Human Resources experts see obvious value in creating organizational cultures that attract and retain exceptional people, yet we find it’s not always easy to convince other business leaders to focus on culture. In fact, lots of times, when we talk about spending time or resources on improving culture, leaders instantly think “culture” equals “fluff”: activities that ultimately make people feel good but don’t positively impact the bottom line or mission, and therefore, it’s not worth the investment. But, what happens if we don’t take the time to invest in culture?
If we dig deeper into American corporate history, many corporate disasters can be attributed to – you guessed it – systemic issues deep within organizational culture leading to breakdowns in communications or processes often with grave consequences and costly outcomes.
Take an incident at United Airlines spanning back to 1978 as an extreme and yet important example. The pilot of Flight 173 chose to fly at 5,000 feet on approach to the airport to troubleshoot a landing gear issue and prepare the passengers and plane for an emergency landing. However, there was not enough fuel onboard to complete the approach to the airport. The junior pilots are heard making mention of this concern to the more senior pilot, but he disregards it and the junior pilots do not challenge him. The aircraft eventually ran out of fuel and crashed approximately six miles from the airport. Of the 189 people onboard the aircraft, ten were killed and 23 were seriously injured.
Completing its investigation, the NTSB found a breakdown in cockpit management and teamwork during the flight. It found that the junior pilots did not assertively communicate their concerns about the fuel exhaustion to the senior pilot. The pilots’ interactions in the cockpit reinforced the culture of their time: a command hierarchy in which co-pilots would never question captains if they observed them making mistakes. Thankfully, the tragedy led to sweeping changes, and most notably, training of all pilots on communication and teamwork that is used today throughout the world and has probably prevented numerous other airline catastrophes.
Fast forward to 2016 and to one of the world’s largest automakers, Volkswagen (VW), which has been accused of intentionally modifying software on diesel engines to cheat emissions testing. VW chairman Hans Dieter Pötsch attributed the recent emissions scandal to “individual misconduct,” failed internal procedures, and a culture “that tolerated breaches of the rules.” Reports are surfacing of an internal management culture described in an article by The New York Times as “cutthroat” and “insular” that may have blatantly disregarded government clean air standards and enabled lawbreaking. The result? Millions of VW cars are being recalled worldwide, the company will pay $10 billion in fines, and it could face the risk of civil lawsuits. Matthias Müller, the new CEO, has pledged to change Volkswagen’s culture and restore the company’s honor.
How does an organization get a sense of its cultural health and avoid similar catastrophes?
Working with some exceptional clients, Helios has come to know having a great culture can not only prevent costly mistakes, but it can enable companies to lead in their industries. Here’s what those strong cultures have in common:
- They can clearly define their culture. Articulate the descriptors about “how we do things here” and behaviors that make your culture “your culture”. If walking down the hallway at your company and we ask employees, “What’s the culture like here?” and they give us 100 different answers, it may be an indicator of a company divided. And a company divided can lead to faulty decision-making and bad business choices. Defining it gives you a blueprint from which many of your other employee and talent programs and activities can flow.
- They know their culture’s strengths and weaknesses. Know what is and is not working effectively. However you choose to do this, whether it’s a formal survey like Helios’ Culture of Intention Survey, or by interviewing every person who works for you, make sure to get a sense of the workplace climate. Why? So you don’t focus time and resources on solving the wrong problems. And so that you can leverage what you’re already doing really well and reinvest your efforts there too.
- They create mechanisms that result in “early detention” of problems. It’s crucial to make space for employees to be able to air their concerns quickly before issues fester. And, to bolster engagement, it’s important that employees are able to contribute their ideas to make improvements to the company and to be involved in solving problems. And organizations providing feedback early and often to its employees are more likely to uncover issues of productivity, safety, and ethics than those organizations that do not.
- They hire for culture fit. Great company cultures are made up of those employees who reinforce it by living the culture and core values. And you want to maintain it by bringing in new people who carry it forward. Hiring the wrong person can spread toxicity and destabilize your workforce, leading to unwanted turnover or employee relations issues. But hiring for culture fit can reap many benefits. Amy Stark, Practice Director for Talent Acquisition at Helios HR says, “Organizations who hire for cultural fit as part of their process have a competitive edge in the talent marketplace. Many candidates prioritize opportunities based on cultural fit in addition to other factors such as career advancement potential and compensation. An additional benefit to hiring for cultural fit is an increase in employee retention and engagement within an aligned workforce.”
- They celebrate culture. Recognizing employees who positively contribute to culture creates standards for everyone’s behaviors. Some organizations celebrate a core value or their employees’ heritage each month. Whatever “it” may be, having rituals creates consistency because employees come to rely on them happening regularly. And it helps to create a sense of pride and community across the organization and what makes the organization unique and special.
When Helios has worked with our clients on tough employee relations issues or talent challenges, we often find a recommendation about culture at the heart of resolving the problem, such as finding better ways to communicate expectations to employees, designing avenues for employees to submit suggestions to improve the workplace, and selecting the right leaders. Often it comes down to ensuring that you have the right culture, and in turn, are treating your employees and your customers appropriately.
According to Kara Ariaill, Partner with law firm Holland & Knight, LLP, from an employment law perspective, a fair and respectful corporate culture is critical for minimizing the risk of employment-related claims. “Employees and former employees seek legal counsel when they are upset about the way they have been treated by their employer, or when they feel unheard. The attorneys with whom these employees consult then develop legal claims around the complaints of mistreatment. Compliance is important for avoiding liability, but given the extensive resources typically required to successfully defend litigation, employers should be equally focused on taking steps to prevent these claims from ever being filed. In that respect, corporate culture is key.”
Taking the time today to ensure you have a healthy and effective workplace culture can help ensure your organization is not facing hidden or substantial costs to your business down the road.