Will the novel coronavirus stimulate positive change in organisational culture…?

The outbreak of the coronavirus has flipped the world upside down and inside out. Foremost, this is a human tragedy, affecting the health and lives of millions. It is also having a significant and growing impact on the global economy.

At 4i, we are acutely interested on how this pandemic will play out for leadership and workplace culture. We are proposing a perspective on how the coronavirus pandemic could actually be a stimulus for positive change in organisational cultural health.

Pre-pandemic, 4i Leadership had already identified significant organisational challenges shared by businesses across a range of sectors and markets. From our perspective, many organisations were on the brink of cultural implosion. Significant change was required. Based on our interviews with leaders and executives, it was clear that true change would not be instigated from within, either due to lack of buy-in or because of self-reported organisational readiness.

Fast forward to May 2020, and one certainty that this global pandemic offers is that operating ‘business as usual’ is no longer an option. Organisations are being required to play a whole new ball game. The rules are changing daily. We are all waiting for the dust to settle and see where the ball lands.

Despite the tragedy, loss and anxiety of this time, could it be that this forced change will ultimately push surviving organisations to be more highly functioning and more “culturally healthy” than before?

Pre-corona, we had the opportunity to talk about People & Culture with leaders and industry experts

Earlier this year, 4i Group completed a wave of interviews with business leaders and market experts spanning multiple industries across Australia, USA, the UK and Asia. The purpose of our interviews was two-fold. First, we wanted to understand the greatest challenges faced by organisations today. Second, it was an attempt to gain insight into the the future landscape for developing leaders, people and organisational culture in Australia and across the globe.

The results were surprising. Across a range of organisations spanning multiple industries and markets, there were clear themes and experiences shared by almost all the leaders we interviewed. From the feedback we received, organisational ‘cultural health’ was less than optimal. When we asked business leaders the biggest challenge their organisation faced , the responses invariably lay in People & Culture. While the responses ranged in severity and context, the key themes for organisational culture could be distilled into four categories

1. Scarcity-Based Thinking

Leaders reported feeling more time-pressured and resource-constrained than ever before. This strong sense of not enough time and insufficient resources was manifesting in a lack of sound organisational strategy, “fire-fighting” decision making, and chronic states of organisational and individual stress.

“We are doing more with less.. much less.. we are so busy getting through each day, there just isn’t enough time to invest in or develop our people” Australian Managing Director, Leading Global Technology Company (Australia)

2. Fear-Based

Closely correlated with a scarcity mindset, organisations were operating in cultures based on fear, blame and inertia. A number of leaders we interviewed specifically used the term “fear-based culture”. Other leaders described issues arising from employees’ inability to make decisions, attributed to the fear of making a mistake and being blamed or punished. The fear and resulting inertia was particularly impactful on the layers of middle management.

“Our Associates are scared to hand-over their models, in case there is a mistake in their work. They fear any mistake will impact negatively on their professional development appraisal” Partner, Top Tier Management Consulting Firm (Australia)

In the same category, we saw examples of internally promoted leaders who were unable to scale out of the detail, micro-managing their team and failing to effectively step up into a management role. This behaviour perpetuated the lack of decisiveness and inertia in the team.

“It’s a problem when leaders can’t step out of the detail. They end up being more of a player than a coach. Too much focus on detail, not enough effective leadership.” HR Director, Global Technology Giant (Silicon Valley)

We see this behaviour typically manifesting due to a lack of trust in the team to deliver (a fear that the quality will be insufficient) or a fear of missing a deadline, being fearful of managing up, and therefore executing rather than delegating to save time. These behaviours inevitably perpetuate the lack of decisiveness and inertia in the team.

3. Lack of Agility

Leaders were frustrated by their organisation’s lack of appetite for, or ability to, change. Leaders wanting to implement new modes of operation or take market risks were experiencing major internal roadblocks, driven by push-back from the top, or lack of support from the organisational eco-system (below).

This theme was especially apparent in established businesses, in undisrupted industries, with deeply entrenched leadership. In these organisations the ‘old-school’ leadership mentality left newer up-coming leaders feeling powerless, stuck and frustrated with the burdens of thick red bureaucratic tape​.

“Most of our leaders have been with this organisation for more than 20 years. The mentality here is so deep, it’s like we would need to create a whole new enterprise to even explore concepts and new modes of operation” General Manager, Australian Housing & Construction Business (Australia)

4. Cultural Disintegration

Underpinning all of the above was a general theme of cultural disintegration, an “us versus them” mentality within organisations. This was leading to infighting and hostility between leaders, teams and units.

“Our single biggest business challenge is getting our leaders to sit at the ‘same table’” Managing Director of a Leading Textile Retailer (Singapore)

The disintegration was particularly prevalent in global or pan-regional businesses with misalignment and perceived lack of support between head-office and local business. What really stood out was the genuine tone of disdain used by local leaders when describing the global head office or CEO. It was as though the global head office was the enemy and the local team was in the trenches fighting a deep civil war.

The business leaders we spoke to recognised the current organisational culture was less than ideal. They recognised a need for investment and change.

95% of leaders we interviewed said that they would like to improve on some aspect of their People and Culture. While 60% acknowledged the negative implications of their current cultural state. However, 4i found very little evidence of actions or investments to facilitate a genuine shift. This was true for organisations that had leadership buy-in…

“Leader development was on our list of priorities for 2019 but we just didn’t get to it, there was too much else we had to do” Managing Director of a leading national Health Club (Australia)

… and true in organisations with Global Head Offices that had different ideas about People & Culture.

“Given the global mandate, there is zero opportunity to invest in our people and culture. We can’t see that changing in the immediate future” Head of Transformation, Global Oil & Gas Company (Australia)

This is what we gathered in February 2020.

Then, COVID-19 happened.

For global readers, please note that Australia was well behind in the initial curve in the COVID-19 outbreak in other parts of the world. The impact and restrictions placed on Australian’s and Australian businesses was at least 2 weeks behind the USA and at least 3 weeks behind Europe and parts of Asia.

“We were happy to see the end of 2019… And then we landed 2020” Executive, International Industrials Business, (Australia)

How quickly our worlds turned inside out and upside down. Now the only thing that seems certain, is that nothing is certain.

We reflected long and hard before formulating this piece.

We know that if our interviews were scheduled for just one or two weeks later, 4i wouldn't have had the opportunity to speak to these leaders about People & Culture.

We appreciate in times where businesses are just trying to keep their doors open (physically and metaphorically), leaders may be even less focused on the softer aspects of organisational health.

4i also acknowledge the less than constructive role the mass media has played. The coronavirus is being labelled the first true “infodemic”; misinformation and unproductive information is spreading at unprecedented speeds. We are especially cautious not to publish words that do not add value or that add fuel to the collective fire.

However, 4i believes that what we uncovered about culture pre-COVID-19 is potentially more relevant for organisations now than ever before.

In a time when many organisations were operating at sub-optimal levels, yet had the capability to ignore the significant cultural issues in the room and focus on business as usual, there was no ‘burning platform’, no urgent reason for organisations to do the hard work required to shift towards a state of cultural health and wellbeing.

We now face a scenario where sub-optimal performing organisations cannot remain unchanged. When the dust settles, 4i believes returning and continuing organisations will be operating in a new (and hopefully elevated) state of cultural health.

“Organisations that can effectively respond and navigate through this crisis will emerge stronger than before and be well positioned to take advantage of the opportunities arising from this time…. and there will be significant opportunities” CEO & Founder of U-Balancer.

A new perspective on scarcity

The coronavirus pandemic is dramatically intensifying the sense of scarcity and pressure on organisational resources. As doors and borders close, business as usual ceases, employees are laid off and the shortage of cash threatens business survival. This is a reality for the independent local cafe owner as well as for Australia’s number two airline, and for most businesses and industries in between.

Emerging from this will be organisations that have survived the crisis, possibly due to government assistance, or because they had significant cash reserves, or because they operated in essential services. Most companies will be learning to manage and operate with less. For a period of yet unknown time, they will have less business, fewer customers, fewer staff and potentially diminished access to resources.

What does this mean for the scarcity-based organisational mindset?

4i considers organisations could behave in one of two ways. The first alternative — a heightened sense of not enough, resulting in fear-based-decision making and particularly cautionary budgeting and planning.

The second — a new perspective on ‘enough-ness ’. As the climate improves and business grows, which it will, organisations may remember how much they did with much much less, and operate with a new and improved perspective on scarcity and possibility. Less fear and greater confidence in the entity’s ability to overcome small and great challenges.

A need to address fear and mental health

4i acknowledge this is an anxious time. Job security is uncertain, many have lost their jobs, taken pay-cuts or are working reduced hours. Those still employed are being required to work from home, in isolation, or with children who require home-schooling. There will be back aches from the lack of ergonomic support in make-shift home offices. Close physical quarters in homes will strain relations between couples and in families. For some, there will be extreme loneliness arising from the lack of wider physical human contact.

The pressures surrounding mental health have intensified, which is significant given our interviews just prior to COVID19 showed many workplaces were operating in states driven by fear and anxiety.

To successfully navigate the “new normal”, organisations will not be able to ignore the issues surrounding fear, anxiety and the emotional needs of their people. Mental health cannot remain a taboo topic. It must emerge as a priority for those leaders wishing to create and sustain a successful organisation in this new space. While there have been significant developments in the past decade, many companies still view mental health as a “nice to have” discussion and often implement a “check the box” mental-wellness compliance policy. 4i believes this crisis could push employee wellbeing to the forefront of HR strategy. Ultimately, we hope it will create safer and more sustainable workplace environments.

Re-focus towards adaptability

“Companies can’t rely solely on exploiting existing business models. “Vitality” — the capacity to generate new ideas and continuously reinvent the business will be an essential attribute” BCG - How to Thrive in the 20's

Business life already felt fast, but the COVID19 pandemic has caused leaders to implement change at an unprecedented pace. In this time, the luxury of diligent budgeting, thorough planning, strategic consulting and multiple managerial reviews is not available. Some organisations are responding at a rapid pace and have been able to fundamentally alter their business models in epic time to remain successful. Others are still identifying options to remain relevant in this time. While organisations that cannot respond to the changing external stimulus or are paralysed in their attempts, may risk becoming obsolete.

For all businesses, this period is likely to detract from focus on forecasting and planning and highlight the importance of adaptability, evolution and harmonisation. One very clear lesson arising from this period is that organisational agility is absolutely imperative for organisational success.

Cultural Integration

“Crisis brings teams together or rips them apart.” Tim Collings, CEO 4i Group

When faced with an external threat so great it threatens to bring an entity to its knees, is there any space left for infighting or civil war? The entity must unite and stand together with a shared mission and common goal. The alternative is to remain divided and risk being conquered. This may sound idealistic, but to make it through to the other side of this global crisis, we see no choice for many organisations but to unite people in their efforts and goals.

Since the COVID19 outbreak 4i has contacted many of our clients to inquire as to how cultural integration is playing out in their organisations. At this early stage, it is too soon to identify if this pandemic will ultimately lead to cultural integration or further disintegration. Our hope is that one positive which could emerge from this COVID19 time, is a shift in organisational culture, and the creation of teams and units that are cohesive, unified and more highly functioning than before.

We know a scarcity mindset brings about scarcity, while a growth mindset brings about growth. Fear-based leadership brings stress and a stress-based environment, while solution-based leadership brings hope and innovative solutions to hindrances and outdated, fixed mindsets.

For some, talking about People & Culture in this moment may seem redundant. Yet there will be a time, hopefully not too far off, where we have the space and capacity to evaluate how our leadership and cultures have fared this crisis state.

We believe that opportunities will emerge from this pandemic, not just in terms of emerging markets and new business models, but in terms of elevated organisational cultural health and wellbeing and more highly functioning teams.

We encourage leaders to think about the kind of organisation they want to be leading and involved with, and use this crisis as the catalyst to make the changes necessary in themselves to thrive in the future.

To discuss these ideas please contact us at 4i Group. We help leaders seeking to create a better world, developing exceptional people to create extraordinary organisations.

Disclaimer: I was engaged by 4i as an independent consultant to carry out research for both 4i’s Customer Experience performance, and global market trends in leadership development. This article is an outcome of that research project.