Impact of Company Policies on Culture and Performance

 

criticism

Tell people they’re inadequate long enough and they’ll believe it. Undermine their confidence with constant correction, tweaking, and complaints and they’ll pull back. Fill people with confidence and they’ll act with boldness.

I’ve been working for the past couple of weeks with the senior management team of a $1 billion industrial company on alignment and performance improvement.  It is always insightful to get out from behind a desk and into the real world of business and day-to-day challenges.  And here in this situation the challenges of a slow economy, aggressive competition and mature market saturation make performance improvement especially difficult.

But the challenges of the marketplace sometimes pale alongside the challenges inside a company. It is a powerful revelation to see just how great an impact internal policies and processes have on the behaviour of leadership and management, which in turn forms much of the current corporate culture.

While most culture “gurus” and academics focus on vision, values and leadership behaviour as the key elements of corporate culture, they routinely miss an even more powerful driver of culture: internal policies and business practices.

Case in point.  Consider a company in a mature market competing with other well established brands for sales of large industrial products. The overall view of both dealers and customers is that this particular company has about the same products as everyone else.  Their quality is about the same.  Their prices are about the same. But doing business with them is a nightmare!

big machineIn a saturated market of similar brands and high cost products, the customer experience is one of the key competitive differentiators!  So what makes a company fail at the customer experience?

One of the key reasons has to do with the internal company policies and business practices.

Internal Policies Drive Corporate Culture

Internal policies are either an enabler or a barrier to how effectively managers can engineer the customer experience. Let’s suppose a company has internal policies and business practices that can be classified as micro-management. Such as: all expenditures above $1,000 by an executive having to be approved by corporate finance, who are over 8 time zones away! Or all hiring at the local level having to be approved by corporate HR. All raises, compensation and benefits, and performance reviews having to fit into a global corporate-wide bell-shaped curve.  Sound extreme?  It’s not uncommon in large global organisations to have such micro-management policies established to protect the company from local abuse or inadvertently doing things that may put the company at undue risk. At corporate level this is reasonable for risk mitigation.  For the local organisation trying to improve performance, such delays due to checking with corporate and other barriers to local decision-making slow down response time and impact competitive ability.

And it’s not only the slowness of decision-making. Lack of trust in local leadership and constant second guessing tends to eat away at team motivation and feelings of empowerment and accountability. Corporate leaders often wonder why local management teams lack accountability and commitment when they don’t realize their own policies are often one of the reasons.  Second-guess someone often enough and restrict their authority and before long they just wait to be told what they can and cannot do.

Many of the so-called culture consultants would diagnose this a culture of “lack of accountability” and prescribe accountability training workshops. If they looked at root cause analysis the real culprit would be internal policies combined with micro-management from corporate.

A desk is a dangerous place from which to view the world. ~John le Carre

Written and Posted by: John R. Childress

Senior Executive Advisor on Leadership, Culture and Strategy Execution Issues,
Business Author and Advisor to CEOs
Visiting Professor, IE Business School, Madrid

e: john@johnrchildress.com
Twitter @bizjrchildress

Read John’s blog,  Business Books Website

On Amazon: LEVERAGE: The CEO’s Guide to Corporate Culture

Read  The Economist review of LEVERAGE
Also on Amazon:   FASTBREAK: The CEO’s Guide to Strategy Execution

John also writes thriller novels!

Posted in consulting, corporate culture, Human Psychology, John R Childress, leadership, Organization Behavior, strategy execution | Tagged , , , , , , , , , , , , , , | Leave a comment

Team Chemistry

3-titration-experiment-

I didn’t do well in high school chemistry class and even worse in college chemistry.  But I always marvelled at how a chemical reaction required just the right amount of ingredients in order to occur.  Take titration, for example.  Add too few drops of one
solution into another and nothing happens. Add too much and the reaction goes overboard.  But just the right amount and a unique situation occurs.

Lately I have been working with several senior leadership teams in emerging and developing countries in the Asia-Pacific region. Within this global industrial company, the APAC region holds the greatest promise for growth and market development and much leadership time, attention and money is being invested in capitalising on these emerging opportunities.

And in order to deliver on the business opportunities, the company is putting some of its brightest and most capable senior executives into General Manager and Brand Leader roles.  In addition they are recruiting top talent from peer companies.

The products and brands are world-class, the markets are ripe for development, customers value their products and services, and the world-wide agriculture business is rapidly developing. A great scenario for success, especially with talented and experienced senior leadership.

But something seems to be missing! The desired reaction of business performance is not taking place.

And in such a situation, excuses are everywhere. “The economy has yet to rebound. There’s nothing we can do till the economy picks up. Customers are delaying purchases because of the global uncertainties. We can’t get the investment we need because the corporation is clamping down on costs.”  

It’s a funny thing about excuses: the more they increase the more performance decreases.

no-excuse-inspiration (1)

One of the excuses I often hear in such business situations is: we don’t have time for team building, we need all our time and energy focused on making the numbers.

Team Chemistry

Navy Seal BUD/S selection and training is an excellent example of the value of team building. Those who finish the 24 week training course are not only physically and mentally fit, but have an ingrained set of teamwork principles that allows them to work together effectively to deliver results.

If Seal teams were put together based on just physical abilities and operational skills, without having the benefits of team building and team principles, their effectiveness would be dramatically reduced. It’s the principles of trust, team, respect and mission that make these teams so effective.

Several years ago, the NBA and other professional sports organisations got the idea that all they needed to do to produce league winners was to recruit the best players. Thus they went searching for and acquiring, often for huge money contracts, the best players. Team salaries soared. But after several decades, it became evident that there is little correlation between team salary and league performance. Here is a chart from the 2014 NBA season.

NBA stats

Today, NBA teams are beginning to focus on team chemistry as opposed to teams of superstars. Team Chemistry can be defined as not the best players, but the right players with the right skills and the right attitudes who play together as a single unit.

I don’t play my eleven best players, I play my best eleven. ~Vince Lombardi

One of my roles in the business scenario I described earlier is to help the country General Managers to build the capabilities of their leadership teams in order to reduce the focus on excuses and to effectively use the talents of the entire team to deliver performance in spite of a difficult global economy. In as little as two or three days you would be amazed at how a team can shift from feeling a “victim” of the economy to feeling empowered and confident about developing new solutions to grow their businesses. Same people, different behaviours. Working together.

There is no excuse for not taking the time to do team building when facing challenging business conditions, when reorganising the business model, when merging two organisations, when implementing a new business strategy, when new senior members come on board.

Talent is important, but teamwork is imperative for results.

No Excuses!

Written and Posted by: John R. Childress

Senior Executive Advisor on Leadership, Culture and Strategy Execution Issues,
Business Author and Advisor to CEOs
Visiting Professor, IE Business School, Madrid

e: john@johnrchildress.com
Twitter @bizjrchildress

Read John’s blog,  Business Books Website

On Amazon: LEVERAGE: The CEO’s Guide to Corporate Culture

Read  The Economist review of LEVERAGE
Also on Amazon:   FASTBREAK: The CEO’s Guide to Strategy Execution

John also writes thriller novels!

 

 

 

 

 

 

 

 

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Does Water Have More Determination Than Your Leadership Team?

upper_yosemite_falls_2_o

Nothing in this world can take the place of persistence. Talent will not: nothing is more common than unsuccessful men with talent. Genius will not; unrewarded genius is almost a proverb. Education will not: the world is full of educated derelicts. Persistence and determination alone are omnipotent.       ~Calvin Coolidge

The power and force of water is one of the most creative and destructive forces in nature. While it may seem soft and inert when in a glass, a flowing stream or a waterfall can easily carve out deep valleys and erode cliffs. Water has an inherent and unstoppable determination to move to ever lower levels, following whatever path will take it steadily downwards. And water moving downwards is relentless. It just keeps moving and in the face of an obstacle simply seeks a way around or through.

A great example is the Grand Canyon in the southwestern United States which was created by the force of flowing water over thousands of years. Huge cliffs and valleys were formed by the simple force of flowing water.

Toroweap Point

 

How about your leadership team?

Does your leadership team have the stay power and dogged determination of water? Or do they seek the easy way out and then give up when faced with marketplace obstacles or new competitors?  I have watched many business leadership teams get all fired up over a new strategy or an infusion of capital from investors, only to wither and start complaining at the first sign of difficulty.

“We didn’t plan for this severe a market downturn!  Our strategic assessment didn’t take into consideration these economic sanctions. These aren’t the same competitors we built our business plans around.”  

Few leadership teams believe so much in their products, their purpose and each other’s skills that they, like a flowing stream, never give up. Most collapse at the first difficulty.

But teams that believe in each other and their fundamental purpose that, like a stream facing a rock wall, they simply keep searching for a way through. They find the crack that becomes a seam that with the pressure of determination becomes a rift and then a passage. They don’t wait for the market to change, they find a way through the obstacles and barriers. They have determination and commitment and they either find or make a way through the barriers. They never give up.

Never give up; for even rivers someday wash dams away. ~Arthur Golden

Written and Posted by: John R. Childress

Senior Executive Advisor on Leadership, Culture and Strategy Execution Issues,
Business Author and Advisor to CEOs
Visiting Professor, IE Business School, Madrid

e: john@johnrchildress.com
Twitter @bizjrchildress

Read John’s blog,  Business Books Website

On Amazon: LEVERAGE: The CEO’s Guide to Corporate Culture

Read  The Economist review of LEVERAGE
Also on Amazon:   FASTBREAK: The CEO’s Guide to Strategy Execution

John also writes thriller novels!

 

Posted in Human Psychology, John R Childress, leadership, Organization Behavior, Personal Development, Psychology, strategy execution | Tagged , , , , , , , , , , , | Leave a comment

Genes, DNA and Corporate Culture

Watson-Crick

 

I think that the formation of [DNA’s] structure by Watson and Crick may turn out to be the greatest development in the field of molecular genetics in recent years.
— Linus Pauling, Nobel Prize for Genetics

 

On April 25, 1953 Professors James Watson and Francis Crick proposed that DNA is composed of a double helix structure, which effectively solved the question of how DNA and chromosomes replicate and combine to form new individuals. It was a revolutionary proposal in modern science that would have profound ramifications for biology, genetics and modern medicine.

As a young graduate student in biology at Harvard University from 1970-1972, I had the fortune of meeting James Watson on several occasions and attending some of his lectures. He was arrogant, opinionated and self-centered, but his awkward personality did not detract from the fact that he and Francis Crick provided a fundamental platform for future molecular and genetic science.

DNA_helixBasically, DNA is the building block of life and contains within its double helix structure the code that not only differentiates one species from another, but also one individual from another. The exact sequence of the amino acids Adenine, Thymine, Guanine and Cytosine forms the code that determines what we are, and in many cases who we are as well. And a new individual born from two parents contains one strand of DNA (and its genetic code) from each parent, making us unique individuals, and not clones.

If you like, you can think of DNA as the software code which runs the operating system of living things.

Since all DNA is made up of just these four amino acids, differentiation lies in the sequence and where they sit on the chromosomes. This basic building block similarity allows for the modern genetic engineering to take place, which basically is the process of manually adding new DNA to an organism in order to add one or more new traits that are not already found in that organism. For example, plants have been modified for insect protection, herbicide resistance, virus resistance, enhanced nutrition, tolerance to environmental pressures and the production of edible vaccines.

And the fact that human beings and chimpanzee DNA matches to 98.8% identical tells you that even as little as 1.2% difference contains enough genetic code (or about 35 million differences) to account for the many striking differences between the two species.

dna-similarities

Corporate Culture is Similar to DNA

There is no single corporate culture, but instead the culture of most organisations is a collection of subcultures which contain strong formal and informal ground rules which guide how people in that subgroup should behave. So, if you think about it, corporate culture is very much like the DNA strand that carries the genetic code for a particular organism or individual. Certain parts of the DNA molecule code for different genetic expressions, such as hair color, eye color, skin color, certain elements of personality and even the raw material for IQ and EQ.

In the case of a business or organisation, the corporate culture is composed of multiple subcultures. And within the same company, subcultures can be very different, just as on a strand of DNA the genetic code for hair color is different from the genetic code for shape of the ears. Each subculture has their own code of behaviour and acceptance / rejection mechanisms, which determine how people tend to behave.

Trying to describe the overall corporate culture is not nearly as useful, or interesting, as understanding the many subcultures and their behavioural norms.

And when it comes to M&A, the DNA analogy is particularly strong. A new individual is made from one strand of DNA from the mother and a complementary strand from the father. But in many cases one set of genes is stronger from one parent than another, creating a dominance situation. Male pattern baldness and eye color are the result of dominant genes overshadowing weaker, recessive genes and are inherited traits.

When two organisations merge, in many cases they have the same functions (HR, Engineering, Marketing, Finance, etc) but some are stronger than others, depending upon which organisation they come from. While one company may acquire the other and be considered the “dominant company”, reality is that some functions and their resulting best practices from the acquired company may be stronger and better fit for purpose in the merged entity. Ignoring these differences has led many an arrogant acquiring management team to totally discount the capabilities of the acquired firm, thus weakening the potential benefits of the merger.

And changing corporate culture is not as easy as simply conducting a “culture survey”, defining a few new “core values” and orchestrating top-down training. The core of the cultural DNA needs to change, and that means something akin to gene splicing and genetic engineering. Real culture change comes about by getting into the subcultural level and determining the actual internal policies and work practices that drive behaviour.

Next time someone around the Board table says “we need a culture change”, have everyone step back and reflect on just what that really means.

A poorly executed culture change programme does more harm than doing nothing. ~John R Childress

Written and Posted by: John R. Childress

Senior Executive Advisor on Leadership, Culture and Strategy Execution Issues,
Business Author and Advisor to CEOs
Visiting Professor, IE Business School, Madrid

e: john@johnrchildress.com
Twitter @bizjrchildress

Read John’s blog,  Business Books Website

On Amazon: LEVERAGE: The CEO’s Guide to Corporate Culture

Read  The Economist review of LEVERAGE
Also on Amazon:   FASTBREAK: The CEO’s Guide to Strategy Execution

John also writes thriller novels!

Posted in consulting, corporate culture, Human Psychology, leadership, Organization Behavior, strategy execution | Tagged , , , , , , , , , , , , , , , | 1 Comment

Don’t Confuse Corporate Culture with Tradition

HSBC

We are connected to the past, but are not defined by it.

Many companies are proud of their heritage and company traditions.  HSBC is 150 years old this year and planning multiple celebrations focused on its long tradition of supporting economic growth and wealth creation.

ChevronChevron, the global oil company, was founded in 1879 and is proud of its history and traditions:

“Our company has a long, robust history, which began when a group of explorers and merchants established the Pacific Coast Oil Co. on Sept. 10, 1879. Since then, our company’s name has changed more than once, but we’ve always retained our founders’ spirit, grit, innovation and perseverance.” (Chevron website)

In many ways, nearly all companies use the legacy of the founders and their early values to help build pride, define who they are and to differentiate them from their peers. While start-ups have energy, passion and a future vision, established organisations have their history and legacy as well as a future vision.

But one of the many mistakes established and successful companies make is to confuse tradition and heritage with corporate culture. Many companies describe it something like this:

“Our heritage and long history of success are the foundations for our high performance culture today.”

More often than not that is just another example of corporate spin, otherwise known as BS!

Culture has very little to do with history and legacy and more to do with the day to day routine behaviours that management and employees use to solve problems and the current policies and procedures that everyone must adhere to.

Slide001In my book, LEVERAGE: The CEO’s Guide to Corporate Culture, I make the point that while founder values and leadership actions may be strong in the beginning, as a company grows the impact of leadership and history on corporate culture gives way to the peer pressure found in local subcultures  inside the company. And since there is no single corporate culture, but instead most large companies are a collection of strong subcultures, history, heritage, tradition and legacy values may have little to do with how the modern company actually behaves.

Banking is an excellent example.  The rise of strong trading and investment banking subcultures have completely overshadowed the values and legacy of the early founding fathers.

For companies such as HSBC to attempt to reshape their currently dysfunctional corporate culture by focusing on heritage and founding values is a design to fail.  They should use the millions of dollars spent on their 150-year celebration to take an honest look at what really drives their current culture and performance.

Written and Posted by: John R. Childress

Senior Executive Advisor on Leadership, Culture and Strategy Execution Issues,
Business Author and Advisor to CEOs
Visiting Professor, IE Business School, Madrid

e: john@johnrchildress.com
Twitter @bizjrchildress

Read John’s blog,  Business Books Website

On Amazon: LEVERAGE: The CEO’s Guide to Corporate Culture

Read  The Economist review of LEVERAGE
Also on Amazon:   FASTBREAK: The CEO’s Guide to Strategy Execution

John also writes thriller novels!

Posted in corporate culture, Human Psychology, leadership, Organization Behavior, strategy execution | Tagged , , , , , , , , , , , , , , | Leave a comment

Shadow of the Leader: The Remake.

Shadow

 

One of the fundamental tenants of corporate culture is the principle of “shadow of the leader”.  In essence the behaviour of the leader and or leadership team casts a shadow over the entire organisation.  It is mostly understood by consultants of leadership and culture that the behaviour of the leaders is mimicked and magnified as you look down into the organisation.  Poor teamwork at the top tends to breed poor teamwork at all levels.

It’s not that leaders push their behavioural traits onto others so much as lower levels of managers tend to see the behaviour of their bosses as acceptable and what is required to get ahead. For example, the leader that focuses mainly on sales and financial numbers tends to see that same focus at all levels, often ignoring other drivers of business performance.

“Organisations are shadows of their leaders.  That’s the good news and the bad news!

But the principle of leadership shadows is not so simple.  Most consultants study leaders and the practice of leadership without really studying those who report to the leader or are one or two levels down.  For the past several months I have been studying the impact of leader behaviour on middle managers and the principle of shadow of the leader is much more complex, and interesting, than most consultants of corporate culture and leadership would have us believe.

bad boss cartoonFor example, let’s suppose we have a leader at the top of a large organisation that yells, pounds the table, swears at people in public, calls them weak and babies when they don’t meet their monthly or weekly figures, and threatens to fire them all.  This is the bosses normal behaviour when disappointed with business performance.

How do direct reports and next level managers respond? In most cases it is not a simple mirroring relationship.  Perhaps there would be a cascading set of behaviours if the actions of the leader were demonstrably positive, developmental and encouraging.  But I believe all middle and upper managers have an internal “professional moral compass” as to what is good and bad leadership behaviour.

When managers look up at leaders for guidance and direction, they are really looking at two aspects: the position and the person.

The Position: In most cases, middle and upper managers respect the position.  They respect the authority and responsibilities that come with a senior position. “I may not always agree, but she’s the boss so let’s see if we make it work!”  Respect for the position is often the element that keeps a company together and moving forward. Certainly in military situations where lives are at stake, respect for the position is vitally important. Senior officers have more knowledge and experience than junior officers and their position and authority are respected.

The Person:  The other aspect is respect for the person. And here is where the moral compass” and not the organisational compass” comes into play. When upper and middle managers respect the leader as a person, there is a willingness to try new things and a motivation based on that respect. On the other hand, when the leader is not respected as a person, usually due to multiple outbursts of bad behaviour, the motivation to “enthusiastically follow the leader’s suggestions or decisions” is lacking.

Respect for the position, but not for the person.

The resulting manager behaviour  is what I term compliance and blind obedience when what is really needed for business success is creative problems solving and fired up motivation to win.  For those faced with recurring bad behaviour from the boss, the daily motivation often becomes just to survive, not to win. To follow orders rather than innovate and improve. To do the minimum when the maximum is needed. To be “9 to 5″ rather than engaged and alive.

Most middle managers don’t mirror or replicate the behaviours of a bad leader. Many try to overcompensate to protect their own staff.  Others just go through the motions with compliance and survival as their focus.

Next time you see a company with good products and a strong marketplace that is under-performing, look at the real day-to-day behaviour of the leader. Analysts would do well to understand the behaviour of the leader as much as they try to understand the business metrics or market dynamics when evaluating a company for investment purposes.

One of the best performance improvement quotes I have heard is,

“Change the leader or change the leader”!

It is my observation that when a new leader comes into an organisation and creates a dramatic improvement in business performance, its is more a result of better leadership behaviours than a bigger brain or new ideas.

Written and Posted by: John R. Childress

Senior Executive Advisor on Leadership, Culture and Strategy Execution Issues,
Business Author and Advisor to CEOs
Visiting Professor, IE Business School, Madrid

e: john@johnrchildress.com
Twitter @bizjrchildress

Read John’s blog,  Business Books Website

On Amazon: LEVERAGE: The CEO’s Guide to Corporate Culture

Read  The Economist review of LEVERAGE
Also on Amazon:   FASTBREAK: The CEO’s Guide to Strategy Execution

John also writes thriller novels!

 

Posted in consulting, corporate culture, leadership, Organization Behavior, Personal Development, Self-improvement, strategy execution | Tagged , , , , , , , , , , , , , , , | Leave a comment

How Leaders Fail . . . part 1

bates-come-back

If you want to know whether or not you are a leader, turn around and see if anyone is following!

The role of “leader” in a business is never easy and for those in charge of a country, division, plant or other significant business unit, the responsibilities are many and the tools for positive impact are few.

One of my roles these days is to advise business leaders on how to focus on the things that have the most positive impact on people and performance, and I also get the privilege of supporting their development and learning as a leader.  Rather than point out the obvious, I tend to look for those few behaviours that unconsciously sabotage their leadership effectiveness.  And many of these “sabotage” behaviours are totally invisible to them; they don’t realize they are behaving this way and certainly don’t understand the negative impact of such behaviour.

You can’t solve a problem you don’t know exists!

Triangle Communications:

One of the biggest leadership self-sabotage behaviours is what I have termed “triangle communications”, which is a nice way of saying, talking about other people to a third person instead of talking directly to the person.

By way of illustration, let’s say that Al has a problem that involves Bob.  Bob either did or said something that upset Al. Instead of talking directly to Bob about the issue and patching it up, Al talks to Charlie about what Bob said or did. Then somehow Charlie goes and talks to Bob about what Al said, and now everyone is upset.  Communication stops and barriers between people build up. And more often than not the actual event gets more and more distorted and negative with each retelling.

Triangle comms

So, what’s this got to do with leadership?  Lots !!

If Al is in a leadership role, his habit of triangle communications sabotages his leadership effectiveness.  Let’s do a classic Ben Franklin +/- on this behaviour.

triangle ben franklin

Lots of negatives and very few positives as a result of this behaviour. And the sad truth is, many of those in leadership roles have multiple triangle communications daily, thus limiting their leadership effectiveness.

There is only one antidote to triangle communication behaviour. Courage.  The courage to sit down directly with the other person and deal with the issue head on.  And surprise, chances are the problem is more a misconception or misinterpretation than a reality. And once faced and openly talked about, the issue subsides, trust and respect is built and your leadership capabilities strengthened.

Don’t Do Triangles!

Written and Posted by: John R. Childress

Senior Executive Advisor on Leadership, Culture and Strategy Execution Issues,
Business Author and Advisor to CEOs
Visiting Professor, IE Business School, Madrid

e: john@johnrchildress.com
Twitter @bizjrchildress

Read John’s blog,  Business Books Website

On Amazon: LEVERAGE: The CEO’s Guide to Corporate Culture

Read  The Economist review of LEVERAGE
Also on Amazon:   FASTBREAK: The CEO’s Guide to Strategy Execution

John also writes thriller novels!

Posted in consulting, corporate culture, Human Psychology, leadership, Organization Behavior, strategy execution | Tagged , , , , , , , , , , | 1 Comment