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.