(this post is taken from a chapter in my new book - LEVERAGE: The CEO’s Guide to Corporate Culture, which will be available near the end of October. See my previous blog posting for Myths 1-4)
Myths are public dreams, dreams are private myths. ~Joseph Campbell
Myth 5: Developing a high-performance corporate culture is too expensive.
The Deepwater Horizon oil spill and the poor handling of the situation by the leadership of British Petroleum ultimately cost its shareholders upwards of $40 billion and cut the share price in half. The failed merger between Daimler and Chrysler cost a minimum of $38 billion and loss of market share. Culture has an ROI as well as a cost.
Because most companies already have training budgets and spend time and money developing internal business processes, integrating the elements of culture into these and other normal business activities is not really an extra cost. Developing a high performance culture is not a special program or extra activity, but a more effective way of running your business. According to the research of Eric Flamholtz on the 18 Divisions of one company, corporate culture can account for as much as 46% of EBIT.
Myth 6: Culture is more important in retail companies than in engineering or technology centric organizations.
If you define culture as being nice to customers then you may understand where this common myth comes from. Culture not only has a customer dimension (or should), but also many internal dimensions about how we treat each other and the habitual ways people react to business challenges and change requirements. While retail is mainly about product appeal and customer service, engineering and technology firms are greatly impacted by the degree of open information sharing, new ideas and innovation, as well as project disciplines. All of these are highly influenced by the type of corporate culture.
Corporate culture is a leadership force-multiplier!
Myth 7: Large or multi-national companies cannot manage culture effectively
Managing a large or multi-national company is hard, period. The diversity of people and national cultures, combined with the time zone distances and language differences make the role of senior management extremely complex. In that situation, we see culture as a “leadership force-multiplier” in that a high-performance culture creates alignment among people and helps keep things aligned.
Consider Wal-Mart, with 8,970 global locations, revenues of $470 billion and 2.2 million employees, which has a very strong and high performance culture that was built by the founder, Sam Walton, and kept alive by successive leaders. In his book, The Wal-Mart Way, Don Soderquist, former Senior Vice-Chairman states: “The Wal-Mart Way is not about stores, clubs, distribution centers, trucks or computers. These tangible assets are all crucial ingredients in the company’s business plan, but the real story of success is about people; how Wal-Mart treats its employees and its customers.”
Myth 8: Culture is all about having a happy experience at work
This is connected to the myth of “culture is about soft stuff”. There is great logic and considerable evidence that employees who feel respected, trusted and have fulfilling work are more productive and creative. But even respected and trusted employees get the blues!
Happiness is akin to weather, while a culture of respect and trust are deeply ingrained elements of high-performance work cultures. The sad fact is, there are numerous employees with unhappy home lives who come to work to either cheer up or get away from the pain of home. A high-performance culture is about consistent work practices and behaviors that promote the overall business agenda while also treating people with respect and trust.
Tight Lines . . .
Note: Over the next few days I will be posting my remaining Corporate Culture Myths from my new book.
John R Childress