Is your com­pa­ny cul­ture sab­o­tag­ing the organisation?

I once met a CEO of a com­pa­ny in India that pro­duced auto­mo­tive com­po­nents. He told me about a par­tic­u­lar prob­lem he had.

The CEO had invest­ed over US$150mil in a fully-automated plant that con­vert­ed raw met­al into the fin­ished prod­uct in a mat­ter of min­utes with very lit­tle man­u­al inter­ven­tion. Yet, although the plant was just over a year old, it was only run­ning at 25 to 30% capac­i­ty. The plant was not cov­er­ing its costs, and it was also mak­ing him a thump­ing loss and pulling the over­all busi­ness down.

He had a team of highly-qualified elec­tri­cal and mechan­i­cal engi­neers. So, he could not fath­om why the plant was per­form­ing so poorly.

We agreed to do a diag­nos­tic. After a few weeks, my col­leagues and I dis­cov­ered that there was noth­ing wrong with the plant. Instead, the prob­lem was the company’s culture.

The CEO had the habit of tour­ing the plant a few times a day, always on the look­out for any­thing not work­ing. The engi­neer­ing team, eager to please him, would keep the machines run­ning to give him the impres­sion that all was well.

How­ev­er, this was all win­dow dress­ing. Their answer to any break­down was to fix the prob­lem just enough to get the plant run­ning. Here’s what I mean: As I walked around the plant, I spot­ted an aer­i­al fash­ioned from a wire hanger!

The “solu­tions” were not just half-baked; they masked the real issues. 

“This is how we’ve always done things around here”

Busi­ness own­ers often start a com­pa­ny with a cer­tain cul­ture in mind. How­ev­er, as the busi­ness grows, the cul­ture evolves – some­times to one that they had not envi­sioned. Or, a new CEO comes onboard only to find out that the cur­rent com­pa­ny cul­ture is stand­ing in the way of the organisation’s progress and future.

I’ve seen lead­ers let things remain the way they are. I’ve seen some rel­e­gate the job of fix­ing things to Human Resources.

Both are bad solu­tions. Ignor­ing bad cul­ture is not a good idea and change that comes from the top has a bet­ter chance of succeeding.

For­tu­nate­ly, the CEO of the auto­mo­tive parts com­pa­ny was hap­py to own the prob­lem and fix it.

For months, we worked to grad­u­al­ly change the lega­cy cul­ture and behav­iours. We enforced a sys­tem where engi­neers had to analyse the rea­sons for recur­ring prob­lems and put in per­ma­nent solu­tions instead of band aid fixes.

In a mat­ter of weeks, we increased plant util­i­sa­tion to over 50%. In the next few months, it shot up to 75%.

This may sound easy in writ­ing, but believe me, it was hard work. But suc­cess breeds success.

Once employ­ees saw the improved results, their atti­tudes changed and they were dri­ven to improve the effi­cien­cy of the plant.

Today, the plants’ per­for­mance has helped the com­pa­ny to become one of the most suc­cess­ful in the world in its sector.

Con­fronting and trans­form­ing culture

The CEO’s idea was a good one – he hired employ­ees who were tech­ni­cal­ly com­pe­tent. How­ev­er, as they were not giv­en clear expec­ta­tions of how to achieve results, they behaved in line with the company’s tra­di­tion­al cul­ture, which result­ed in the plant fail­ing to perform.

As this case demon­strates, cul­ture plays an impor­tant part in a company’s performance. 

“Cul­ture” is the organisation’s val­ue sys­tem and per­son­al­i­ty. These are the mind­sets, habits and behav­iours that employ­ees share. It will attract tal­ent that shares the same val­ues and repels those who do not.

There’s no one type of cul­ture that is con­sid­ered per­fect. But as you can see from this case, trou­ble comes when it ends up work­ing against the company.

When this hap­pens, it’s time to course cor­rect. It can be chal­leng­ing to trans­form some­thing as abstract as cul­ture, but it can be done.

First, sur­vey the cul­tur­al landscape

A company’s strat­e­gy and its align­ment to struc­ture and design, work­flow and process­es, poli­cies, tech­nolo­gies and reward sys­tem play a big part in dri­ving the cul­ture. So, the first step is to deter­mine how these are dri­ving behav­iours, deci­sions and actions in the company.

Define the mis­sion and values

Don’t be too sur­prised if an employ­ee can’t explain the com­pa­ny mis­sion and val­ues. Many com­pa­nies don’t have them writ­ten down, or if they do, they are poor­ly defined. Hav­ing them clear­ly spelled out ensures that every mem­ber of the organ­i­sa­tion knows how to behave.

Com­mu­ni­cate and ensure adoption

Com­pa­nies with great cul­tures com­mu­ni­cate their mis­sion and val­ues so clear­ly that every employ­ee knows what is expect­ed of them. Lead­er­ship must also live and broad­cast them con­tin­u­ous­ly and employ­ees should be appraised against the mis­sion and val­ues, not just in annu­al per­for­mance reviews but in day-to-day activ­i­ties and deci­sion making.

Adopt a top-down, bottom-up approach

Top-down, “do it my way” approach­es rarely work. If people’s behav­iours, habits, atti­tudes and mind­set form part of the cul­ture, it makes sense to involve every­one in the organ­i­sa­tion in the trans­for­ma­tion effort. This way, not only do we get own­er­ship and buy-in, but we get to work on mat­ters that will impact all lev­els of the organisation.

Con­clu­sion

Fric­tion will be inevitable when we change “how things are usu­al­ly done around here” – even if one applies the steps above to the let­ter. No fric­tion doesn’t mean good news – some­times it may indi­cate that noth­ing is chang­ing! The chal­lenge is to man­age this fric­tion effectively.

Resist the temp­ta­tion to impose author­i­ty to stomp out the fric­tion to accel­er­ate the change. When trans­for­ma­tion is done from a top-down, bottom-up approach, the entire organ­i­sa­tion will be inspired to work towards a com­mon vision, mak­ing the change sustainable.

Krish­na Pau­pamah has worked with com­pa­nies glob­al­ly to trans­form their busi­ness for over 35 years. He is the Founder and Group CEO of Renoir Con­sult­ing.

This col­umn was first pub­lished in Busi­ness Today.