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  • Christiane Wuillamie

3. Culture Can Be A Significant Business Risk

This is the third in a series of blog posts from 10 Culture Principles.

IEDs (Improvised Explosive Devices) are cheap to make, can be built with little training, can be hidden from, and easily detonated with a cell phone or pressure sensor. An invisible hazard that causes great damage.

Corporate Culture as an IED

Corporate culture can be very much like an IED. We all know that culture impacts business performance, either positively or negatively, and a culture not in alignment with the strategy and goals of the company can actually derail otherwise excellent business initiatives.

Yet while most culture experts talk about values, and try to measure the overall corporate culture, I believe they are missing a hugely important element of corporate culture.

Culture can be a significant business risk.

Just like an IED is a risk to people driving or walking along a road or shopping in a crowded marketplace, culture can be a risk to business performance and the well-being of employees at all levels.

Let me explain. First of all, there is no such thing as an “overall corporate culture”. Culture is not one unified thing, but instead a collection of subcultures, many of which have strong beliefs about work, the business, management and their jobs.

Subcultures exist in all organizations and are a result of peer pressure to conform, combined with the very real human need to belong and be accepted by the group. Belonging is hard-wired into our DNA from early human history. Individuals couldn’t survive alone, so being accepted into a tribe meant survival. And the way to be accepted was to blend in, not stand out. To accept the norms of behaviour peculiar to that tribe. Those tribal behaviours were then reinforced by peer pressure. Likewise, when a new employee enters the workplace for the first time, they have a strong need to fit in, to belong to a group, to be accepted.

In every subculture there is an informal leader who either by force of personality, experience or wisdom sets the ground-rules and beliefs of the group. He or she may be the lead engineer with the most experience, the head nurse, the Master Sergeant, or the person who has been in the company the longest. Rarely are the informal leaders on the radar screen of HR as a key influencer or high potential, yet they have as much or more power over how things get done as any senior executive, probably more.

Culture as an IED

And this is how culture can become an IED. When a subculture is not aligned with the overall business purpose or strategy, it can easily block a new change initiative or business improvement attempt.

There are times when the subculture becomes an even greater risk to the business. Think about the subcultures of greed and fraud within investment banking that led to the global economic crisis of 2009. Or more recently the subculture within Volkswagen of a group of engineers and managers falsifying emissions data; unleashing a PR and financial disaster for the company. Or the 5-years of fraudulent bank accounts opened by Wells Fargo employees for customers who didn’t exist, all in the effort to satisfy the pressures of management.

A subculture can even be lethal, as we have seen in the explosion of the Deepwater Horizon Oil Rig in the Gulf of Mexico and the death of 11 workers, caused by a subculture of pressure to make schedule and reduce costs that led to excessively risky decisions.

Keep Your Eyes Peeled

The best defense against harmful IEDs in a war zone are the eyes of the soldiers, keeping a lookout for the tell-tale signs of roadside bombs. I am encouraging senior managers to look for the subcultures that exist within their organizations, to identify the informal leaders, to work with them to align the subculture with the overall purpose and strategy of the company.

When senior executives and business leaders don’t know where the subcultures are or how they impact company performance and employee engagement, that may be the biggest IED of all.

If you don’t understand your culture,

You don’t understand our business.

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