Funny thing, culture. We rarely pay attention to it when things are going well. Far too often, we take it for granted. It’s just there. Most casual descriptions of culture come down to this: “Well, it’s just the way we do things around here.” And in a simple, less complicated world, this might be good enough. But findings from a recent study I conducted with MIT Sloan Management Review suggest otherwise.
The project’s objectives were straightforward: understand the cultural characteristics that companies should possess to make them attractive to next generation employees, as well as the new behaviors that will be required of leaders so their organizations will stay out in front in the digital age. After releasing the report at the World Economic Forum in Davos, I have had the opportunity to talk with hundreds of executives about its implications.
Each leader crafts a narrative about their organization’s shared beliefs, their core values, and the behaviors they expect to see demonstrated among employees. They might even argue that these statements about beliefs, values and behaviors need not be written down explicitly because they are understood implicitly. After all, they are the essence of who we are and what we are all about. Would they be right? Not necessarily.
I’ve worked with C-suite teams on large-scale change initiatives for more than 35 years. And I came away from this new study and my ongoing conversations with executives with a sobering conclusion: Far too many organizations are suffering from broken culture syndrome.
How to spot broken culture syndrome
The research pointed to a troubling and deepening trend. The gap between a leadership team’s narrative describing its company’s culture and how people actually felt about working there was widening. Employees cited large gaps in their perceptions of their organizations’ readiness to compete, leadership skills, and fit-for-future mindset of their leaders, with 88% of employees reporting a lack of organizational preparedness. Unsurprisingly, perceptions of transparent communication and trust were equally low.
The implications are not difficult to discern. When leaders talk about how purpose-driven, customer-focused, innovative, or collaborative their cultures are, they might find themselves preaching to an unresponsive choir. As a leader, it’s important to find out how authentic your narrative about your culture feels to employees on the ground. Does it ring true, does it produce energy or drain it? Is it in need of minor repairs, revitalization, or is it fundamentally broken?
You’ll have a good idea if your organization is suffering from broken culture syndrome if your employees feel that your culture is the problem, rather than the enabler to solving your customers’ most pressing problems. Culture is the glue and grease of organizations, but when I hear leaders talking about how strong their culture is I tell them they shouldn’t care about that. You can have a strong culture that produces pathological outcomes. I suggest to them that they should care more about how healthy their culture is. A healthy culture serves as the glue that binds us together in good times and bad. It can also be the grease that facilitates innovation, fresh thinking, and resiliency. But an unhealthy culture can also serve as glue and grease: the glue that keeps us stuck in the past or the grease that causes us to slip and fall when we lose our way.
Identifying 3 common triggers of broken culture syndrome
While broken culture syndrome can take hold in a variety of ways, there are three common triggers: culture clash disorder, cultural inertia, and toxic collapse.
Culture clash disorder usually occurs during post-M&A integration activities, when it becomes evident that the merging organizations operate under different sets of norms and guiding principles. However, it can also surface in large complex organizations with many business units and differing strategic objectives and subcultures, such as in financial services. Investment bankers behave differently from wealth managers or retail executives. Deal-makers ought to behave differently from advisors or stewards. The disorder emerges if some of the leaders in those businesses behave in ways that violate the core values and guiding principles of the company as a whole.
Another trigger leading to broken culture syndrome is cultural inertia. When employees feel that culture change is above their pay grade, they feel powerless. They feel irrelevant to the change process and perhaps even victimized by events unfolding around them. The response is often to retreat and experience change as something happening to them. Cynicism takes hold and employees find comfort in banding with others feeling victimized. But cultural inertia can also be found in organizations with long histories of success, where leaders in those organizations don’t see, or refuse to see, the urgency for change. In this case the inertia stems from believing that the rewards for legacy behavior outweigh the risk of not adapting to a changing environment.
The third trigger, toxic collapse, is perhaps the most dangerous. Toxic collapse occurs when an organization is experiencing a fundamental and widespread erosion of trust. In this scenario relationships have deteriorated into intra-company warfare, with entrenched factions digging in for battle. The accumulation of power trumps statements of purpose and values. Rainmakers behave in whatever way serves their self-interests, regardless of the extent to which their behavior flies in the face of written or spoken principles. This is when you hear previously committed and engaged employees say they are leaving because this isn’t the company they joined anymore.
Overcoming broken culture syndrome in your organization
Broken culture syndrome need not be a fatal condition in your company. As a leader, it is important to know what challenges or problems you are solving for, then focus on those areas. Each trigger of broken culture syndrome will likely require a targeted response. For example, when the CEOs of Price Waterhouse and Coopers & Lybrand noticed the first signs of culture clash disorder setting in, they promptly engaged leaders from the two merging firms to work together in a project they called the PwC 50, aimed at developing a strategy to provide superior service to the new firm’s top 50 clients. Finding the glue that would bind these leaders together — excellent service to clients — enabled them to work together as a newly formed team.
Dave McKay, the president and CEO of Royal Bank of Canada noticed that a number of his senior leaders were in danger of coming down with a case of cultural inertia. He was feeling resistance to the changes he wanted to bring into the bank in light of the rapid digitalization of the financial services industry. The reason: 25 years of unrivaled success from the bank’s familiar competitors. McKay engaged in a process that he called “collective ambition,” an intensive analysis of the future of the industry, Royal Bank of Canada’s current position globally, and a comprehensive series of dialogues aimed at rededicating the organization to its core purpose while simultaneously reinventing the company. It proved to be a remarkably successful approach to wiping out any signs of cultural inertia.
When Alan Mulally took over as the new CEO of Ford Motor Company in September 2006 the company was on the verge of bankruptcy financially, and already bankrupt culturally. Toxic collapse had set in to such a degree that Ford’s culture had become the problem rather than the means of getting the company back on its feet. Due to a culture of fear that had taken hold, leaders were terrified to bring bad news to the CEO. The climate was characterized more by zero-sum/win-lose relationships, rather than by a spirit of collaboration and trust. Mulally changed all of that by insisting that leaders would have each other’s’ backs by helping each other to succeed. He forced a process of fact-based analysis rather than a policy of “no bad news to the CEO.” Teamwork and extreme customer focus became the new way of doing business. Those who wouldn’t change were replaced, sending a clear message that Mulally meant business.
Mullaly’s transformation of Ford has been widely recognized as one of the most successful revitalization efforts in recent history, and if you’d ask Alan for the reason for this success, he’d respond that it was primarily the result of his reviving the organization from toxic collapse.
In addition to developing targeted responses to whatever might be causing broken culture syndrome in your organization, there are six universal therapies that will get your organization on the road to recovery:
- Clear out all the noise and focus on what’s causing broken culture syndrome in your organization, because it is likely the cause of your most pressing business problems. Rededicate yourselves to being a community bound by purpose, performance, and principles.
- Forget the notion that culture is guided by implicit assumptions. Make explicit statements about the unique signature of your organization — what makes it a special place — but then engage employees in active discussions about the gaps that might exist between those aspirational statements and the reality on the ground.
- Appreciate that saying it, talking about it, even writing it down doesn’t make it so. Be sure that you, the leader, are role-modeling your narrative and that you are holding the leaders around you accountable for doing the same.
- Make the feeling contagious. Find healthy culture carriers at every level of your organization so employees begin to trust that the change is taking hold.
- Realign metrics and rewards to create a transparent line of sight between the written and spoken words and noticeable changes in those appointed to leadership roles by living the values and guiding principles.
- Continuously care and feed your culture. Remember that culture is not a constant. If it’s broken, you and your team can fix it together. Don’t believe that culture is above your pay grade. If large-scale culture change feels a bit out of your scope, remember you can start with your team. You can set a new tone and contribute to conversations that will root out broken culture syndrome in your organization.
Douglas Ready is a senior lecturer in organizational effectiveness at MIT Sloan.