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What Destroys a Company Culture

March 3, 2020

When our firm is retained by one of our clients to find a key leader, one of the key criteria we assess in determining the right fit is the company’s culture and a candidate’s proven ability to operate effectively in that culture.  In the thousands of searches Allen Austin has conducted, we have seen many different corporate cultures…some extremely efficient and positive…some not.  In addition to products or services that can be differentiated in the marketplace, a critical success factor for any organization is the culture its employees work in.

A company’s culture thrives when there is stable leadership and when senior management and employees share common values and patterns of behavior.   When leadership is fragmented or inconsistent, when departments degenerate into factions and gaps emerge between a company’s stated purpose and actual mode of operation, ineffective and toxic cultures are born.

In my opinion, corporate cultures are in pretty bad shape across the globe.  In many corporations, morale is poor, communications between different levels is almost non-existent and employees are indignant at what they perceive to be management’s seesaw shifts in culture – aimed at what they see as an all-or-nothing push toward short-term profits.  So many businesses have had to experience the power of the Stock Market mentality, focusing all its efforts on making the quarterly numbers.  Even small businesses fall into this trap, especially if they are under the control of private equity or other investor arrangements.

Too many organizations miss the opportunity to be “authentic” and this is reflected both in the people who work in the companies and the type of employee applicants they attract.  The CEO should know what aspects of the company attract the right employees. Why would someone want to work for you? What wouldn’t they change about their job? How is this consistent with your stated goals and mission?  If the answers to these questions aren’t clear, it could be a warning signal that something’s wrong.

Too much energy in too many companies is expended trying to manage a dis-satisfied workforce.  This dis-satisfaction is translated into departmental turf wars and an unwillingness to share information – an ‘us vs. them’ mentality that results in lower standards and diminished productivity.  CEOs fail to see that employees’ actions are often prompted by fear — fear of losing status, fear of losing control, fear of losing their jobs. This fear is usually generated by a lack of information.  Of course, every company’s unofficial source of information is known as “the grapevine.” Here is where rumors abound and misinformation flourishes – all to the detriment of a well-functioning organization. Some business leaders ignore or deny the existence of the grapevine; others try, by executive fiat or sheer force of will, to crush it entirely.

Of course, there’s a better way to go about this.  In a healthy culture, senior management can actually learn a lot about what’s going on by ‘listening in’ to the grapevine – inviting people to come forward and talk about what’s going on, without fear of censure or retribution. It’s a way of identifying significant issues before they get out of hand and cause major employee discontent.  If anything, consistent face-to-face communication between levels in the company diminishes the impact (and credibility) of the grapevine.

Change comes hard to a company’s culture. Certain standards can become very deeply rooted in the everyday life of the corporation and when change is necessary, the CEO can find a hard struggle ahead. Employees fight back in covert or openly devious ways, thus slowing the move toward progress.  A culture resistant to change is one of the major reasons for failure when it comes to implementing a new strategic initiative, for example.  Behaviors that have been around forever undermine the initiative from the beginning…vital momentum is lost resulting in a change initiative that will fail.  How can the CEO and his or her senior management combat this common problem?  Consider focusing on the following initiatives:

  • A clear vision.There has to be a clear vision that everyone grasps and buys into. From there, various departments within the company can find ways to align themselves to the vision and work to support it. This vision is the common ground everyone shares.
  • Actions supporting values.If a company’s stated goal is an uncompromising commitment to quality for example, management can’t be seen “cutting corners” or conducting other short-term budget maneuverings that weaken the overall goal. Employees can see it, customers will eventually see it, and the tension between the ideal and the real will cause something to snap.
  • Full and updated communications.It cannot be understated the importance of forthright and timely communications. These efforts reinforce the company culture and make people feel positive and rewarded for their efforts.