Corporate Culture Must be Cultivated & Nurtured

A garden needs to tended, otherwise it becomes overgrown, infested with weeds, and even breeding vermin.  What was once an enhancement becomes an eyesore.  Likewise, company culture is an intangible asset that needs to be maintained.  If it is not, it becomes a liability, and that has consequences on more than just revenue. 

Company culture, properly implemented and maintained, leads to higher job satisfaction, greater productivity, and is a nurturing environment for innovation and progress.  It inspires the staff and management to be better, and inculcates a culture of excellence.  A positive company culture is part of the branding, and may be somewhat quantified as goodwill on the balance sheet. 

A toxic company culture develops in time, when management either shows a bad example, or there is neglect in weeding out bad habits that creep in.  For example, cliques develop, favouritism creeps in, and merit is cast aside.  In such a scenario, the company starts to lose talent.  Of greater concern would be instances of sexual harassment, gender and other forms of discrimination, and insular attitudes.  This means losing market competitiveness, and opening the company to negative goodwill and legal action, costing current and future revenue. 

It is part of management to ask ourselves what are the elements of company culture that would open the company up to risk, the risk of legal action, the risk of lawsuits, the risk of loss of talent, the risk of death and injury, and any form of risk that would harm the reputation of the company, and compromise the safety of staff.  We have to recognise that we live in an age of activist consumerism.  Inaction leading to even minor incidents, or allegations, may have outsize consequences for the company.  This requires a proactive, and not reactive, approach.  If we are reactive, the damage has already been done, and it is too late.  This is what is known as cultural vigilance. 

One of the ways to do this is to have a culture of open communication, especially between layers of management, and between management and staff.  This should also be extended to other stakeholders, as well as other types of internal customers such as contractors and vendors.  This is why we have these exercises such as reviews, 360^o feedback, whistleblower polices, and more.  That being said, we must first identify these risks before they develop into a crisis, and address them.  Having these tools without identifying these risks is like having a having cameras in your homes security system, but pointing them in the wrong direction. 

The first is the risk of neglect  of human resources.  This is when there is an inadequate investment in the people we have.  Investment in our employees means ensuring the feel part of the company’s success, and gain from it.  For them to be stakeholders, they must feel that they gain from the success of the company.  This goes beyond compensation, and also includes promotion, career development, personal development, and other forms of intangible benefits. 

When employees feel they have been short-changed, they become disenfranchised.  They are not invested in the success and growth of the business.  This means they are less inclined to innovate, to participate and believe in the mission of the company.  They become cynical, displaying degrees of passive aggressive behaviour, and quality and engagement drops precipitously.  People are ultimately motivated by what is in it for them, and that is an ongoing conversation management needs to constantly have with the rest of the team.  When we want our employees to care about the company, we must care about them, and treat them as a precious resource.  It is cheaper to develop people we already have than to constantly train new ones. 

The second risk is the lack of accountability that creeps in.  From board level, values must be cascaded down, and everyone is held responsible for their own behaviour.  This applies to any form of misconduct, as well as ethical behaviour.  There should be no form of favouritism in hiring, for example, because that undermines morale and destroys standards.  There should be no instances of leniency on account of seniority or connections.  There should be no free pass for any form of bullying or discrimination.  People, regardless of their position, must always be held accountable for their behaviour. 

There are two parts to this.  While whistleblower programmes should be there to protect them, and disciplinary action made known, the employees cannot be cowed by fear.  It stifles engagement, and adds to the stress.  Proscribed behaviours should be explicit, penalties clear, and there should be a proper process of fact find and appeal.  At the same time, Human Resource and Legal Departments should have a relationship with the employees in the form of regular engagements, training, and bonding.  This humanises the concept, and gives room for consultation in any doubt. 

The third risk is the lack of diversity and inclusiveness.  This has many levels of dangers.  For one, we want to avoid the groupthink that develops when everybody shares a similar perspective on many areas.  This creates a disconnect between the company and segments of the market.  Insidiously, there is this sense of the other, which breeds prejudice, bias, and discrimination.  It creates instances of isolation, micro-aggression, and even bullying.  This opens the company up to negative goodwill and legal action. 

This diversity begins at board level.  There must be an effort to ensure that diverse demographics are represented at the decision-making level, from management to product design to marketing.  This helps us to engage a wider segment of the market.  It also increases the talent pool from which we hire.  The last thing we want is to lose talent because the environment was hostile to a different culture, gender, nationality, or religion. 

Finally, there is the risk of disconnect between the sated values of the company and the example of leadership.  Ethical lapses by top management include sexual misconduct, insider trading, fraud, bribery, and other forms of commercial crimes.  The first is brought about by a sense that the rules do not apply, and the rest is due to an environment that rewards profits over values.  They do not arise in a vacuum.  Incidences like this affect morale.  They also affect the bottomline long after the offender is ousted. 

Ethical standards and values must always be explicit, and constantly reinforced, from the highest level down.  At the same time, we need to address the pressure to perform.  This means exercising some form of patience at a strategic level.  Companies are guilty of unrealistic deadlines, overly-optimistic projections, and outright fabrication of forecasts to justify management decisions.  There is too much emphasis on giving value back to shareholders at the expense of other stakeholders such as employees.  Remuneration packages are performance based, skewing towards financial performance.  This encourages risky behaviour, and short-term profits over long-term gain.  All of this undermines the company culture. 

To address these risks, there are steps that have to be taken.  The first, and most obvious, is to secure the explicit and legally enforceable commitment of all employees, from the board level down.  The board must be seen to embrace and advance these values.  These values have to be named and expounded upon.  It should be part of Compliance. 

Corporate culture is not something that should be allowed to develop in time.  It must be planned, cultivated, and nurtured.  This begins with documentation that defines it, and programmes to cultivate it.  Company culture is something too important to be left to any one department of the company.  It is a multi-departmental effort involving groups as diverse as Human Resource, Legal, Compliance and Corporate Communications.  It should be headed by someone who reports directly to the board.  External stakeholders must also be engaged as part of the process, from staff unions, to the vendors, because they influence and are influenced by corporate culture. 

There should be a reward and proscription programme, with clearly defined standards of ethical behaviour, and explicit consequences for misconduct all the way to termination and legal action.  There has to be a known carrot and stick approach to this.  This should be part of the education campaign to nurture company culture.  None of this is left to chance. 

Company culture should be the foundation of the company’s market position, strategic development, and planning process.  It cannot be distinct from the core processes of the business, but its defining trait.  This means it is evaluated as part of KPI, and is measureable in terms of outcome.  Company culture done right insures the company against negative goodwill and scandal, develops talent and promotes growth.  Ultimately, our customers want to buy into our story.  It is our responsibility to give them one they can subscribe to.