Executive Tools
- Executive Summary
- Self Assessment Checklist
Expert Practices Articles
- Corporate Culture: An Overview
- The CEO and Culture: Calling the Shots
- Toxic Cultures
- Transforming the Culture
- Culture: The Employee's View
Tools & Analysis
- Corporate Culture: The Distorted View from the Top
- A Step-by-Step Approach to Changing Culture
- Market-Driven Culture Change
- 10 Signs Your Culture is Out of Alignment
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Corporate Culture: An Overview
According to fellow Vistage expert Rick Seaman, a company's culture
consists of the shared values and codes of conduct that bind everyone
together. It defines how people act toward each other and toward
their customers.
Culture includes these components:
- Processes used to conduct business
- How responsibilities are allocated
- How complaints are handled
- What's condoned, what's punished
For the TEC speakers, culture is rooted in values -- those moral
standards shared by a company's staff that endure over time.
"Values drive culture," Hagberg says. "Depending
on the culture, there can be a lot of agreement or disagreement
about cultural values. The good news is that disagreement can make
the task of changing the culture easier to achieve. Conversely,
and contrary to expectations, when everyone shares the same values,
it can take tremendous effort to change that culture."
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The CEO and Culture: Calling the Shots
According to Hagberg, "CEOs often have a very accurate perception
of what's happening outside the company (the marketplace, competitors,
customer issues, etc.), but a far less accurate idea of the corporation's
internal landscape. They make decisions knowing why they made them,
and assume that others will understand, when in fact others don't
understand. When it comes to reading the culture and its climate,
how employees really feel about things, the CEO and his or her senior
staff often appear to be clueless."
Another "disconnect" occurs in the areas of excellence
and quality.
"Senior executives have a much stronger belief that excellence
and quality are highly valued, and are less willing to acknowledge
when the organization tends toward a short-term, crisis mentality,"
says Hagberg.
Employees feeling pressured to generate quick results often wonder
if senior management really does value quality. They see a more
expedient, ‘Just ship it!' mentality at work.
"The words/actions disconnect only breeds cynicism and skepticism
among employees," Seaman adds, "making it much harder
to implement change of any kind. They sometimes seem to be saying,
‘What you're doing is loud, I can't hear what you're saying.'"
The subsequent "culture clash" insures that the CEO and
senior management are forever seeing things differently than others
within the company.
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Toxic Cultures
Too many organizations miss the opportunity to be "authentic,"
adds Seaman, 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 either intuitively or through measured
analysis what tangible and intangible 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.
"A culture resistant to change is one of the major reasons
for failure when it comes to implementing a new strategic initiative,"
Hagberg says. "Entrenched behaviors undermine the initiative
from the beginning, robbing it of vital momentum and ensuring that
implementation will fail."
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Transforming the Culture
"Let's say market conditions, like a storm front, are moving
west at 10 miles an hour. What is the minimum rate of change to
the culture needed to stay consistent with this? The obvious answer
is 10 miles an hour, but CEOs often say, ‘We can only go west
at five mph, any faster would be too traumatic.' The truth is, to
actually get into alignment with the market's requirements, the
culture should change at closer to 15 mph! The culture must be managed.
A culture that is too far out of alignment with market conditions
can produce the biggest trauma of all: failure."
Hagberg advises reviewing examples of past organizational changes
and then asking these questions: How did these changes get started?
Where was the resistance? How did things start moving in a positive
direction? What was the overall impact?
"Understanding how your company handled change in the past
will assist you in the future," he says. Other important elements
include:
- A high level of employee involvement. "Give employees
responsibility for helping to direct change," Hagberg says.
"This diminishes resistance by transferring ownership of
the eventual outcome to the people who are most affected by change."
- Continuous, reliable communications. By communicating the need
for change, you build motivation and buy-in among key stakeholders.
Employees at all levels should be brought into the loop in order
to ask questions, provide input and understand the need for change.
- An implementation plan with targets of intervention, time lines,
milestones, and accountabilities. What are your priorities? Where
should you focus your efforts? What resources will be needed?
Says Hagberg: "These basic management steps must be followed
if a change as complex as modifying a culture has any chance of
succeeding."
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Culture: The Employee's View
Many CEOs fail to realize how sensitive employees are to the trappings
of corporate culture, he says.
"With titles, office size, job perks and so on, employees
see a much more class-structured system than senior management does.
This applies to compensation, too. Executives believe they get paid
big bucks because they deserve it, while to employees the link between
performance and compensation is far less clear. As a result, their
levels of dissatisfaction are higher."
Both TEC experts feel strongly that a company's culture can be
greatly enhanced simply by asking employees what they think. This
includes getting their opinions on:
- What motivates them
- Why they stay
- What would they change in the company
- What they wouldn't change
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