According to Rakesh Khurana, a professor of leadership development at Harvard Business School, “large-scale statistical studies have failed to find any direct causal link between CEOs and firm performance.” He said that a corporation’s internal culture “exerts a far greater longer-term influence on the company’s success.”
I’ve written previously about culture in the light of the terrible events at Mid Staffs and elsewhere. Lord Myners’ report on the Co-Op has again highlighted the importance of organisational culture, leadership and governance.
Recently on the BBC news, he spoke of the lack of collective responsibility at Board level and an organisational culture which he separately described as “corrosive”. His report refers to the inability of the Board to hold Management to account and how the organisation was “stuck in denial over this near ruinous failure of corporate governance.”
The Co-Op, BP, Barclays, BBC, NASA and Mid Staffs are extreme examples of what happens when leadership, culture and governance are not taken seriously. Things are not “black and white”; there can also be less extreme shades of grey. And the impact of these shades of grey should not be under-estimated as they limit an organisation’s ability to perform effectively and deliver value to its stakeholders.
It can be difficult knowing where to start when it comes to culture and leadership, but here are some thoughts:
- Measure and map your culture using normed diagnostics (so you can compare your culture with a large comparison group)
- Identify the desired future culture (the one which will best enable you to be successful)
- Show your leaders and managers the impact they personally are having on culture, compare this with their desired impact and put a personal development plan in place to realise the desired impact
- Run engaging workshops with departments and teams so that they experience and understand the direction of travel and their personal responsibilities in bringing about cultural change
Culture has a huge impact on an organisation’s ability to function properly. Get it right and it’s like sailing with the wind behind you; get it wrong and there can be unfortunate and unintended consequences.