I am often asked by senior executives various questions concerning corporate culture. This past week was no exception when I spoke to a group of risk professionals and regulators from the Australian banking and financial services sector. The conference title was Culture and Conduct in Financial Services and held in Sydney and sponsored by Criterion Conferences.
Even though the Australian banking sector is beginning to see cases of excessive risk, greed and even fraud, due to a strong and engaged regulatory sector and a national culture of “doing the right thing”, they have not been plagued with the excessive fraud and greed evident in the US and UK banking sector. So Far! But everyone is concerned, and the risk professionals in the room this week are taking culture and risk conduct very seriously.
As the only non-banker and financial services professional at the conference, my keynote address focused on helping the group gain insight into the deeper aspects of corporate culture and importantly, the key principles that drive and sustain culture, and the most effective levers for reshaping culture.
At the end of my talk there was some time for Q&A and these are they kinds of questions that came up.
Does it really take 5+ years to change culture? Yes, if you do it piecemeal and don’t really understand what drives your culture and how culture “works” inside your organization. With a good understanding of the principles and drivers of culture, plus courageous and determined leadership at the top, real change in “how things are done around here” can take a year or less.
I know this statement goes against the traditional wisdom found in most books about culture and from most of the big consulting firms, but there is plenty of evidence, in some very large companies, that real sustainable culture change can be accomplished quite quickly. I didn’t say easily, but time is not the enemy in culture change, lack of understanding about how culture works is! Read the case study of the dramatic culture shift at the NUMMI auto plant joint venture between GM and Toyota and you will see one of the key principles of culture in action: systems and work practices are the strongest drivers of employee behaviour and culture . The same principle, as well as the importance of leaders “really leading” the new culture is shown in the dramatic turnaround of Continental Airlines between 1994-1995.
Over my 35 years of studying corporate culture and consulting with senior executive teams, I now have a pretty long list of speedy culture change examples.
Is there one corporate culture inside a company? My response to this very important question is: almost never! Unless you are one of those companies which makes culture a strategic business priority (like Zappos.com, Johnson&Johnson and Netflix) and manage it as closely as you manage the P&L, more often than not, your organization is a collection of strong subcultures. In fact, all companies of any size quickly break up into strong subcultures as a result of a key culture principle: culture works on human logic, not business logic.
Because we are a highly social species, employees want to fit in and be accepted as part of the group, team, etc. And in all companies there are teams that work together and depend on each other for recognition and support as well as getting the work done. And each of these subcultures has at least one “highly influential leader” that others trust and respect, and it may not be the formal boss. Employees take their clue on how to behave, what to believe about the company and management, and how things get done from the informal leader, which is further reinforced by peer pressure.
If you really want to understand your corporate culture and how it influences business work and performance, then you need to find the various subcultures and learn about their beliefs and practices. Hopefully they will be aligned with your overall vision, strategy, ethics and values, but don’t be surprised if they are not. After all, most companies spend very little time and effort on cultural indoctrination and culture alignment.
And be aware of culture surveys that give you a company culture picture or scores. There is no such thing as an overall corporate culture.
In my next few blogs I will respond to more of the “typical” questions relating to corporate culture. But for now, take some time to think on these 5 key Principles of Corporate Culture.
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
John also writes thriller novels!