Corporate Culture: the Biggest Asset Not on the Balance Sheet

The balance sheet for any company will list all kinds of assets and liabilities, except company culture.  There should be a way to account for this, because culture is a critical factor in the success of any company.  A great corporate culture is like a propellant – it helps accelerate an organization toward achieving its goals. Likewise, a toxic corporate culture is like dragging a boat anchor behind you: no matter how high the throttle is set you just can’t seem to pick up speed.

Great leaders understand the value and impact of culture, and that’s why they put effort into creating a healthy one.  Culture is the collectively held values, ideology, and social processes embedded in a firm.  Every organization has a culture, whether it was created intentionally or is the product of evolutionary chance.  For example, a set of contrasting corporate cultures is empowerment and fear.

Corporate Culture 101

Here are some facts for leaders to internalize as they contemplate and hopefully embrace their role concerning corporate culture:

Culture is a function of leadership.

It doesn’t matter what kind of organization you lead – a Fortune 500 company, small business, football team, or Girl Scout troop – culture is always a function of leadership.  The person at the top of the organization chart is the corporate cultural ambassador.  Do not outsource this responsibility to another person in the company, because you can’t.  The organization, for better or worse, will follow your cultural lead no matter what.

There’s no vacuum where culture is concerned.

Leaders range from the charismatic to the technical, introverts to extroverts.  Not all leaders have personalities that recognize the importance or value of a healthy company culture.  Those who don’t appreciate this truth, will discover that just because they haven’t formally expressed the culture, one exists anyway, and it isn’t always a healthy one.  In fact, the less intentional a leader has been about defining and reinforcing culture, the greater the chance is that the default culture is dysfunctional, if not downright toxic.

The “beauty” of culture is in the eye of the beholder.

Leaders may claim to have created a healthy culture of empowerment what do the workers believe?  If they don’t feel empowered, then the leader is delusional by saying they are.  When it comes to culture, the leader is often like the emperor in new clothes – believing there is something there when no one else sees it.  If the workers haven’t embraced the culture espoused by the leader, then it doesn’t exist.

Culture is built intentionally.

Leaders must decide what kind of culture serves the company and its customers the best then make a priority of building it.  It should not be allowed to evolve because rarely does a healthy culture develop spontaneously.  It requires thought, planning, expression and constant reinforcement.

Culture is more deeds than words.

It is very important to articulate all aspects of the desired culture.  In fact, the leader must tirelessly communicate about what the culture is, how it works and what it looks like.  Culture is forged on the anvil of deeds, so the leader must model the expressed culture.  One inconsistency between words and actions can jeopardize the cultural foundation of the company.  In other words, you can tell employees that they’re empowered but the instant you punish one for acting empowered, any cultural capital you’ve accumulated will quickly evaporate.

Culture building can occur quickly.

It doesn’t take long for the troops to follow a leader down a healthy cultural path.  If a leader consistently communicates and models a strong, healthy culture, the workers will catch on quickly.  If there’s a problem, it’s often because middle management is invested in a different culture and feels threatened by any change.  For this reason, culture-building efforts must permeate every level of the company.

Culture correction can take a long time.

This may seem contradictory to the previous statement, but when the culture is unhealthy or toxic, it can take years to deprogram the staff.  In fact, the first step is usually removal of the leader responsible for the negative culture.  Even then it doesn’t change quickly, because the collective memory of the victims of a dysfunctional culture literally need time to heal.  It takes concerted effort over a period a years, potentially, to reprogram a company’s negative culture.

Culture Assessment

While promoting a healthy culture is the responsibility of the leader, it’s the concern of every manager and employee in the company.  It’s important to understand how the company’s culture is perceived, but it’s difficult for the CEO to get candor from employees about it.  I recommend that the leadership of the company regularly engage employees at all levels in discussions designed to determine their views of the culture. But, the truth is sometimes hard to come by, because many will fear being honest.  Still just having these discussions will reveal some insights, and it demonstrates that culture is a leadership priority.

Another option is a survey.  Some companies conduct annual employee opinion surveys that research many issues, culture being one of them.  These surveys are anonymous, allowing employees to express their opinions without fear of reprisal.  Conducting such a survey is an excellent idea, but it comes with an obligation: disclosure of the results to the rank and file employees. Do not conduct such a survey unless you commit to complete transparency in communicating the results.  To conceal the results because they indict the company’s culture makes a bad situation worse.

Summary

A healthy company culture is a major competitive advantage.  Most leaders would like to attach ROI to any initiative, including culture building and curation.  I don’t know how to measure the ROI of doing this, but I do know that customers can feel a difference when they do business with companies that have healthy cultures.  Employees are simply more committed to the company’s success, and they put forth more effort to succeed.  Furthermore, companies with healthy cultures enjoy greater employee retention, which lowers costs while increasing productivity.  For these reasons, don’t allow building and maintaining a healthy company culture fall very far down on your to-do list.

3885 views