If company culture was a person, they would frequently appear on Interpol’s most wanted list, but without a good description, would they ever find him?
Confused? Well in my experience people talk about company culture as if it was a third person, but with very little understanding of what it is, and more specifically what their culture means to shareholders, employees, or the bottom line for their organisation.
Company culture is defined as the collective beliefs, values, ethics and behaviours of the organisation; the inward expression of what is most important to them. But when these set of values become unbalanced or disconnected from the market, the business goals, and those of the shareholders, then problems become inevitable.
Take for instance the NHS; in my previous role I had many engagements with the NHS regarding Time and Attendance solutions. These solutions are proven to yield significant savings, yet the response I received from a number of NHS organisations was quite breath-taking. It wasn’t about the cost or doubts about the potential savings of the solution. The response was simply “it’s not our culture”.
What does that mean? So how much do you budget for your culture? Across the NHS the savings from this technology could well surpass £100 million every year. In this case, culture is clearly misaligned to the NHS goal of saving £20 billion by 2014.
Onto the next cherished British institution, good old Aunty BBC. After the revelations of Jimmy Saville, they are setting up an investigation into that evil man. No not Mr Saville (though that may well be an accurate description) but Mr Culture who apparently allowed Saville far too much freedom. The BBC clearly has a creative and collaborative culture, but it appears that this was insufficiently balanced with the need to control and protect.
What about the Banks and the havoc they caused to the economy? Who was to blame? Yet again the evil Mr Culture, or in this context, Mr Casino Culture.
Let’s look at Mergers and Acquisitions. Research shows that between 60% and 80% of acquisitions fail to generate wealth for the acquiring company. And what is one of the major reasons for this failure? Mr Culture, or to be precise the mysterious Mr Acquiring Culture and the equally unknown Mrs Acquired Culture just didn’t get along.
Without understanding the differing cultures and safeguarding their positive attributes, the arranged marriage results in the dominant company eroding the others culture leading to staff attrition and loss of value creation. Earlier this year HP wrote off $8 Billion due to its failed acquisition of EDS. Ouch. Did they pay too much, or simply destroy its value through reckless meddling with the culture in EDS?
What about the most common activities such as recruitment? Of the new recruits who don’t succeed, 90% of the reasons given, relate to wrong culture fit. The cost of wasted recruitment fees, training, and induction can be considerable. Is there anywhere Mr Culture doesn’t pop up?
This is not to say culture is bad, though obviously it can be, rather there appears to be pandemic failure to recognise, influence or be accountable for the culture within an organisation. This failure can lead to failed recruitment, staff retention, acquisitions, and in turn, increased costs, reduced productivity and erosion of shareholder value.
On the other hand, the right culture can transform a company’s fortunes. Steve Jobs didn’t actually build the iPhone or the iPad, Apple did. But there was no doubt about who set the culture within Apple. Apple culture was the inward expression of Steve Jobs and what he valued, what he felt important. Mr Culture was Mr Steve Jobs.
There are a range of tools available to understand the culture of an organisation, such as the Competing Values Framework, and these can not only provide insight into the culture, but also, where it needs to change to become more aligned with the business goals and the market in which it serves.
So we should not use company culture as a scapegoat or mysterious other, but instead, a way to gain competitive advantage and improve shareholder value.
Above all, we should take company culture seriously.