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Patrick Pearson

Make or break: Is culture a deciding factor for business?

Bell Pottinger, Carillion, Enron, Lehman Brothers, Odebrecht, Siemens, Turing Pharmaceuticals, Uber, VW. What do these companies all have in common?

Well, it’s true that they are (or were) all renowned in their respective fields, but the reason these companies stick in the mind is not a positive one. It’s human nature that people tend to remember negative things over positive – a scientifically proven theory borne out every day on TripAdvisor and Glassdoor - and what these companies have in common is that they are all associated with corruption and scandal.

A culture of trust

Today’s global business landscape is plagued with news of corporate scandals, many driven by poor governance and an unhealthy corporate culture. That’s why there is a growing focus on culture as a company’s primary pillar of trust. In the words of leadership guru Simon Sinek, “Cultures are groups of people who come together around a common set of values and beliefs. When we share values and beliefs with others, we form trust.

In today’s commercial world it is trust, not money, that is the real currency of business. So, if corporate culture is not keeping the Board awake at night, then perhaps it should be.

The power of culture

Corporate governance codes, business consultants and commentators are beginning to promote the fact that a company with a healthy corporate culture is seen as a safer and more attractive company to invest in, partner with and work for. As a result, companies are realising that culture goes way beyond compliance. It goes beyond risk management too. Sure, a healthy culture can mitigate risk, but to view it only as a preventative measure underestimates the power it wields.

A strong culture that engenders integrity, accountability, transparency and fairness can create real competitive advantage. The list of commercial benefits is far longer than the list of companies whose broken cultures have hit the news headlines and include: attracting and retaining the best talent; motivating employees to excel for the team: maximising access to investment capital; and nurturing enduring customer relationships built on trust. No wonder the words of business guru Peter Drucker are resonating in boardrooms across the world: ‘Culture eats strategy for breakfast’.

Realisation about the role of culture is an important step, but how do companies go on to develop, roll out and embed culture within their organisations?

Developing organisational culture

First, it’s important to understand the basic principles of culture. Culture is the common set of behaviours and underlying mindsets and beliefs that shape how people work and interact day to day (McKinsey, 2018). It emphasises who you are as a business, so your employees need to live and breathe it to represent the company. It forms the basis for a positive and enduring contract between employer and employee that defines ‘what is encouraged, discouraged, accepted, or rejected’ (Harvard Business Review, 2018) within the company.

Secondly, companies need to think about the process of developing, launching and embedding culture. To create an emotional connection with employees, culture can’t just be created from a brainstorm in the boardroom. It must be co-created by the employees, the people who represent the brand. By involving a representative sample of workforce personas, employees will relate to, believe in and take pride in the company’s culture and associated values.

Articulating and embedding culture

Thirdly, the expression of culture must then be crafted. As Ryan Lilly, the economic development speaker, puts it: “Growing a culture requires a good storyteller. Changing a culture requires a persuasive editor.” Culture needs to be woven into a story that threads together the company’s purpose, its vision for the future, its belief system, its strategy and business model and its long term goals (the what, the how, the when, the where…and especially the why). The story needs to have empathy to connect with people, with purpose at the heart. Simon Sinek’s famous quote sums it up perfectly: “People don’t buy what you do, they buy why you do it. And what you do simply proves what you believe.”

Finally, culture should be communicated internally. By launching and sharing the company’s culture, employees have a common creed that they can identify with, sign up to and bring to life through their daily work.  To truly embed culture, it should be integrated into every employee-related process, including recruitment, performance measurement, career promotions and rewards. To quote Sinek again: “When the things you say and the things you do are in alignment with what you actually believe, a thriving culture emerges.”

Culture as the deciding factor

Many factors influence corporate success or failure but, in today’s commercial world, it is trust that makes the wheels of industry go round. Culture is the foundation of trust. It has the ability to create or destroy value.  If it is to create value, it must be embedded throughout the organisation, such that values on the wall become values in action. Companies that cultivate corporate culture will appreciate its value not just in terms of disaster prevention, but competitive advantage. Companies that ignore culture will court scandal and risk having their reputations dragged through the mud – for some, the consequences may be terminal.  

For more information on employee engagement, contact Patrick Pearson, Director of Communications Planning.