Wednesday, October 28, 2009


Mike's post on October 20 Oh, The Culture, combined with the questions we get at many of our leadership session including the one we recently did at West Point, have caused me to spend a significant amount of time thinking about corporate culture. Mike ended his post with the following two sentences. "In a crisis, you reap what you sow from your culture. Address the culture now so it will serve you well in the crisis." As usual, I completely agree.

This post is about the need to nurture the culture and reinforce the values or risk an erosion of the company's culture that can eventually cause the crisis. Let me share some of my research and thoughts on this topic. We should probably start with a definition of corporate culture.

The easiest way I have found to describe corporate culture is how your employees act and the decisions they make when no one is watching. I found two articles with more in depth definitions. Corporate Culture Definition is quite good in describing the various layers within culture. Another article Definition of Corporate Culture is also good and uses an analogy of culture as the invisible energy field or electricity that runs throughout a company and either enables or restricts its ability to achieve strategic objectives. I would submit that the invisible energy source known as culture needs to be constantly reinforced and nurtured or you run the risk of erosion particularly in the area of values and ethics. Another interesting article is about corporate culture and brand entitled Corporate Culture is Brand, and Brand is Corporate Culture which highlights that how your employees act is much more the brand than any logo or advertisement. Lastly, my research uncovered some articles on measuring corporate culture, although I did not find anything that provided REAL measures. The two articles I liked were Human Resources: Measuring Corporate Culture which differentiates artifacts, espoused values, and basic underlying assumptions. This article refers to corporate culture as the Other Bottom Line. In my experience, the erosion happens within the basic underlying assumptions that can change over time. It is fine if it is an intentional change but lax risk management and not reinforcing the values will erode the culture even if not intentional. The other article Corporate Culture covers small businesses and culture definitions. The reason I included it here with measurement is that there were a few questions that are very helpful to assess what the culture is and could over time help you to measure any changes. The five questions are:
  • What 10 words best describe your company?
  • What is really important around here?
  • Who gets promoted here and why?
  • What behaviors get rewarded here?
  • What type of people are the "in" crowd and the "not in" crowd?

During my 30 years in the consulting industry, I learned that I needed to understand two things at each of my clients in order to be successful- what was their corporate culture and how they compensated their executive team. If I knew these two things I would know what they would and would not buy, how to handle myself in meetings, and what problems I could and could not recover from with them and how to do it. In addition to observing the cultures at each of my clients that enabled or restricted performance, I watched a strong culture at Arthur Andersen that truly was the other bottom line (it may have even been the cause of the true bottom line) erode over time and cause the crisis that destroyed the firm. Hindsight has allowed me to see now the signs that were there before the crisis. At Bearingpoint I saw a culture that destroyed value. I know first hand what can and does happen if you do not nurture the right corporate culture. BTW, does anyone know of any good measurement tools for corporate culture?

This is NOT soft stuff. Companies need strong, healthy cultures and CEO's need to focus on nurturing it or the culture will erode and so will profitability and corporate sustainability.

Until Next Time,


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