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How to fix the broken culture of an established company

Module 6: Knowledge framework for growth

The core of an organisation is its culture – and a culture for growth is dependent on your company’s values. But there are a lot of things to consider before you can determine whether you have a culture for growth. These include:

  • The values you want to define your company’s culture and the behavioral descriptors for each value, e.g., if teamwork is a value, what does it mean to be a team player in your company?
  • Making “fit with values” part of your hiring criteria – and your staff KPIs.
  • Praising people who behave in ways that demonstrate your values – they will be role models for the rest of your team’s behavior.
  • Having the difficult conversations with people who are not acting in accordance with the company’s values.

“People problems” arise because they haven’t identified their company values

Some CEOs say they don’t want to grow because they don’t want to deal with more people problems. But these “people problems” arise because they haven’t identified their company values. They have a collection of employees instead of a carefully built team – some may be great performers, but others don’t fit in, or underperform. Fortunately, by getting the culture right, and attracting and retaining people who do fit with the company’s values, many people problems will disappear.

How does culture affect business growth?

Culture is the central core of a company. It defines the terms of engagement between the company and its employees, its customers, and its vendors and suppliers. It is not a fluffy “nice to have” – it enables you to operate at a lower cost, perform at a higher level, and grow more quickly. A strong set of values contributes to company growth in a number of ways:

  • Better candidates are attracted to companies with well-defined values, so the recruiting time and costs are reduced. Likewise, companies that use their values as a screen will be able to sort-and-sift candidates more quickly.
  • New hires find it easier to learn the ropes and get up to speed because they are working with colleagues who share similar values.
  • When someone isn’t working out as expected, it’s much easier to identify whether it’s a performance issue or a “fit with the values” issue.

Case study: Elizabeth

Not long ago, Elizabeth was being recruited to the CEO position in a company that had just experienced embezzlement by the CFO. She was wondering whether she should accept the job and asked, “How can I be sure I’ll be successful? How do I know if I can fix this culture?”

Elizabeth decided that before she could accept the CEO position, she needed further information about the company’s existing culture – and to determine whether she could provide the kind of leadership the company needed. She sought key information such as:

  • the company’s mission, values, and vision statement
  • financial plans and reports from the last three years
  • the executive team’s resumes
  • job profiles and hiring criteria
  • reports from internal employee surveys and external customer surveys.

Elizabeth needed this information to make her own assessment about the company. And if board members couldn’t produce anything but financial reports, that, too, would be a telling piece of information in its own right.

ANZ Business Growth Online Program presented by Dr Jana Matthews, Australian Centre for Business Growth at UniSA. Part of the knowledge framework for growth module.

Fixing a broken culture

When there are signs that your organisational culture is broken, what should you as a leader do about it? In two words: fix it. First, identify the existing set of values, and decide if they still define the company. Then modify as necessary, roll them out and reinforce them.

After reviewing reports provided by the board, Elizabeth interviewed the executive team. While they were unclear about the values and culture of the company, they all wanted to put the past behind them and rebuild the company. So, because of this, Elizabeth accepted the position and told the board she would do the following within the first month:

  1. Establish a task force to develop a report with findings and recommendations for improvements.
  2. Review all positions and employees in the finance department to ensure they had identified everyone involved in the embezzlement.
  3. Conduct an organisational assessment or audit so employees could rate the company and identify issues inhibiting growth.

When there are signs that your organisational culture is broken, what should you as a leader do about it? In two words: fix it

After reviewing the results of the organisational audit and task force report with the executive team, Elizabeth began implementing the recommendations, searching for a new CFO and slowly rebuilt the culture of the company.

As she introduced change, she tied it to the employees’ responses to the organisational assessment. For example: “Because you indicated there was not enough communication about the growth plan, we have included more time for discussions about the company’s goals before the departmental plans are formulated.”

Elizabeth used the organisational audit to help her identify the existing set of values within the company – which ultimately enabled her to fix the broken culture, turn around the company and begin growing again.

Creating a culture that supports growth

The creation of culture actually depends less on the values themselves, and more on the way the values are implemented and applied in a company’s everyday life. If the leader and executive team identify, live, talk about and take action according to the values, there will be an internal consistency and congruity that will enable the company to thrive. But if the values are “paper values” and aren’t practiced, then employees will become cynical, and will lose faith in the mission, the values, the vision – and the leadership.

Depends less on the values themselves, and more on the way the values are implemented

There are several ways a culture can be broken: not taking time to define or communicate the company’s values, or defining but then ignoring those values. If you have a broken culture, take ownership of the problem. Do an organisational assessment, get feedback from all your employees, and then develop and implement a strategy to repair your culture. It can be done, and it’s a great way to unlock the growth potential of your company.

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