If Culture is the moral compass then where is your company heading?

Last month Peter Kell, Deputy Chairman of Australian Securities and Investment Commission addressed the issues with culture in the financial sector in a speech at the AFR Banking & Wealth Summit. He described the erosion of trust and confidence in the financial system and the global costs of misconduct arising out of poor finance sector culture. He was of course partly referring to recent events that have happened with organisations such as Target and their accounting scandal where staff over inflated their earnings to the tune of $21 million.

Wesfarmers who owns Target is taking action against 10 staff, Mr Goyder, Chairman of Wesfarmers said ‘What’s so disappointing is that people have made a decision, probably through implied pressure that they felt, to do something mind-blowingly stupid”.

Former Target managing director Stuart Machin resigned last week from Wesfarmers.

Corporate cultures have an enormous influence on how people within them behave. With the pressure to be a cultural fit people can find themselves behaving in ways not consistent with their own values and beliefs. Never before has there been such a focus on corporate culture and the responsibility of leadership to manage their own cultures to exemplify what their boards expect of them.

What is culture?

Culture has become a bit of a buzz word these days, especially with the explosion of Silicon Valley based companies with their wacky workplace designs and companies like Zappos which is now more famous for its culture than its shoe sales.

Google’s new offices in Dublin

Everyone has their own opinion as to what culture is, some say it’s ‘the way we do things’ others that it’s the accumulation of values and behaviours that show up in its language and actions. For me its best defined as the company’s personality, often hard to describe or define but every company has one. When we think about our own personality and where it comes from we are confronted with the age old debate of whether it is learnt or innate. Well a company is not that different, some of the company’s personality is designed, whether that is by the Founder or perhaps the industry but it also evolves off its own steam.

Some companies have very carefully crafted cultures like the ones you see at Apple, Google and Facebook. Other companies leave their cultures to chance through failing to define their values, vision and mission and not recruiting the right kind of people to support their culture. This more often than not results in a culture that can lack a moral compass when making decisions, it  can breed confusion in the workforce when there is no clear guidelines for what behaviour is acceptable and what is not. 

Why bother to invest in a good corporate culture?

Quite simply because it’s the right thing to do. There is plenty of evidence these days as to the financial benefits of having a great culture and I could fill the following pages with graphs and charts to show this but to be honest if you need to be motivated to change your culture through the attraction of more dollars then you’re not yet ready to go on this journey. But if you believe that profit is an outcome, that it is the score board for having a great product or service that makes customers happy and that your whole team benefits from having happy customers then you might be ready to change your culture.

It is possible to have a financially successful company without a healthy culture, there are plenty of companies out there that are still making big bucks whilst failing their customers and their people. The question is how sustainable are they? How long will they get away with it before customers and their people are offered a better option and start to vote with their feet. Commodity product industries can often we guilty of not providing great service, just think about what it’s like getting through to your power company’s service department.

Things were very bad for electricity company customers up until the government deregulated the industry and competition entered the market, now these companies have had to invest in the service experience. The airline industries in many countries used to be regulated until it was deregulated by their governments creating one of the most competitive customer experience industries in the world.

Government departments can be notoriously bad at customer service with people forced to engage their services with no choice. Government departments are also well known for having toxic cultures full of workforce so who hate their jobs and stay for the benefits. I’m not saying all are like this but many are.

So to answer the question about whether it’s worth the bother of having a good culture think about your own industry. The closer you are to the end customer experience and the more competitive your market the more critical it is to have a great culture. To give you examples of this, if your business is drilling for oil and heavily reliant on a few people to manage large machinery that extracts oil that is then sold to petroleum companies then the need for an awesome culture is less. But if you’re in the restaurant business relying on repeat customers and your people are responsible for the complete product and service experience of the customer then you had better have an amazing culture. Most companies fall somewhere in between and will have varying levels of motivation for investing in their cultures.

If you are still considering whether you should build a better culture then I take you back to my initial answer, do it because it’s the right thing to do, people spend over half of their lives in the workplace. Leaders have a responsibility to ensure employees enjoy their time at work and thrive, there is a lot of research indicating the importance of a healthy and happy workplace. Mental health and physical health can be impacted by stress, feelings of being overwhelmed, corporate bullying and feeling unsupported. If you employ people then make sure they are cared for because that is a company’s responsibility. There are many other positive benefits of course like increased productivity, increased sales performance, less staff attrition and more customer loyalty but be motivated to do this because you care about your people first and foremost. The rewards will be generous for putting your people first.