Untangle The System
“Are you here to fire us?” I turned my head and came eye-to-eye with the employee who’d asked the question every other person in the room was too afraid to ask. I scanned the room and studied the faces of the beleaguered employees. Their eyes were riddled with emotions of apprehension, anxiety, and fear.
Before that day, I’d never worked with this company. The employees knew me only by name and that I was an external consultant hired to work with them over the next few months. The Board had retained me to “take a look under the hood” following the abrupt resignation of their longtime CEO. For the sake of anonymity, we’ll call him Sam. Sam had moved on to another CEO role in a different state, and the Board worried he had left some exposure to the company in his wake. In the two weeks since Sam’s departure, whispers of the toxic culture he had created started seeping out to the public. Until then, his nearly decade-long tenure as CEO went relatively unchecked.
On paper, the company looked strong. The staff team met increasing sales quotas year after year. Flush with money through tight expense control and revenue generation, the company appeared… healthy. It was clear the Board saw the results it wanted to see from Sam and the team. They were winning! The numbers were in the green! So, they asked very few, if any, questions about how the team achieved the impressive results.
While I’d experienced my share of toxic cultures and poor leadership in my career, as I looked around the room, this was like nothing I’d personally experienced. The fear was palpable. I said, “I’m not here to fire anyone. I’m here to listen, and to learn.” Ultimately, based on my findings, my job was to recommend a CEO candidate profile to guide the Board’s Executive Search. But judging from that first day, it was going to be a challenge. Over the next several weeks I interviewed each employee individually and in groups. I evaluated the financial statements, sales results, and customer service metrics. I visited all the company sites and talked to customers.
My report to the Board revealed the true state of the company. Staff members had created fraudulent customer profiles to inflate annual sales results by as much as 50%. They were so busy fabricating results, it left them little time for true customer acquisition and retention. They followed the CEO-mandated protocol blindly, out of fear of retribution. They constantly worried about losing their jobs in a volatile employment market. The need for the job kept them shackled as Sam intensified his fear-tactics while the company continued to devolve.
Sam hid losses behind creative expense suffocation. Offices were in disrepair and, in some cases, dangerous for staff and customers. Technology was outdated and dysfunctional. Aside from Sam and a few “favorite employees” that he cherry-picked, staff members had no performance reviews or merit increases for at least the previous five years. Customer retention was abysmal. Internally, the organization was in chaos. And that internal chaos had bled externally. As pressure mounted, and it was clear he could not keep up the ruse any longer, Sam used his yet unblemished record of success to pursue his next opportunity. He left mere months before the organization’s significant decline started surfacing.
This company did not make the news. This is not the Wells Fargo account fraud scandal that has become case study fodder for every business school in the world. You’d probably have to dig around the web for a while to find anything about it. As a consultant, I see these types of situations unfold daily in large and small organizations, and across all sectors. As a researcher, educator, and lifelong student of leadership, I’ve studied innumerable companies that have been brought to their knees at the hands of toxic culture-building executives. On the flip side, I’ve also had the delight of studying those organizations led by Leaders that clearly get it. Culture is an organization’s most powerful force for building enduring organizations.
As I watch companies build, and grow, and decline, and break, and start over again, I find myself atop the culture soapbox. If you’ve known me long enough, you’ve likely had the joy of hearing my Culture Cake metaphor. Culture gets the reputation for being the “soft stuff” and I’ve affectionately termed it, the Frosting. Most culture-building efforts get pawned off to Human Resources or become haphazard efforts fashioned with random perks like dress-down Fridays, and pot-luck Wednesdays.
Let me be clear. These things are the Frosting.
And don’t get me wrong, delicious frosting is my favorite part of the cake. But culture is far more than just the frosting. Culture is the whole cake. Culture-building is actionable work that must be methodically planned, painstakingly executed, and meaningfully cultivated. But we’ve grown lazy and untrusting. In the dizzying, fast-paced digital age, anything that can’t be quickly implemented, measured within an inch of its life, and shown to have an instantaneous return based on some obscure algorithm gets tossed out with the morning garbage.
Culture-building isn’t a quick-win growth strategy. But… it’s the only sustainable one.
“Proven results” come in various forms. Since culture outcomes take time, we have to learn from those who have come before us. Researchers and management gurus have studied the link between performance and culture since the early 1950s. Known as the originator of the term, corporate culture, Elliott Jaques published The Changing Culture of a Factory in 1952. His revolutionary research revealed how the company’s focus on positive social forces drove effective production and collaboration. If you think that managers are skeptical about the impact of culture today, just imagine how these revelations went over 70 years ago! In 1992, Kotter and Heskett released the results of an extensive research study of 200 companies demonstrating that strong culture increased net income 756% over 11 years. I’ll take 756% in 11 years over huge gains in a single year, only to watch them plummet the next, any day of the week.
The process can only start when Leaders intentionally engage in culture-building. From there, it takes time, and patience, and practice. That’s why most organizations tend to settle for the boxed cake with a can of store-bought frosting.
But I want you to have your delicious, scratch-made cake and eat it too. So, I’m going to explain how this works. Elements of any environment, or system, reciprocally influence each other creating a reinforcing context. The reciprocal influence and reinforcing context breed conditions for evolving and convoluted organizational problems. But the reverse is true too.
When the Leader is steady, empowers her team to take risks, and personally leads courageously, she reinforces the Trust Culture and untangles the culture of fear. As a result, the team takes risks, innovates, and performs at its highest level.
When the leader demonstrates gratitude and personal commitment to holistic wellness, she reinforces the Vitality Culture and untangles the culture of fatigue. As a result, her team is productive and engaged.
When a Leader is inclusive and self-aware, she reinforces the Culture of Parity and untangles the culture of isolation. As a result, her team collaborates and is more connected.
When a Leader is virtuous and committed to her own personal growth, she reinforces a Culture of Purpose and untangles the culture of apathy. As a result, her team is committed and motivated.
This is why culture—healthy or toxic—is so complex. A leader’s role in untangling, or further tangling these issues is inevitable. How people lead and the type of culture they perpetuate have the most profound impact on how effectively they can untangle the system.
Over the next couple of months, we will untangle the system together. I’ll share with you how your actions, as a Leader, reinforce a healthy organizational culture. We’ll explore the Trust Culture, Vitality Culture, Culture of Parity, and Culture of Purpose. Stay tuned, and eat more delicious cake.
