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Corporate culture & performance

“Culture eats strategy for breakfast.” — Paul Andrew

Corporate culture is the most talked about, yet often neglected facet in management circles. A glaring example of this is the mega merger of the German auto manufacturer Daimler-Benz and the American automaker Chrysler Group that took place in 1998 for a $36 billion consideration. This marriage lasted only nine tumultuous years and ultimately failed, and that too, miserably. How could two successful corporate giants make such a huge blunder?

According to Dave Healy , an analyst with Burnham Securities, referring to the then-Daimler-Benz chairman, the merger failed because, “You had two companies from different countries with different languages and different styles come together, yet there were no synergies. It was simply an exercise in empire-building by Juergen Schrempp.”

Corporate culture is the hidden advantage that we need to leverage. In my experience as a consultant, the one thing I have observed repeatedly in some companies, large and small, local and multinational, is the issue of functional silos and ensuing turf battles. By neglecting corporate culture, you create a toxic work environment that harms productivity and pushes good people out of the door – a very high cost to pay in terms of your enterprise’s sustainability.

During his tenure as vice-chairman at Dell, Mort Topfer (now 73) and recognising that such problems exist in companies, he adopted a culture based on integrity. He said: “I’m sometimes too blunt, but it’s most important to be open and straightforward and tell the truth. This helps with bureaucracy and turf battles: as soon as you’re open and listening and willing to dialogue, people are remarkably receptive and changes speed up rapidly.”

Topfer had joined Dell as vice chairman in 1994. During this time, he shared the office of chief executive officer with Michael S. Dell, chairman and CEO, and Kevin B. Rollins, vice chairman. Together, they presided over one of the fastest growth periods in the company’s history.

The question you need to ask yourself is whether a straight-talking approach, such as the one used by Mort, would work in your organisation, particularly when you consider the ambient culture in Pakistan. You will need to consider factors like: the history of your business; its founder’s philosophy, host country culture, the peculiarity of your industry, the nature of your products and services; market situation; customer/client expectations etc. But please don’t get paralysed by analysis in the process!

In his book, Jack – Straight from the Gut, Jack Welch (ex-chairman, GE) describes an occasion when a student asked him a simple question on GE’s culture. The question was how a company of GE’s magnitude, operating in 160 countries, with over 300,000 employees, and having such a diverse range of products and services (plastics, power generation, medical equipment, financial services, jet engines, media etc.) managed to align itself through a common culture? Jack’s reply was at once inspiring and plain. He said that when it came to corporate culture at GE, he focused on only two things that were common to all cultures: voice and dignity. These are universal values. Of course, the way ‘voice’ and ‘dignity’ find expression would vary across cultures around the world. For example, ‘dignity’ would look different in the US, as compared to Pakistan.

Imagine how your company would perform when everyone working in it felt that his/her voice would be heard – that his/her ideas were valued. How would everyone behave if they felt respected through inclusion in corporate activities, plans, information sharing, and tactical/strategic decision-making?

Managing corporate culture also includes an enquiry into our values. This reminds me of a classic, Zen and the Art of Motorcycle Maintenance by Robert M. Pirsig (Harper Torch Paperback Printing May 2006). Its back cover reads: “One of the most important and influential books written in the past half-century. It’s a powerful, moving, and penetrating examination of how we live…and a breathtaking meditation on how to live better. Here is a book that transformed a generation: an unforgettable narration of a summer motorcycle trip across America’s Northwest, undertaken by a father and his young son. A story of love and fear – of growth, discovery and acceptance – that becomes a profound personal and philosophical odyssey into life’s fundamental questions…”

It’s important to ask why you are in business and what kind of business you are trying to run. For example, is it our job only to maximise shareholder value? Millions of businesses worldwide are dedicated to the pursuit of profit. But the good news is that many companies are waking up to their larger role in society as responsible corporate citizens. They have begun defining themselves by taking into account the needs and aspirations of all their key stakeholders in their plans and strategies.

In this context, carrying out stakeholder analysis, which covers their hopes and fears, would be a necessary first step to understanding your present situation and developing a baseline. Based on findings of such a study, scarce resources could be allocated and managed more effectively to achieve a balanced and sustained growth.

I have come to realise that by focusing on Jack’s two pillars of corporate culture; ‘voice’ and ‘dignity’; we can commence a culture transformation process throughout our business. It surprises me to see how so many of our corporate leaders fail to leverage human latent by ignoring these fundamental pillars.

Shaping and nurturing corporate culture for performance takes time and loads of patience. It’s about communicating with people at all levels; it’s about listening to alternative perspectives with an open mind to not only understand but also to feel what is being conveyed, verbally and non-verbally. It’s about sharing different points of views; it’s about being willing to be challenged; it’s about putting structures and processes in place which allow for formal and informal interactions between people from different functions, departments and levels of seniority. Above all, it’s about empathy. And we have to make time for it.

Get hold of the book Maverick by Ricardo Semler. It’s a fascinating read and presents an inspiring and practical case study of Semco, a company based in Brazil. It contains insights that show how corporate culture can be transformed for achieving superior performance in a very challenging context, and not very different from our own.

What we learn from countless stories of corporate success from around the world is that the more genuinely committed we are to the growth and development of our people, the more our teams will contribute with passion. The key question leaders need to ask each one of their constituents is this: “How can I help you win?”

Think through your own situation and consider applying some of the following best practices designed to bring values of respect and openness to life:

1. Use the ‘Delphi Technique’: When faced with a performance problem, e.g. continuous fall in market share or excessive re-works in production, consider using the ‘Delphi Technique’ with your team. The purpose of this exercise is to get everyone to share their personal perspective on an issue, without their thoughts getting coloured by a dominant member in the team. Request team members to write (not speak) in a sentence what they think the core problem is. Collect their sheets and display them on the wall. The goal is for you to understand all the perspectives assembled and arrive at a common, agreed core problem through an open dialogue in a safe environment. It is useful to set norms to keep the communication process focused and efficient. Once you have arrived at a commonly agreed core problem, invite team members to write what they think is their ideal solution. After collecting their unique responses, discuss them thoroughly and agree on a common solution, again through free and frank discussions, considering the pros and cons of the alternatives that surface in the meeting. This way you will have your team’s commitment for exemplary execution of strategy agreed upon.

2. Hold people accountable: We need to hold ourselves, and people we work with, to account by keeping a balance between compassion and courage. Everyone in the company must therefore have clear roles, responsibilities and goals. These must be reviewed periodically. Key to obtaining superior performance is having a fair and transparent performance evaluation and management mechanism to which everyone subscribes willingly. Rewards for achievement and consequences of failure must be clearly known and understood by all concerned, from the outset.

3. Encourage teamwork: While teamwork is vital, individual performance counts too! The best of companies struggle to find a balance between these two extremes. Better teamworking can be achieved by the strong helping the weak. Since ‘what gets rewarded gets done’, recognition should be given to attainment of individual objectives and also to the person’s contribution in the domains of helping, supporting and coaching his/her teammates.

4. Listen, listen, listen: A deep sense of ownership and commitment in everyone is the key to each individual taking genuine responsibility for their own growth and development. Listening is the key to influencing and creating a buy-in. You may wish to brainstorm with your team, “What are the barriers to self-development?” Follow these findings by seeking suggestions on, “How can we overcome these barriers to self-development?” Once the findings are on the board, concrete goals must be set and assigned to people present.

To build and maintain credibility in any process, keep a tight follow-up on commitments. Celebrate successes in public, and hold defaulters to account in private, without harming their dignity.

Gary Erickson reminds us to, “Never expect that just because you have a great company, a great business model, and great employees, things are going to be perfect. You have to keep tweaking it.”

A corporate culture that is characterised by extreme insecurity and excessive reverence to seniors impairs performance and ultimately proves to be fatal. To make the big leap in performance, all you need to do is apply a bit of commonsense; but remember, commonsense is not common practice!

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