How To Make Human Progress In A Changing World Of Work
Gallup, Edelman, Willis Towers Watson, you name the research; trust in business and in business leadership is diminishing. We as leaders have a lot of work ahead to rebuild trust. How do we make human progress in this technology-enabled, hyper-connected, and increasingly transparent business world?
Creating Sustainable Advantage with Culture and People
Business Leaders have been challenged in leveraging their organizational culture for marketplace success. Peter Drucker once remarked “Culture Eats Strategy for Breakfast”. Culture is an outgrowth of leadership and can be changed to meet organizational goals. This dynamic interplay between leadership and culture is critical if even the most brilliant of strategy is to be effectively implemented.[i]
There have been no standards in defining culture. It’s complicated. Sometimes it’s even paradoxical. Your employees, partners, and other stakeholders will perceive your culture in different ways and even use different words to describe it. With all the other challenges your business is confronted with, it is easy to see why organizational culture has not been a priority for the leader. However, there is real power to be reaped in nurturing this intangible asset.
“Business leaders and the financial and industry analysts that follow them have also come to recognize that establishing and fostering the right corporate culture is not simply a way of staying out of trouble,” said Lou Gerstner, former IBM CEO and again said, “but represents a fundamental driver of sustainable differentiation and winning in the marketplace.”
The competition moves faster than it used to. “Having the best product or service or making the perfect strategic move doesn’t buy much time at the top. The landscape has shifted from looking for that long-term sustainable competitive advantage to managing a portfolio of transient advantages, moving from one short-lived advantage to the next.” As Rita Gunther McGrath wrote in the Harvard Business Review.
Sounds difficult, doesn’t it? That’s because it is. But this is where culture comes in. Like most organizations, your competitors have typically ignored culture. They’ve been focusing on strategy and operations and culture simply became a luxury that they would get to once they achieved some success. But the goal of culture is to drive the success of the enterprise. Waiting to focus on your culture until after you become successful actually sentences you to a never-ending culture of mediocrity. This, in turn, reduces your capability to succeed. It’s a negative “lever”. Instead of magnifying the force you want to apply. A mediocre culture increases the distance to your goals
Focusing on culture not only removes this negative lever, it can exchange it with a positive one if you do it right. And, unlike products and strategies, which can be quickly copied, the culture advantage has more sustainable power. The fact that it is complicated and challenging means that any advantage you achieve over the competition will be difficult to match. So, how do you secure this kind of advantage? It starts with understanding what culture really is. Here is the Standard of Trust definition:
Lets start with “values”. At the core, culture is about what is valued. This can include framed “values statements” or “principles statements”. Arthur Anderson and Enron had value statements in their headquarters about principles like integrity, however, it turns out making financial performance at all costs was the guiding principle so that’s how people behaved. Your culture is the collection of words, actions, and perceptions that explains and supports what is really valued by the system.
And that means it’s complicated. There are four factors in this definition that create your culture: language, actions, perceptions, and tangibles. You and your people activate the first three. Culture is a complex combination of what we say it is, our behaviors, and the underlying assumptions and ideas behind it. As you might expect, those three areas are often unpredictable, which is one reason why culture can be so disorderly. It becomes something that you have to put together, understanding you’ll find some paradoxes along the way.
For example, we’ll state we value customer service, but we’ll also say we value being dedicated to the long term. Those values are reasonable, but at times are quite completely opposite to each other. One is proactive and one is reactive, and to analyze where the culture really stands on that contradiction, you’ll have to assess several things at once. It’s the combination of what people say and how they behave do that will eventually determine how those two values are equalized.
Additionally, you have to factor in the “tangibles.” Tangibles are the non-human parts of culture. Tangible things like dress code, office location, office decor, office layout, etc. These also reveal what is valued, so they have to be included in your assessment of what your culture in truly is.
This definition is powerful because it enables action. Language, actions, perceptions, and tangibles give you all the areas you can work with. They give you areas where you can test, change, and discover. And they keep the conversation about values moving, rather than stuck down a path that leads toward a boring new set of inspirational posters — but no improvement in performance.
Now, think about your organization’s culture. Think about the language, actions, perceptions, and tangibles they define and support what your organization truly values.
“A company can’t buy true emotional commitment from managers no matter how much it’s willing to spend; this is something too valuable to have a price tag. And yet a company can’t afford not to have it.” -Stan Slap
Don’t constrain yourself to a culture that sounds great or symbolizes only your aspirational state. Relationship Capital (RC) flows between people as it is earned, but it’s often restricted by a system of controls that keep managers accountable for their employees.
The “carrot and stick” culture rewards good production aligned with the organization’s commands. This is traditional capitalism; a model ruled by contracts and external relationships. A process of commerce driven by fairness enabled by request for proposals and a systematic bidding process controlled by strict procurement processes. Get authentic about “what is the current situation.” What is valued? What is rewarded? What is discouraged? Not so clear? Well, now is the time for you to understand.
The Fall and Rise of Organizational Community
Humans are social creatures with an innate need to help others. Technology and business process reengineering have made organization’s much more efficient with the need for fewer people to get the work done. The Great Recession was the reason that many leaders espoused to downsize their workforce. We got to this point because of poor management of people. There are a number ways of dealing with tough financial times. People can volunteer to work fewer hours a week. Some companies are already doing this. Another option is voluntary shut down for a couple of months. There are different ways of doing it without hurting people’s lives.
The majority of employees currently working at large organizations are disengaged and businesses are starved for breakthrough thinking and innovation. We have created a cycle that has disconnected financial performance with the individual’s need for purpose, mastery, and trust.
To break that cycle, we need to recognize the importance of the organizational community, and build cultures that encourage people. We need to back away from continuously pulling at the lever of downsizing to maintain short-term profits at the expense of the community. Most executives leading business today will be the first to say that no single person is responsible for success or failure. Stop measuring people’s performance by individual quantitative measure. Stop doing the things that destroy community. That is first and last.
Today, it is very apparent to most, that senior executives do not value people and their business culture because when times get tough, people are let go or downsized. This destroys trust, reputation, and community.
There are lots of other alternatives approaches: Build the culture, respect people, and listen to what they are doing. If you are senior management, get out of your office, find out what people are doing on the ground; be more visible, not formally, but to put your ear to the ground and to know what is going on; and be part of the ecosystem.
In a community, we all interlock arms in tough times by supporting and sacrificing for one another, we will have a better balance of profits and purpose that builds relationship capital trust with employees, customers, and all key stakeholders for long-term sustainability.
Conclusion
Business leaders are just beginning to nurture their organizational cultures for purpose, performance and relationship capital. These businesses that make the transformation will be distinctive and sustainable. Those that do not leverage morally-interdependent social relationships will continue to see their trust evaporate and will become extinct. Elevating trust and professional credibility in an increasingly automated business world is critical to making human progress.
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