It’s all about culture. Period. It doesn’t matter whether you are talking about leadership, innovation, diversity, change-management, training, quality improvement/assurance, engagement, sales, delivery, customer service, communication, etc., it is all about culture. Look out the window any evening. There go 90% of your assets leaving the building. It is the real value of any organization and their only real product. They have the potential to be creative, passionate people who want to wake up every day who want to do their best. They also have the potential to be dysfunctional, controlling, egotistical, and complacent. Organizational culture is what makes the difference about which person walks through that door. It is the fundamental difference between long-term successful and profitable companies and those who eventually end up in the dustbin.

Here are some interesting facts about culture:

According to a KPMG study of mergers and acquisitions in the 90’s, 83% failed to return any positive shareholder value to the organization and was cited as the #1 career killer for C.E.O.s. The main reason given? Culture clash.

The public sector is facing a crisis in the attraction and retention of top talent. They cannot compete with the private sector in terms of compensation and they can no longer guarantee a job for life either and are constantly expected to do more with less. What is by far their greatest tool for attraction and retention tool? Their culture.

Studies among Gen. Y’s state that working environment and such topics as work-life balance and opportunity are cited as the top reason they select a place to work. In other words, do you have a culture that allows them to develop without burning out?

All of this work on leadership ignores what that the end result of leadership is culture. What good is having “great leadership” if the organization is so dysfunctional that people do not feel that they have a stake in the success of the organization?

The ‘What’ of Organizational Culture

Organizational culture can be difficult to define, let alone understand. Our definition of culture is:

Organizational culture is the collective unwritten beliefs, rewards, ethics and behaviors that determine how people within the organization react and behave both toward their internal and external stakeholders, peers, and customers.

There are 2 Types of culture – what a Flexible Culture and the Inflexible Culture. Flexible cultures are organizations where people are encourage and rewarded for their commitment. These cultures are innovative, diverse, and change-ready. They are outward looking organizations. Inflexible cultures are marked by their inability change and are places where peoples energies are focused internally.

Examples of Inflexible Cultures are:

‘Survivor’ Outwit, Outduel, Outplay.

It is a culture where people are so focused on the internal threats and politics that burn out is high and innovation, because it is ‘sticking your neck out’, is low. It is a culture dominated by fear.

Centralized

This is a very top heavy culture where senior management is at the center of every decision. It is a 50’s style corporate culture where the only people who make any decisions are senior management and change happens very slowly (if at all) because people have no ownership. It is a culture dominated by complacency. In this culture, when they tell you to hammer a nail you keep doing it until they tell you to stop.

Bureaucratic

This is a culture where process and procedures take precedence over people and needs. Systems are very well entrenched and are very rarely reviewed and changed. One Six Sigma statistic that always struck me is that 85% of the data that an organization collects is meaningless. In this culture, it takes an enormous amount of energy just to get through the paperwork.

Examples of Flexible Cultures are:

Customer-focused

This is a culture where people have ownership of their clients and are willing to push back internally and argue on behalf of their customers. This is a culture that adapts quickly to meet the needs of the marketplace because they know the needs and demands of the end user.

Learning culture

This is a culture that encourages innovation and where commitment is rewarded over loyalty (click here for explanation). In this culture, innovation and acceptable risk taking are rewarded and people are constantly encouraged to not only learn but apply their learning within the organization.

Ethical culture

This is a culture where people feel that the organization walks their talk. It is a culture that embraces real diversity and where people believe that they are part of a greater good and that what they do makes a difference. In this culture, people are engaged and empowered.

What makes up a culture?

We will explore all areas of culture in future newsletters, but a good place to start are the major elements that make up a culture. They are:

Leadership – What is the vision, plan and communication that provide the organizational glue?

Attitudes and beliefs – Is the culture you think you have the one everybody throughout the organization thinks you have?

Ethics – What is that you do as opposed to what you say?

Rewards and recognition – How are people promoted, compensated or recognized?
Processes and procedures – Are there clearly understood processes that are reviewed to meet dynamic needs?

Communication – How are ideas and initiatives communicated both formally and informally?

The Bottom Line

Culture has a direct impact on the bottom line. The way it works is quite simple. An initiative is implemented in order to meet a need. It is then communicated to the organization. The message is filtered by the culture which then implements it and affects how it is delivered to customers, when it is implemented, how much resistance there will be and the quality with which it is done. That implementation ultimately determines success or failure.