Amongst the many tumultuous events happening around the world, the year 1943 saw a small, yet remarkable event in the corporate world. Robert Wood Johnson, Chairman of Johnson and Johnson from 1932 to 1963 and a member of the company’s founding family, crafted the company’s credo in 1943. Similar to a company's mission statement, beliefs, principles, or purpose, a credo was unusual at the time. Out of curiosity, if you check the phrase ‘mission statement’ on Google’s Ngram Viewer, it begins showing up in books around the 1940's but only starts to take off in the 1980's.
Pervasive among large organizations today, in a study of nearly 700 large companies, it was found that more than 80% published an official set of corporate values on their website. The values and behaviors that contribute to the unique social and psychological environment of an organization are what is termed as its ‘culture’.
Organizational culture has developed into a blanket term that includes, not only an organization's vision and values but also characterizes the patterns of collective behaviors and assumptions that are imbibed by new members as a way of perceiving, thinking and feeling.
In simple terms, it is the way of thinking and doing of things, which is shared to a greater or lesser degree by all members, and which new members must learn, and at least partially accept, in order to be accepted into service.
If culture is seen as something that characterizes an organization, why do critics then dismiss it as cheap talk with no impact on employees’ day-to-day behavior? Corporate scandals support the minimifidian view. Despite ‘integrity’ being listed as one of the core values, the transgressions of Deutsche Bank, Barclays and even Volkswagen created quite a stir in public news. This makes one wonder about corporate values, or corporate culture as a whole. On the other end of the spectrum, however, are the ‘culture champions’ who have, quite enthusiastically, voiced their opinions about the importance of culture. Vern Dosch, president and CEO of National Information Solutions Cooperative (NISC), says in his book, Wired Differently, “I used to believe that culture was ‘soft,’ and had little bearing on our bottom line. What I believe today is that our culture has everything to do with our bottom line, now and into the future.”
How then can we begin to explain the gap between these polarizing views? The work of Bernard L. Rosauer offers some insight into this dilemma. Rosauer defines organizational culture as an emergence – an extremely complex incalculable state that results from the combination of a few ingredients. In Three Bell Curves: Business Culture Decoded, Rosauer outlines three variables that collectively mould business culture:
2. The work
3. The customer
He goes on to state that, “when the performance of these three ingredients are mixed a culture emerges. And while culture itself can't be measured or managed, the ingredients can”.
This ‘emergence’ of culture adds another dimension to the pre-existing definitions in the academic literature, including the stories workers tell to account for events, organizational customs, and values.
A more inclusive definition of culture would therefore be one that also talks about the primary function of corporate culture, which is to guide the actions and decisions of employees throughout the organization. Higher management, responsible for guiding and aligning employee actions to the company’s vision, therefore becomes intertwined with a company’s culture. David Cummings, Co-Founder, Pardot, maintains that, “corporate culture is the only sustainable competitive advantage that is completely within the control of the entrepreneur.”
By harmonizing behavior with official culture, a company can effectively gain a competitive edge that allows it to outperform its competitors.
Of course, having a vision or a well-defined notion of culture does not actually mean that people within the organization will follow it. Edgar Schien, responsible for coining the term ‘corporate culture’, in an interview with Rodger Dean Duncan stated, “managers today understand the importance of culture as a factor in whether a company performs well or not. But many of them mistakenly believe they can arbitrarily decide whether or not you will have a good culture. They still don’t understand that culture is a product of years of learning and experience, not something you “implement.”
If it cannot be implemented, a culture is then built. The most important thing to consider about organizational culture is that it grows, whether or not management does anything. Therefore, it is important for management to focus on cultivating a great culture rather than to have an unintentional culture develop. The good news about building a culture is that it is shaped by its leaders. That is also the bad news. By modelling the desired behavior and letting others see the desired values in action, leaders can leverage the culture within an organization to accelerate its success.
Dr. Jennifer Chatman, Co-Director of the Berkeley Culture Initiative, the Associate Dean for Learning Strategies at the Haas School of Business, and Editor for the journal Research in Organizational Behavior further explains how culture becomes a leadership tool. Chatman says that “leadership teams tend to misunderstand the role of culture. Culture is not created through “perks” like staff lounges or pizza Fridays. It’s a system of shared values the organization has determined to be critical for success.” As an instrument, a company’s culture can be used to facilitate its goals. For leaders looking to influence culture, the following guidelines will be helpful:
1. Devise a clear vision
A robust business model, clear goals, and plans of action towards those goals must be clearly defined. Once the objectives are clear, this vision provides the meaning and course for the culture change.
2. ‘Walk the talk’
Announcements of ‘new values’ must be accompanied by a change in behaviors of people at the top. If a company begins to make proclamations about desired behaviors but people do not see those behaviors being modelled by the leaders, there is an absence of integrity.
3. Modify the organization to support organizational change
Identify the current policies and systems that need to be changed to create the desired culture. This may include new rewards structures, recruitment, or retention programs to better align with the new values.
4. Account for change
Leaders need to proactively identify future performance issues and then specify new behaviors to help fix the problem. This builds the capacity for growth and change. By gearing for change, companies can adapt to shifting circumstances.
5. Evaluation processes for measuring change
Processes or measurable parameters must be built into the framework designed for change. Regular checks should be in place to assess whether or not progress is being made as planned, along with what steps can be taken to facilitate it.
Prior to any initiative for change, an assessment is needed to identify areas that need change. Rather than imposing completely new values and standards of behavior, one can start with understanding what has worked best in the past and then tweaking the existing culture towards it. To further understand how leaders can effectively realign a company’s culture, one can look at the example of Louis Gerstner. As the first IBM CEO who was hired from outside the company, Gerstner describes his arrival in April 1993 in his book ‘Who Says Elephants Can't Dance’. He describes an active plan in place to dis-aggregate the company. The company's management was developing a plan that would allow its various divisions to rebrand and manage themselves. It had been agreed that a reasonable resolution was to split IBM into autonomous business units. Gerstner, however, quickly figured out what the culture was that had led to IBM’s success. He noticed that the company was drifting away from its own culture of providing integrated solutions for customers. His choice to keep the company together was a prime decision of his tenure. He succeeded in restoring the culture by strengthening the best elements of what was already there, and not by trading it. Under Gerstner, IBM transformed and within six years, they became the market leader in their products and services.
Does this mean that new leadership of a company can constantly mould the prevalent culture to accommodate its changing vision? Well, the converse is usually true. In general, the culture is stronger than the new leader. While culture can act as a tool for the leadership, it can also constrain new leaders who do not fit into the existing culture. As a consumer-tech company, Apple had a technically based culture. When Steve Jobs was fired, the company’s culture could never fully embrace the new marketing-based CEOs. When Jobs came back, a shared equivalence between the leadership style and organizational culture turned the company’s fortunes, and the markets around.
This leads us to question what aspects of an organization’s culture can leaders truly control? If leaders are dependent on culture, how can they influence it? Richard Branson, Founder, Virgin Group gives a clue “There’s no magic formula for great company culture. The key is just to treat your staff how you would like to be treated.” It is no secret that effective leadership leads to a distinguished organizational culture. By emphasizing core values while simultaneously holding people responsible, leaders can influence the employees, based on their leadership style and strategic command. With clear cut vision and a deliberate intent to bridge any arising gap between the vision and ground realities, the leaders of an organization can create a culture where employees flourish.
It is therefore no coincidence that UNSSC has partnered with McKinsey & Company to offer a UN Leadership Culture Assessment to support the UN to better deliver results. Looking to measure the competencies of its Leadership Framework (UNSLF), the UN Leadership Culture Assessment Tool will be designed to provide an important platform through which to drive behavioral change and assess leadership culture across the UN system.
It is more evident than ever our changing world today needs an effective leadership that can meet the needs of an evolving organizational culture. Efficient leadership shapes the employee involvement, employee commitment, and wellbeing, all which are critical to a thriving workplace culture. When created intentionally, an organization’s culture will support employees who are suited to advancing its objectives. If carefully nurtured by the leadership, a company’s culture will enable employees to thrive by syncing their values to those of the workplace. On the flip side, a company's culture can also be created unintentionally. The very fact that there has been no cognizant effort to fabricate a culture may lead to an organization where efforts are not synchronized, and employees feel unfulfilled. When employees are ambiguous about what the expectations of their leaders are, they have no distinct parameters for assessing success and failure. It is very likely then, that such employees work just for a pay-check rather than work for the joy and meaning that comes from inspired association, visible results, and positive feedback.
All in all, it can be fairly concluded that leaders are instrumental in setting an atmosphere for workplace culture, but they too work within a larger framework and are influenced by existing culture in turn. By building and sustaining a healthy corporate culture, leaders of an organization can set themselves apart by creating distinctive and effective cultures that succeed, not only for their employees, but for the organization as a whole.