Ignore Corporate Culture at your Own Peril

As a keen observer of reputational issues around the Globe, it has always intrigued me that once a reputation risk incident has happened, that the organisation’s culture are often found to be the main cause and culprit.

At NASA (Challenger & Columbia space shuttle disasters) and Andersen (Enron), and even now BP (Complacency), corporate culture was implicated. This means that as Reputation Managers we will need to take a careful look at our culture and its potential danger to our reputation.

This lends itself to the question: “What is Corporate Culture and how can we positively influence it as part of our reputation management initiatives?”

Another question to ask is, is there a relationship between organizational culture, performance and reputation?

The definition offered by most is that "Culture is the way we do things around here." But the other day, I heard this. Culture is how we intuitively do things around here.

In other words its the way things get done without really thinking about how we’re going to do it. And therein lies the reputational risk danger. Like Dr. Roger von Oech wrote in his book – a Whack on the side of the Head. “Where all men think alike, no one thinks”.

Culture is essentially the core beliefs, traditions, customs, and established patterns of behavior held and practiced by members of an organization.

If this is true can culture be pinned to a table and dissected? Can it be reduced to bullet points on a flipchart?

It’s not necessarily the same as the values and mission the company puts in the front of their annual report, or the behaviours and processes outlined in their policy manual, although it can be.

What Corporate Culture is however; is the everyday actions, statements, and presumptions of the people who work there. The unwritten rules. The things that are taken as a given. The way we intuitively do things around here.

If you ask an employee why they do *this* instead of *that* and they respond "We’ve always done it that way" that process has become cultural. If it’s merely understood that you can call your boss by their first name, but you address everyone else of your bosses rank or higher by their last name, it’s culture.

If employees understand that they can question anything that doesn’t seem "right" this can be assumed to be engrained in their culture. If it’s understood that you never question anything, that’s culture too.

Edgar Schein, the OD expert (among others) points out that culture exists in layers.

It is often compared to an iceberg. The level that is visible above the surface is the level of behavior. This is the easiest layer to observe and change but it is affected by invisible layers underneath.

accidentsThe first invisible layer of culture below the surface, according to Schein, is the layer of values:what we care about and what we think is important. You can’t observe values directly the same way you observe behavior but you can certainly infer what they are from the way people act.

The deepest layer of culture – and the hardest one to observe, measure, or change – is the layer of fundamental beliefs.

The three layers interact, of course.

Let me give an oversimplified example. Suppose we have a fundamental belief that employees are basically lazy and that left to their own devices, they’ll just goof off. We’d probably place high values on control systems that allow managers to closely scrutinize employee performance and make sure that employees aren’t getting away with anything. Our behavior would reflect these values. If you asked us about it, we’d tell you that our control systems are just the way our company does business. We might not even be able to articulate the underlying belief about employee laziness that leads to this behavior. While it might not be hard to get us to change some aspects of our control systems, it might be very challenging to get us to change our fundamental beliefs about human nature. (Theory X & Y)

Organizational cultures tend to be self-reinforcing and self-perpetuating. People who share our beliefs will be attracted to our organization; people who believe otherwise will tend to go elsewhere.

Here is an example of how culture can be formed and create reputational risk.

1. Behaviours that produce positive outcomes (not necessarily positive for the organization, but positive for the person) are repeated. Others see the positive outcome and emulate the behavior and get similar results. A belief springs up that this is an accepted way to behave, and it becomes engrained as cultural. This is what we do, even if the written rules say don’t do that.

A practical example is the attitude of self-enrichment by executives in accepting outrageous pay schemes without due concern over the messages they portray. Workers then start to enrich themselves through shoplifting and other wasteful techniques.

2. Behaviours that produce negative outcomes (again, not necessarily negative for the organization, but negative for the person) are avoided. Others see the negative outcome and avoid the behavior. A belief springs up that this is a risky way to behave, and it becomes engrained as cultural. We just don’t do that, even if we are told it’s the right thing to do.

A Practical example would be that of speaking up or whistle blowing. The moment people see how a whistleblower is treated, they will be scared. Like the vernacular in South Africa. In Zulu they speak about an impimpi – being a spy. No one wants to be branded in this way, yet from a risk management perspectives we want them to speak up so that we can deal with issues whilst they are still small.

This procession can eventually lead to a culture that is overall positive and nurturing or negative and oppressive, depending on which behaviours prove rewarding and which prove to have unpleasant consequences.

Most cultures fall somewhere in between. One thing I am certain of is that once a culture is established, changing those fundamental core beliefs is probably the most difficult challenge in OD and Reputation Management.

In most reputation risk root cause analyses, I have found that the culture had a lot to do with the fundamental root cause of the risk that emerged.

To prevent unnecessary reputation risk in your own organisation, I would recommend that you work closely with your colleagues in OD/Organisational Behavior to impact the corporate culture in a positive way.