Last month, I had the privilege of speaking at the 10th anniversary Hawkama corporate governance conference at the Armani Hotel in Dubai. Together with many distinguished colleagues and speakers, we have discussed the importance of corporate culture and its importance to organizations. I am sharing with you my thoughts and synopsis of my participation at the event.
When we talk about corporate culture, we talk about customs, maybe behaviors, actions or even inaction. It is usually referred to in a group context and it is usually something that is acquired over time and can be passed on from one group to the other or even one generation to the other. It is the environment that we create that includes behaviors, attitudes and attributes that are gained over time. Corporate culture defines what is important to the organization, who gets hired, what behaviors are rewarded, in simple words, we can call it institutional habits.
Organizations set certain rules and systems in the company that are intended to create or define the organization’s culture. But in truth, corporate culture is, in most cases, something that is implied rather than actually expressed directly. It is in many cases the unspoken rules that define the company’s behavior towards its employees, customers, suppliers, and the society; in fact any stakeholder.
In my opinion, the key ingredients for corporate culture are the core values of the organization. These define how you conduct business either within the organization or externally and therefore are not simply words or text you place on your walls, these matter a lot not only in their philosophical sense but also when in practice. It is what you do that will eventually become “implied culture” and therefore if we keep the values at the core of the organization and ensure that everyone acts on them, starting from the top and going down, then this will help in building the corporate culture one would like to see at their organization. Buy building a culture around strong core values, this builds employee engagement and creates strong loyalty among all stakeholders. Also creating a healthy and happy working environment is another key ingredient. As we have seen recently, the government of the UAE has placed a lot of emphasis on happiness and that is not just a coincidence. Therefore if we create the right environment, then we will see people operating more efficiently and acting on tasks and assignments effectively.
There are many ways to ensure a healthy corporate culture, but among the most important elements is to act on what is important to the organization. It is important to create an environment where employees can speak up. It is also important to make sure that the middle managers are good ambassadors not only on carrying the messages down but also on bringing the good practices to the organization. And to make what you do more effective; create a culture of accountability where people become responsible about their actions. When people within an organization feel that their performance is not reaching what is acceptable within the organization, they will take the initiative to change and improve. And that is the main purpose of accountability, which encourages people to take matters on their own hands and have ownership of what they do. Therefore recognizing good actions and good cases helps in encouraging healthy culture and practices in the company.
Additionally, acting consistently on several matters of importance to the organization, will help in delivering consistent messages that are important to the organization. This can be achieved by having good governance. If you have good governance in the company then by all means you will have a strong corporate culture.
There are many tools that one can use to influence culture but among the most important tools is to make sure that employees feel that they are secure (I do not mean comfort zone), so that what ever they do is not driven out of fear. Training by all means is very important, not only by showing what others are doing, but by also showing what your own employees are doing that has influence in creating a healthy culture. Also, Reward people who act on the company’s values, as actions that are built on the values of the organization have a long lasting effect and impact.
Peter Drucker, one of the greatest management scholars said, “culture eats strategy for breakfast.”
And that is very much true. As much as strategy is important, if there isn’t a culture that supports it, strategy will fail. If the organization culture is unhealthy, it will be very difficult to implement plans and tasks even if the vision is set and the goals are clear.
One of the most common practices in the region, where people intend to change culture is restructuring. However, we have seen over and over again, how restructuring has created more failure than success. It may create a success that is temporary, as they often tend to ignore culture. Therefore as the CEO of an organization, it is very important to observe and understand how a company operates. In other words, feel the pulse of the organization. What is good and what is going wrong, and who is behind the issues that the company is facing. I personally would usually start with the management team and the middle managers, as I believe that they are the key drivers for institutional habits, good or bad.
And to summarize how culture is very important to an organization, I would like to quote organizational culture guru, Edgar Schien,
“culture determines and limits strategy, the most important thing is to create or manage culture, if you do not manage culture, it will manage you, and you may not even be aware of the extent to which this is happening.”