ambitious, quick-paced plans that would not be possible in a dysfunctional, slow moving culture. Companies with healthy cultures are more likely to have the resiliency to weather the firestorm while preserving their culture. Other companies, with less healthy cultures, and which successfully emerge from the economic crisis will have to, again, begin re-working their culture as the good times start to roll again - if for no other reason than the "war for good talent" will rear its ugly head once again. Top managements' efforts will have to move from financial survival to profitable sustainability while building the "invisible Balance Sheet." Leading & Managing A Healthy Corporate Culture A healthy culture always follows from the principles and policies that are put in place and modeled - not vice-versa. Here are the questions to ask - and answer - in order to identify a company's culture. They are also questions that need to be answered when developing or changing a company's culture. 1. What is important around here? What gets rewarded? What gets punished? What gets ignored. What are our core beliefs, the principles that govern how we interact and treat one another, our customers and our suppliers? - Values. 2. Do we have the right people on the bus and in the right seats? Are they aligned with the demands of the business? Do we have the competitive intelligence? How do we develop them into leaders and managers who will drive results while developing people? - The "Invisible Balance Sheet." 3. Where are we going? What future state do we want to achieve? - Vision. 4. How are we going to get there? What's the Big Dream? What is the roadmap? - Strategy. 5. Why are we here? Why have we pulled all these people and resources together? - Mission. Leading and Managing the Corporate Culture