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!

About johnrchildress

John Childress is currently Visiting Professor in Strategy and Culture at IE Business School in Madrid and a pioneer in the field of strategy execution, culture change, executive leadership and organization effectiveness, author of several books and numerous articles on leadership, an effective public speaker and workshop facilitator for Boards and senior executive teams. In 1978 John co-founded The Senn-Delaney Leadership Consulting Group, the first international consulting firm to focus exclusively on culture change, leadership development and senior team alignment. Between 1978 and 2000 he served as its President and CEO and guided the international expansion of the company. His work with senior leadership teams has included companies in crisis (GPU Nuclear – owner of the Three Mile Island Nuclear Plants following the accident), deregulated industries (natural gas pipelines, telecommunications and the breakup of The Bell Telephone Companies), mergers and acquisitions and classic business turnaround scenarios with global organizations from the Fortune 500 and FTSE 250 ranks. He has designed and conducted consulting engagements in the US, UK, Europe, Middle East, Africa, China and Asia. Currently John is an independent advisor to CEO’s, Boards, management teams and organisations on strategy execution, corporate culture, leadership team effectiveness, business performance and executive development. John was born in the Cascade Mountains of Oregon and eventually moved to Carmel Highlands, California during most of his business career. John is a Phi Beta Kappa scholar with a BA degree (Magna cum Laude) from the University of California, a Masters Degree from Harvard University and was a PhD candidate at the University of Hawaii before deciding on a career as a business entrepreneur in the mid-70s. In 1968-69 he attended the American University of Beirut and it was there that his interest in cultures, leadership and group dynamics began to take shape. John Childress resides in London and the south of France with his family and is an avid flyfisherman, with recent trips to Alaska, the Amazon River, Tierra del Fuego, and Kamchatka in the far east of Russia. He is a trustee for Young Virtuosi, a foundation to support talented young musicians. You can reach John at john@johnrchildress.com or john.childress@theprincipiagroup.com
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