The original version of this e-book was written with my dear departed friend and business partner Dougal Thompson in response to the collapse of the giant American corporation Enron.
WHEN ENRON WENT DOWN IT SINGLED AN UNFORGETTABLE REMINDER OF THE POWER AND INFLUENCE OF AN ORGANISATION’S CULTURE TO DESTROY THE BUSINESS IT OPERATES WITHIN.
Dougal and I discussed Enron and others like them a lot. Over the following five years we researched the most common mistakes we saw organisations making with culture which led to them being vulnerable to their culture. We published our findings as the original version of this e-book. Now, some ten plus years later I have decided to update the e-book, not because the content required changing but simply because the lessons about culture still don’t seem to have been learnt and if anything, the consequences of a failed culture are more impactful now than they have ever been. Even as I write this introduction a major law firm is in the news
for a culture of sexism, elitism and chauvinism, and a once- admired international sports team is dealing with the fallout
of its cheating culture led by its own leadership team. Modern organisations still don’t seem to have realised that they cannot outperform their culture!
IN THIS DAY AND AGE, TOXIC CULTURES WILL NOT BE TOLERATED BY EMPLOYEES, SOCIAL MEDIA, TRADITIONAL MEDIA, CUSTOMERS OR SHAREHOLDERS.
Organisations that fail to master culture are putting themselves at substantial risk.
Learning to master culture is no small thing. Culture is incredibly complex and subtle so that even learning to see culture doesn’t come easily. If you can’t see culture then it’s hard to improve it.
However, avoiding these ten most common mistakes will immediately and significantly enhance your organisation’s ability to begin the journey to embodying a culture you can be proud of and enabling a sustainable culture. These mistakes are easily avoided simply by becoming more aware of their existence.
I hope you find the ideas in this e-book useful. If you can avoid making all ten mistakes in your organisation’s approach to culture I promise you, your culture will prosper.
If you wish to chat with me about any of the following topics you can contact me at info@culturesatwork.com
I wish you the best of luck on your culture journey.
Kindest regards,
MISTAKE 1 – ACTION BEFORE AWARENESS
Too many organisations define culture as “The way we do things around here!”
It is not a helpful way of describing culture, and in reality better describes systems and processes than it does culture. Culture is not “the way we do things around here” but rather “Why we do things this way”. Introducing the word ‘why’ to the definition better captures the essence of culture as it acknowledges an underlying sense of meaning and motivation beneath all activity carried out within the culture.
It’s easy to see why many organisations make this mistake and overlook the deeper aspects of culture. Doing things and even being seen to do things is how organisations measure their own progress and results and are evaluated by others such as customers and shareholders. However, when it comes to developing a culture before you launch into ‘doing things’ to your culture, it is far more effective to first become more fully aware of what culture actually is. Understanding things like how culture forms, how it functions, what culture provides, who owns culture and the like, before racing to take action to change culture. After all, how can you effectively transform something if you don’t really understand its form or function? It’s like trying to fix your car’s engine but having no idea what’s under the hood.
When it comes to organisational culture it is best to always place awareness before action.
RECOMMENDED SOLUTION:
Educate your organisation and leadership team to understand culture in depth. To put things in perspective, your leadership team’s combined awareness of culture should be of the equivalent depth and breadth as their combined financial acuity. Culture has proven to put more organisations out of business than any financial crisis or competition.
Definitely ensure this is achieved before you attempt to change or transform your culture. Working on your culture before you understand what culture is and what it does is a fool’s game. Educate your people regarding how culture forms, how culture is structured, where culture comes from, why culture influences performance, who really leads a culture and why. Understand why a culture only changes on its own terms and never on the terms of the business.
MISTAKE 2 – START WORKING ON CULTURE TOO LATE
This is perhaps the biggest and most common mistake organisations make when it comes to culture.
Because most business leaders are so unaware of the deeper and more subtle aspects of company culture, they are not skilled in noticing the weak or early signals that their culture is in need of work. It usually only occurs to leaders that the culture needs to change when it is already inflicting significant damage to the business and its employees. My observation is that by the time organisations realise that they need to transform their culture, they are already, on average, 18 months to two years behind their need. Having been involved in over 300 culture change initiatives, I can confidently say that the golden rule for culture work is this: START BEFORE YOU NEED TO!
As we all know, culture takes time to develop. You can’t simply install it and switch culture on. Culture takes time. Culture transformation is a very complex process involving deeply held beliefs that will not be surrendered easily just to accommodate the latest business trend or requirement. This is because culture is not a business system, it’s a human system. This means culture is not logical, rational or objective. Culture is emotional, motivational, intangible, paradoxical, powerful, and the most influential part of any organisation’s level of performance.
RECOMMENDED SOLUTION:
Organisations would do well to think in terms of ‘Culturing’ rather than Culture. I have coined the phrase ‘Culturing’ to capture the following concepts:
a. Culture functions more as a verb than as a noun. Culture is ongoing and not a one-off experience that once done is finished with. It requires more than an annual survey check-in. It requires a daily, weekly, monthly and annual check-in.
b. Too many organisations focus only on their ‘culture’ rather than learning the more subtle social science and art of ‘Culturing’. In other words, they spend all their time working on and mastering their own current culture when it is far more advisable to simultaneously learn to master ‘culturing’ as a wider concept than just the limited expression of culture that currently exists within their business.
Mastering ‘Culturing’ means learning to appreciate the wide variety of cultural options available to organisations at the various stages of the business life cycle or at varying levels of performance. ‘Culturing’ is the equivalent of completing a degree in commerce or an MBA whilst still running your business. In this way, you learn what other cultures can do and apply the best ideas and options to your organisation. If you only know how to lead and guide your existing culture you could be in trouble when it comes time to change your culture because, at that point, you will have no idea or awareness of what culture options are available to your organisation and how to initiate and lead those options. When organisations learn to practice ‘Culturing’ they are far more able to transform faster with greater fluency and effectiveness than an organisation that only knows how to function with one culture – their old, outdated one! Working on current culture compared to learning to master ‘Culturing’ is like the difference between working in your business or on your business. Only one of these options takes you into your preferred future.
MISTAKE 3 – THINK THAT BUSINESS STRATEGY TRUMPS COMPANY CULTURE
Yes, we have all heard the old adage that culture eats strategy for breakfast, but when was the last time you saw an organisation that acted accordingly? When was the last time, for example, you saw the senior leadership team or the board of directors place more time, energy and attention on the company culture than the business strategy? Even if they know the old adage, most organisations assume and act as if their strategy is more important than their culture.
Research by Professor Mike West at the London School of Economics observing 100 organisations over a 10- year period clearly demonstrated that culture is, on average, eight times more influential on the performance variance the organisation experiences than strategy alone.
This doesn’t mean the strategy isn’t important. It is. No question. It’s just that strategy is not as influential to performance as culture is. Not acknowledging this and acting and deciding accordingly, is a mistake.
RECOMMENDED SOLUTION:
Identify what areas and in what manner your workplace culture is impacting on the delivery of your strategy. Consider the impact in both positive terms (i.e. the culture is for delivering discretional effort, creativity and additional speed into the organisation) and negative terms (e.g. lack of collaboration, withholding information, high staff turnover, poor customer service focus etc).
If you have managers and leaders who still think culture is the soft fluffy stuff then encourage them to simply think of the relationship between culture and strategy in this way: Culture provides performance and strategy directs it. Culture without strategy is directionless and strategy without culture is powerless.
MISTAKE 4 – ASSUME THE ORGANISATION ONLY HAS ONE CULTURE
I once visited the headquarters of a global organisation which has over 80,000 employees spread around the world. I was amazed to hear the human resource director declare that the organisation had only one culture. I felt for her as I can imagine how reassuring it must be to believe that with 80,000 employees in so many locations around the world, that the company only had one culture. The reality, of course, was that their organisation actually had hundreds, possibly thousands of cultures, not just one.
Any organisation with more than fifty people in it and especially those with different departments or branches in a variety of regions or countries are most likely to have multiple cultures in the business and not just one over-arching culture.
Just take a brief walk through your company and you will feel, hear and see the different cultures that exist. Try visiting the accounts department, the sales team, the dispatch area, your call centre or your IT department. Drop in and say “hi” to your human resource folks, your marketing team, your senior management team and your warehouse people. You will inevitably experience significantly different cultures. They speak in different languages, use different symbols of success and progress, they use different artefacts and tools, they are motivated by different priorities and extract different types of meaning from their work. They even think about time differently. Where senior leaders and finance think of time as financial quarters, people in the call centres think of minutes and shifts. In short, they all have very different cultures.
RECOMMENDED SOLUTION:
Always assume you have more than one culture and plan and act accordingly. (By the way, having multi-cultures in your business is an asset as it enables diversity, creativity, capability, specialisation and agility). Study the structures of your various cultures and consider how they each align (or misalign) with others and the business strategy or your over-arching purpose.
The key with cultures is not to aim for identical cultures but rather cultures that are aligned to an over-arching purpose and do so through contributing their special skills and expertise. Once you have established the various cultures and how they are structured, run information and introduction sessions across departments and functions so that each culture can learn to understand, respect and communicate effectively with the others. Those cultures that rely on one another for optimum performance should be especially familiar and understanding of the other internal cultures that comprise your overall organisation.
MISTAKE 5 – BELIEVE THAT THE COMPANY CULTURE BELONGS TO THE ORGANISATION
Your business systems and processes, your brand’s value proposition, your logos, and your physical assets are all owned by your organisation. But culture is, and always has been, owned by the people who occupy and embody the culture.
Your people are the DNA of your company culture. When your people go home at the end of every workday your culture goes with them. Even the company values aren’t really the company’s values. Most companies do massive amounts of work creating and wordsmithing a set of company values, yet company values are essentially impotent without the alignment of your employees’ personal values with those of your organisation. Company values are the equivalent of goals, whereas people’s perennial values are the means by which and through which your organisation’s values come to life and are expressed in your business.
Research has proven that the typical impact a company’s values have on employee commitment and engagement is exactly zero! Whereas, people clarifying their own personal values and aligning them to their work role, on average, positively impacts on commitment and engagement by up to 20 percent.
When organisations begin to understand that their people own the company culture the leaders and employees begin to think differently about how they approach and engage with the culture. Leaders and functions such as HR become less commanding and controlling and more curious, respectful and inviting of people’s contributions to the culture. Leaders, if they really awaken to where the power of performance lies in an organisation, become very humble and appreciative of the culture. When employees realise they own the culture they instantly become more accountable and responsible for that culture and cease blaming HR or leadership for the negative state that the culture may have fallen into. Furthermore, they congratulate and thank each other for the state of a positive culture.
RECOMMENDED SOLUTION:
Go out of your way within the organisation to ask (and if necessary, explain) who really owns the culture. You will usually find the employees already know who really owns the culture but often senior management and human resources might need a gentle reminder or lesson to awaken to what is really going on with the culture. A sense of ownership is vital if you wish for the culture to optimise itself. If the people do not know or feel that they own the culture there is a good chance you have inadvertently created a cult and not a culture.
MISTAKE 6 – TOLERATING LEADERS AND MANAGERS CYNICISM ABOUT THE IMPORTANCE OF CULTURE
I once had the privilege of attending a Berkshire Hathaway annual general meeting conference. Warren Buffett made the comment that any business leader who doesn’t understand and respect the role and power of organisational culture probably shouldn’t be a leader and definitely shouldn’t be in business.
I can’t say it more succinctly or powerfully. All I can add is that organisations that tolerate unreasonable and uncalled for cynicism towards culture or the need to optimise it are a liability to your organisation. I’m not referring to leaders or managers playing devil’s advocate and challenging the need or the thinking of your approach to culture. Healthy scepticism is great for culture. I am referring to the almost childlike cynicism I have repeatedly witnessed from managers and leaders who, despite being functional and capable in their roles, haven’t a clue or the awareness to see the role culture plays in delivering performance. Ongoing cynicism from people with this lack of awareness need educating fast!
RECOMMENDED SOLUTION:
Go out of your way within the organisation to ask (and if necessary, explain) who really owns the culture. You will usually find the employees already know who really owns the culture but often senior management and human resources might need a gentle reminder or lesson to awaken to what is really going on with the culture. A sense of ownership is vital if you wish for the culture to optimise itself. If the people do not know or feel that they own the culture there is a good chance you have inadvertently created a cult and not a culture.
MISTAKE 7 – THINK THAT YOU CAN MEASURE CULTURE
Have you ever told someone how much you love them? Did you ever try to quantify how much? I love you to the measurement of twenty- seven kilograms. I love you to the value of one million dollars. I love you for twenty-nine kilometres. Of course, you didn’t. Just like you can’t measure love, you can’t measure culture.
Of course, the fact that you can’t measure culture doesn’t stop thousands of organisations around the world from spending small, and in some cases, large fortunes doing just that. Organisations claim to measure culture using personality profiles, behavioural indicators and climate and engagement surveys amongst many other diagnostic tools. A huge unintended consequence of organisations using external survey providers to ‘measure’ their culture is that they inadvertently signal to their own employees that the culture (and the understanding of how it functions on a daily basis) doesn’t actually belong to the people who work in the culture. It signals that the culture belongs to the survey providers because it appears they are the only ones who can accurately interpret the results and their meaning and are therefore the only people who actually understand the culture. This is a big mistake. The moment you disempower a people’s sense of culture ownership you disempower the culture. People who do not feel a sense of ownership of a culture don’t feel accountable for it.
It is important to recognise that although engagement surveys have their uses, in reality, measuring culture isn’t one of them. What they do measure is your people’s opinions of the culture, which of course can be very useful – but these opinions shouldn’t be confused with being descriptions of the actual culture. People’s opinions of your culture are important and even worth measuring, but they are not the culture itself.
Identifying how your people see, understand and feel about your culture is useful but it is not a measurement of the culture.
RECOMMENDED SOLUTION:
The best way to resolve the mistake of thinking that you can measure your culture is to in fact measure something far more obvious, which is its impact on and contribution to your organisation’s Key Performance Indicators.
In other words, look at your existing KPIs and consider which, if any of them, are influenced positively or negatively by culture using your in-depth understanding of how culture functions, so you can then determine how culture is supporting or sabotaging business performance.
If you work in HR and are having difficulty getting the senior leadership team to take culture seriously, trust me, this approach will do it for you. There is not a senior executive worth their salt who will not be interested in how culture is impacting on the ability of your organisation to achieve their KPIs.
MISTAKE 8 – DELEGATING CULTURE TO HR
The problem with senior leaders delegating the responsibility of culture exclusively to their HR team is that culture doesn’t belong to HR. The moment the business thinks that culture is the responsibility of the HR team, everyone in the organisation metaphorically wipes their hands of any accountability for the state of the culture. The bottom line is this: You can’t delegate cultural responsibility to a small subset of people in the culture. Culture belongs to everyone, is owned by everyone and is the responsibility of everyone in the culture.
The moment people think others (for example HR or external survey providers and consultants) are responsible for their culture, they will abdicate all responsibility to those people and then disassociate themselves from the need to participate further and instead blame (for example) HR for a poor culture. I often hear employees make comments like “Hey HR, what are going to do to fix our awful culture?” or “Okay, so our survey results are poor or worse than last year, what are you [HR] going to do about that?”
When a culture believes its performance solutions lie outside of itself, they are in trouble. They quickly adopt a victim and blame mindset and performance stumbles and falls dramatically.
RECOMMENDED SOLUTION:
The solution here is to equip HR with the knowledge and resources to educate everyone in the organisation about culture. Specifically, people should learn how culture forms, how it functions, how it is led and by whom. Help people understand the symptoms of a poor, average, good and great culture, and facilitate them to identify their pathways to their desired culture. Teach people that their personal values aligning with their job are more influential to the organisation’s performance than people’s alignment to the company values. Show them how values differ from morals and ethics. Teach them how to communicate about culture with one another to equip them to have informed, positive and influential conversations to keep the culture on the right track.
Only when people truly understand culture can they deliberately and positively influence their culture.
MISTAKE 9 – LEADERS DON’T NEED TO LEAD CULTURE
In my experience very, very few leaders see leading culture as an aspect of their role. Fewer still see the vital importance of leading culture as part of their role. I have always found this strange as leaders lead people more than they lead anything else. In fact, I would suggest the only thing leaders lead is people. Everything else is management (management of process, systems, projects etc). At the most senior levels of leadership, the importance of leading culture is actually included in the leadership title.
‘C’ suite leadership which is comprised of positions or titles such as CEO, CFO, CIO, CMO, COO – all have the letter ‘C’ as the first letter of their abbreviated title. As we all know, the letter ‘C’ in the title stands for the word ‘Chief’ – the name historically given to someone with the mandate to lead a culture. So why do all of these titles start with the letter ‘C’ and not ‘O’? Why not “Officer of Executive Chief?” or “Officer of Marketing Chief?” I would like to suggest that ‘Chiefing’ the culture is, and should be, a leader’s first mandate of power. If a leader is not leading culture they are not leading anything!
(The middle letters of these abbreviated business titles, ie the letters E, F and I, in the titles cEo, cFo and cIo respectively, represents the name of the function the leader oversees. In other words, the tribe they chief. The CEO is chief of the executive tribe, the CFO is the Chief of the finance tribe and so on. The letter ‘O’ as the last letter in all of these titles, of course, stands for ‘Officer’, as in the senior rank in the military, responsible for designating and overseeing strategy).
When a toxic culture occurs in an organisation my first question to the leadership team of that organisation is, “How did this happen on your watch? How, with culture as the first mandate of your leadership responsibilities, did this culture occur?”
Nine times out of ten it’s because the leaders didn’t see, realise or take seriously their responsibility of leading the culture. Even those who realise their responsibility for culture confess that they lack the necessary skills to see and lead a culture because no one has ever shown or taught them how.
RECOMMENDED SOLUTION:
Educate your leaders on how to lead a culture. If you don’t know how to go about this, please feel free to contact me as I would be the first to agree that most formal leadership training and development doesn’t cover this topic and the very few that do, only do so in a shallow and cosmetic manner. To master the art of ‘Chiefing’ is a leadership skill set that any genuine leader will increasingly need in their CV.
Warren Buffett has described leading cultures as the leadership skill of the 21st century. Boards will increasingly demand to see what the leaders of the organisations they provide governance to, are doing with the company culture. It helps if the leaders can speak knowledgeably and articulately to describe their leadership influence on the organisation’s culture.
MISTAKE 10 – DEVELOP THE WRONG COMPANY VALUES TO OPTIMISE THEIR CULTURE
Understanding how to choose the best values for your organisation is a large topic, larger than can be covered in this e-book. It’s so big in fact, that I have written three books on this subject. However, if I were to summarise the biggest mistakes organisations make when it comes to developing a set of values for the business, I would list the following:
• Asking employees to suggest values for the business before ensuring employees know what a value is and how they differ from morals and ethics. Many organisations think they have created a set of values when in reality, they have created a set of ethics or vice versa. Values exist to motivate people, ethics exist to control behaviours (choose carefully).
• Placing a larger emphasis on creating a set of business values rather than supporting people to clarify their own personal values and consider how these align with their work, the company and the organisation’s values.
• Neglecting to ensure the company values you select are aligned with the business strategy.
• Not placing an emphasis on turning the values into behavioural descriptions before ensuring people actually have the capability and capacity to adopt such behaviours.
RECOMMENDED SOLUTION:
Avoid making these mistakes.
