Change Guide Blog

Leaders’ Actions Define Organizational Culture Leaders shape culture. Organizations mirror the people that lead them. We have a client who started building his business 15 years ago. He never met a customer he didn’t want to serve. If someone had money they wanted to spend for his type of product, he was going to make sure he got the business. He had a “can-do attitude” that made anything possible.

Several hundred million dollars in annual revenue and a few hundred employees later, he has built a remarkable organization that serves some of the most sought after customers in the industry. But during the last few years, profits have stalled, the organization has experienced extremely high turnover, and there is a sense of defeat that permeates the organization.

What went wrong? In a nutshell, the leadership style and the culture that it grew that were perfect for a small startup are now strangling profitability. The “we can make it work” ethic that was the hallmark of getting this company off the ground is now positioned to be the death of it. The leader that couldn’t say “no” to a customer 15 years ago now leads a company that still can’t say no to a customer. Even customers that ask for things the organization just can’t do profitably. The organization can’t say no to suppliers that are no longer providing quality products at a price that makes sense. And they can’t say no to employees who aren’t working out – instead, hiring more people rather than having the right people.

Taken together, all of it is leading to declining profits, rampant cynicism, and increasing turnover.

How can this organization regain the forward momentum they once had? It has to start with the leader. To get to the root of the problems, he is starting to recognize that he is part of difficulties.  As he evolves, so will the organization.  As he matures and develops a more reasoned decision making process, so will the organization.  He is backing away from things he is not very good at, he is listening to his employees, and he is getting rid of customers that are unprofitable.

If the culture is going to change, the leader needs to lead the way.

We often think that culture is a messy, squishy thing that we can’t really get our arms around.  And culture often makes leaders uncomfortable because they don’t feel that they can “put their finger on it”.

But there are lots of ways to measure culture these days (just spend a little time on Google or Yahoo! and you will be overwhelmed with the standardized tools, customizable assessments and consultants you’ll find).  And there are lots of companies out there that can attest to their success in building the right culture for their organization.

Just measuring and assessing an organization’s culture at a given point in time is illuminating.  But actually defining what the strategically appropriate culture is for an organization is even more helpful.  Once an organization has a desired culture in mind, and a picture of the current culture, then assessing the gaps and developing plans to close the gaps is all that it takes.

But, don’t be fooled.  Defining the desired culture for an organization sounds easier than it really is.  Getting a group of leaders together to discuss whether it is more important to follow rules or act quickly can be a touchy conversation.  Since culture is an outgrowth to a large extent of leadership, much of the culture is shaped by individual leaders’ styles and work preferences.  If you have a leader who is generally hesitant to make decisions and stick to them, then you may very well end up with an organization that talks about the same issue week after week in meetings but never lands on “what are going to do about it?”

Some think that it’s too hard to change culture… that we can’t change it even if we know what gaps we have between our current state and our desired culture.  Not true.  There are real, tactical activities and leadership actions that can shape a new culture.

For example, if the organization lacks the needed focus on customers, then insist that every manager and above spend at least one day a quarter out in the field with customers.  Or if your organization makes decisions on the fly in the absence of adequate data (not a good thing for, say, a pharmaceutical company), then insist that all projects use Six Sigma or similar tools.  Or if your organization is too cautious and can’t move quickly enough to respond to new demands (not a good thing for, say, a software company), verbally encourage teams to make decisions faster and try new things… and then throw a big party the first time one fails as visible demonstration that we appreciate and value risk-taking and new ideas.

One thing that can’t be overlooked, however, is that “closing the gap” between the current organization and the desired future organization often requires things of leaders… new communication styles, new approaches to work, new ways to lead.  This is often the hardest part.  Certainly there is some impact on culture from the structures and processes and kinds of people who work in an organization; but largely, people look up to see what kind of behavior is acceptable.  If you are up, then you are being watched whether you like it or not.

If we really want to make that strategy happen, we can’t ignore our organization’s culture.  And if that culture is not the right one to make the strategy happen, then that culture needs to change.  If we as leaders decide that we don’t want to do our part to change the culture, then we will live with the consequences of a failed strategy.

Mom used to always say “count your blessings”.  As the year comes to an end, organizations should to the same – with a twist.

If you work in an organization that is making plans for the new year, you should “count your successes”.

The path to growth and improvement can be long and bumpy.  There can be detours, side-tracks, unexpected challenges.   And that long, bumpy ride can make progress feel like a failure.

But if you stop, take a breath, and look back, you will see how far you’ve come.  It may not be as far as you wanted, but it’s almost always further than you thought it was before you took the time to look back and count your successes.

For the people who work in an organization, taking the time to reinforce the progress that has been made and the good work that has been done is invaluable.  Nothing motivates a team like a bit of success.  A winning team is pumped and ready to go out and win again.

This doesn’t mean you should completely ignore things that have not gone well.  But for just a moment, don’t focus on the misses.  Focus only on the hits.  Tell people that too… “I know it hasn’t been perfect.  We can talk about all of the ways we could have done better another time.  For now, let’s just be proud of all that we have accomplished.”

So take time to count the successes your organization has had over the last year.  And celebrate!