A Strong Corporate Culture Begins with Leadership

With each new major misstep by a corporation reported in the press, there seems to be mention of a failed corporate culture. This is no surprise.

According to a 2018 Harvard Business Review article, “Culture is the tacit social order of an organization: It shapes attitudes and behaviors in wide-ranging and durable ways. Cultural norms define what is encouraged, discouraged, accepted, or rejected within a group.”

In a 2016 article, Wall Street Journal defined corporate culture as the “values and actions of managers and employees [that] create a unique business environment.” Culture drives employee engagement, the quality of employee work and ultimately corporate or institutional performance.

The CEO is ultimately accountable for the culture of his/her organization or corporation. A healthy culture is nurtured by clear statement of corporate mission, respect for employees, open communication and dialogue, constructive and timely feedback, inclusivity, celebrations of successes and opportunities for employee development. Culture is made toxic by such things as perceptions of retaliation, acceptance of gossip, exclusivity, overly heavy monitoring of employees and lack of communication and feedback from managers. 

Sometimes, there is a disconnect between the intentions and efforts of the CEO and frontline employees’ experience with workplace culture. When there is an indication that there is such a disconnect, the CEO must treat this as a red flag. Gallup argues that the disconnect or breakdown in corporate culture may be due to policies and procedures put in place by such functions as human resources, finance, operations or legal that are deaf to corporate culture and values.

A second cause may be executives and managers who do not understand, support or share the values of the culture. When this happens, the results are pretty obvious. According to Gallup, managers are responsible for the vast majority of variance in employee engagement.

That’s why it is essential that the CEO constantly monitor his or her organization for red flags of such disconnects. Tools for doing so might include employee surveys, anonymous hotline complaints, legal claims brought against the organization by employees and former employees, formal meetings (e.g., roundtable discussions, townhalls) and ongoing informal dialogue (e.g. walking the halls) with frontline staff.

In my experience as a CEO, one of the greatest challenges is to remain diligent in addressing concerns. This requires not being defensive or dismissive of the red flags.

Often, the concerns can be explained away as temporary or already being addressed. They may or may not be temporary but in either case feedback to staff about the concerns are essential.  Other times, legitimate employee concerns may be confounded with what are believed to be unreasonable employee expectations. It is key to remember, legitimate or not, the perception of the frontline is the reality of the organization and the foundation of corporate culture.

This all raises the question of how to manage the red flags. As CEO, the most important place to look, after looking at him or herself, is at the senior executive team, including those accountable for human resources, legal, operations and finance. The senior executive team not only puts policies and practices in place that can support or destroy corporate culture, but they also model for their managers the values and behaviors that affect frontline staff, heavily impacting culture.

The CEO may find it hard to focus on the senior executive team. The senior executive team consists of individuals the CEO has come to rely on, who the CEO may have appointed or recruited, who may have relationships with the governing board and who may demonstrate one set of values to their CEO and another to their managers. Despite these challenges, it is imperative that the CEO hold accountable his or her executive leadership team before a toxic culture affects the organization’s overall performance.