“Culture Eats Strategy for Breakfast” – Peter Drucker
Over the past 15 years we have worked with many companies in every type of industry and with a wide range of revenue and level of profitability.
In virtually every situation, we were asked to help our client improve operations and profitability.
While our approach includes a number of tasks, one of the most important things we focus on is corporate culture. Corporate culture is the foundation by which any company operates.
Our experience includes working with clients that have many different types of culture.
We have learned, however, that there is a direct correlation between the culture of a company and it’s operating performance and related profitability.
This relationship is extremely important and we are devoting the next two blogs to this topic.
This blog post will discuss the cause and effect of a bad culture and how it negatively impacts companies. Our next blog will discuss the elements of a productive culture and how it contributes to the success of companies.
“CULTURE” DEFINED …
It is important to look at the definition of an organizational culture.
In a paper published in the Academy of Management Journal, in 2006, Ravasi and Schultz characterize organizational culture as a “set of shared assumptions that guide behaviors.
It is also the pattern of such collective behaviors and assumptions that are taught to new organizational members as a way of perceiving and, even thinking and feeling.
Thus, organizational culture affects the way people and groups interact with each other, with clients, and with stakeholders.
In addition, organizational culture may affect how much employees identify with an organization.”
BAD CULTURE WILL …
Inherently, bad corporate culture ultimately leads to poor performance, operating losses and sometimes the failure of a business.
Some cultures can be labeled negative or toxic and originate from a leader, management team or a management style that promotes an environment that every person should fend for themselves.
There is typically a heightened sense of individualism and an environment that encourages individuals to get ahead at the expense of everyone else.
Management typically encourages conflict and promotes a combative style of behavior by encouraging an “Us versus Them” mentality.
ANOTHER EXAMPLE SKILLS …
Another example of poor company culture we have found in troubled companies, is a situation where there is a void in leadership.
The company typically does not have a clear leader and the management group is incapable of making even the most basic decisions.
When decisions are made, it is by group think and is often a compromise instead of making the best decision for the business.
Furthermore, no one is responsible for looking at the big picture and setting strategy even for the near-term operations of the business.
This results in a lack of clarity with the middle and lower level management of the business.
The end result is a lot of people wasting time on tasks that really do not move the business forward.
6 EARLY WARNING SIGNS …
There are many more examples of poor company culture, however, we would like to highlight some early warning signs of a bad culture that if recognized, should result in rethinking the approach to the current cultural environment.
• Poor management and leadership
• Lack of empathy
• Micromanagement
• Low office productivity
• Poor internal communication
• Lack of Discipline
When working with a company, we look for one or more of these warning signs early in the process. If they are prevalent, changing the culture becomes a critical element in developing a plan for improving operations.
IS YOUR CULTURE EFFECTIVE?
These issues are addressed early in the process and checkpoints are established along the way to assess if the culture is changing.
Ensuring that the cultural change is occurring is an important benchmark and contributes to the success of achieving our objectives.
No company’s culture can ever be perfect.
Our experience, however, in working with many companies, reflects that working toward an effective corporate culture will result in a more productive and profitable business.
Our next blog will focus on the attributes of an effective corporate culture and how it positively impacts a business.
Revitalization Partners specializes in improving the operational and financial results of companies and providing hands-on expertise in virtually every circumstance, with a focus on small and mid-market organizations. Whether your requirement is Interim Management, a Business Assessment, Revitalization and Reengineering or Receivership/Bankruptcy Support, we focus on giving you the best resolution in the fastest time with the highest possible return.
