1st June 2018

The seedy world of corporate culture…. when companies go bad!

Blog post

The inquest has drawn its first conclusions, the reports are in and the newspaper headlines are full to overflowing. Bad leadership practise, resulting in toxic culture, has brought about another failing, scrap that, failed organisation. Who am I referencing? Carillion of course, but you’d be justified in replacing that organisation with a whole host of other organisations in the past three months. Cambridge Analytica closed its seedy doors recently for similar reasons. The RFU, whilst not having failed (yet) is embroiled in a nasty media storm around its culture of sexism and UK Sport has so called “whistleblowers” currently in fear of retribution for shedding light on a not-so squeaky clean culture. Let’s not forget the light that has recently been shone on the big four accounting firms and their “complicit” role in “signing off Carillion’s “increasingly fantastical figures””, and their failure to identify Carillion’s “terminal failings”. Perhaps it was more a case of, “too readily ignoring them” as the inquiry report has proposed. Either way, the seedy world of corporate culture is in the spotlight and boardroom behaviours that are far from picture-perfect are being revealed.

 

Carillion’s public and dirty demise was as much about culture as it was about bad leadership. Culture gets defined by the behaviours of those at the top of the business and brought to life by those within. If you role model the wrong behaviours, don’t be surprised if you see something similar being played out elsewhere in the organisation. Look at the recent Carillion report findings again and you see evidence of a culture centred around excessive performance at all costs. “The perception of Carillion as a healthy and successful company was in no small part due to its directors’ determination to increase the dividend paid each year, come what may”, the report found. “Honouring pension obligations over decades to come was of little interest to a myopic board who thought of little beyond their next market statement”, it shared also. “Carillion relied on its suppliers to provide materials, services and support across its contracts, but treated them with contempt” and “The board was either negligently ignorant of the rotten culture at Carillion or complicit in it.” It’s not pretty reading. Neither is one of the closing remarks: “Carillion could happen again, and soon”. There are plenty more companies waiting to fall off of that metaphorical cliff and find their rotten corporate cultures exposed for all and sundry.

 

Culture is a well debated and well written about subject. Many a book sits among the vast shelves of Amazon’s warehouses professing how to build a winning culture. It’s the secret sauce that can set apart one company from another; retaining staff, attracting talent and pushing an organisation from one lofty milestone to another. In the same breath, it can be the very thing that brings a company down. Greed and toxicity can tear an organisation apart, sending high performers fleeing to the hills, low performers out on their sick beds and the media vying for blood when it all publicly falls apart. Just look at UK Sport and its “win at all costs” mentality that is now under scrutiny from an independent report.

 

Look within the organisations that have so publicly aired their dirty laundry of late and you see the same rotten core of a culture at play time and time again. For instance, a culture built around excessive drive for performance; a culture with reckless regard for the role an organisation plays for those it employs or trades with; or a culture where a handful of people are out for themselves, with little interest in the well-being of those under their command or influence.

 

A culture can be many things to many people; a drive for results is no bad thing, but it’s to what degree that matters most. When it goes to the extremes, there is rarely an easy way to bring it back. If you look at all the great corporate cultures of the last decade, they all speak to successful organisations.  For example, Tony Hsieh and the work he has done in building Zappos,  the well profiled culture of South West Airlines or that of the Silicon valley big wigs of Google, Netflix and Spotify, to call out just a few. None of them speak to the greed of the examples hogging the headlines of late. Culture is built, not bought. It requires nurturing and is shaped by the people at the top and by the people within. It requires attention and nourishment to ensure it remains a healthy part of an organisation’s growth. Fail to nourish it and like a tree it can wilt and die.  Take it to the extremes and it can be the very thing that brings the company crashing to its knees.

 

The job of a leader in all of this is to pay attention to culture. Create a culture of accountability for the culture itself. An awareness to, and appreciation of, developing and maintaining a healthy organisational culture. Whilst building a winning culture may still be a bit of a dark art to many, understanding the culture at play within an organisation is not. Emerging technologies are making it easier and quicker to understand the perception of a culture in an organisation as seen through the eyes of its people. Whilst ingrained culture may take years to develop and change, organisational climate can be altered immediately. In understanding what the perceived climate is in an organisation, leaders can develop strategies for changing the behaviours and actions that bring about longer term culture change. As with forming a culture, changing a culture starts at the top. If leaders aren’t willing to pay attention or act with intention towards fostering a healthy climate, why should anyone else bother? Leaders act as the ultimate role model for those within the organisation.

 

As Simon Sinek has discussed widely in his field of work, “when we feel stress our bodies release cortisol. Cortisol impairs rational thinking & decision making. In a toxic culture we are biologically more likely to make a bad decision or do something that is ethically questionable.” Organisational cultures that centre around the absolute extremes foster unhealthy behaviours at all levels of an organisation.

 

In my role, I get the good fortune of working with numerous companies all over the world. Most of that work centres around culture and leadership with both linked to identifying areas for performance improvement. I’ve seen my share of interesting results when mapping cultures but one thing that shines through in every instance, from SME to global conglomerate is this. When a leader actively invests in understanding their culture, in making a choice of what they want their culture to be, how they want to be perceived, the results are always positive. Not just positive from an organisations cultural perspective either. The performance of the business reflects a more positive outlook, the commitment and engagement of the people within the business is higher and leadership style is more balanced. One recent client broke into the Times Top 100 Best Places to Work this year and no surprises, they have a strong purposeful culture and are led by a CEO that is curious and actively invested in creating a culture that counts.

 

With the changing landscape the digital revolution has provided leaders with, it’s no longer a complex process for understanding and mapping culture. Leaders need to be curious to find out more and put emerging technologies to use. The rise of robo-consultants and pulse-like surveys provide almost endless options for leaders to quickly, non-disruptively and cost effectively measure the perceived culture in their organisation and do something about it. The question is more like, “why wouldn’t you be doing this?” than “why would you?”. The recent headline news examples remind us all that skeletons in cupboards are all too easily laid bare when we choose to have an organisation act in a way that is less than favourable.


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