Deborah has transformed one of the worst performing plants in the company to one of the stars. She appreciated the formal recognition as general manager of the year, but what she enjoys most is knowing she has made a real difference in the organization and in people’s lives. Although there was plenty of complexity and heavy lifting involved in the turnaround, she knows that the keys to her success were simple. It didn’t take a genius to see that people thought no one cared what happened, and that they were behaving accordingly. Just getting the place cleaned up and painted made a huge difference. The previous GM paid no attention to the appearance of the plant, and spent as little money as possible on what he considered frivolous things such as grounds maintenance and janitorial services. She saw immediately that the overall look and feel of the work environment gave a clear message that it was OK to be sloppy, and that management was not interested in anything but getting the widget out the door.
Her second major change was to hold people accountable. If they did not meet their commitments on time, she gave them direct feedback about her concerns, and made sure they understood that there would be consequences for underperformance in the future. Most people responded well, but there were a few bad apples in the group. She removed them, and was amazed at the positive and visible changes in the attitudes of those who remained. Her acceptance speech for the award was characteristically low-key and self-effacing: “Thank you very much, but this was mostly just a matter of fixing the broken windows.”
Characteristics of the organization (the nurture factor)
The previous discussions about the characteristics of people focused on nature, or the innate factors a person brings to the organization. You certainly need the right DNA to build an effective organization; but just getting the best people is not enough of a guarantee of success. Now, we shift the focus to nurture – the characteristics of the organization that will shape behavior. Cultures reflect unique combinations of personalities and values of their top leaders, and as a result come in a wide variety of flavors. This discussion is focused on two important factors of a successful culture: an environment that fosters ethical behavior; and one that also offers the chance for the growth of its people.
What do we mean by culture? Culture is the shared values, behaviors, and norms of a group. It includes patterns of activities and symbols that give it significance and meaning. Culture, in a business setting, is the essence of how we do things around here. Culture is analogous to personality traits. That is, it’s stable over time and affects behavior consistently in a wide variety of circumstances. Cultures develop over time, and they can’t be changed easily or quickly. However, with consistent attention, motivation, and courage, culture can be re-defined over time. The needle typically moves slowly, but it can be advanced with the right attention, emphasis, and incentives.
Company size and industry type aren’t consistently related to ethical culture; but the quality of work experience does seem to be a predictor of good behavior. To the extent that people in the ranks feel a sense of equity, professionalism, and pride in their work, they are inclined to behave well. When they feel their efforts are not rewarded, that their work doesn’t make a difference, that others in the company don’t care, or that nobody is monitoring their behavior, they’re more likely to behave poorly. Still, we need to be careful not to over-regulate. The more onerous the rules, the more likely people are to look for loopholes. This is a tough balancing act.
Involved boards tend to foster better decision-making. Because of this, smaller or private companies benefit from having an engaged and alert advisory board. In my own profession of psychology, most ethics cases brought to the regulating boards involve individual practitioners who work in relative isolation and who don’t seek advice from other professionals when potential ethical issues are on the table. Executives need contact with competent colleagues to make sure they’re behaving according to appropriate ethical standards and not getting on the slippery slope. People whose decisions are open to scrutiny from others are more likely to make good ones. As H.L. Mencken observes, “Conscience is the inner voice that warns us someone may be looking.” An atmosphere of collaboration in the organization helps to increase the chances that good decisions will outnumber bad decisions.
One of our fundamental needs for survival is to figure out what information means, so that we can tell whether it will help or hurt us. One of the best ways to do that is to look to people around us to help interpret that data. As noted in the earlier discussion about influence, the Law of Social Comparison explains that people we trust and identify with are a great resource to help make sure we perceive and interpret new data accurately.
We have strong needs to identify with groups we find attractive, or that we feel are powerful, and we tend to take on their ideas and behaviors without conscious effort or questioning. This is also the mechanism behind cults, delusional beliefs, and mob behavior. It has important implications for building and maintaining a desirable company culture.
As organizations grow, the top executives will have less direct contact with people in the ranks. A top executive’s good intentions and messages about the right behavior can be lost among competing messages from the person’s peers. The peer reference group exerts great pressure on members to conform to its norms and standards, and the force is even stronger in the absence of authority. Parents become keenly aware of this as they realize that the impact of their teenagers’ peer group is greater than their own. In a work environment, the peer group is the strongest source of information about how to behave, so the peer group should be of the highest quality, and should receive the right messages from above.
If we want to create great cultures, we need to keep in mind what author Malcolm Gladwell refers to as The Power of Context. He uses the Broken Windows theory of criminologists George Kelling and Catherine Coles for illustration. If a vacant building is left with broken windows, vandals tend to break more windows, then break into the building itself, perhaps to become squatters, lighting fires and wreaking other damage. If trash is allowed to accumulate on a sidewalk, more people begin to dump trash there, and eventually it becomes unsafe to park or walk on that street. The clear message given by these environments is that nobody cares and nobody is looking. We hope that people of good character would intervene, but that doesn’t happen. In fact, the research shows that the context of the situation is a powerful influence on behavior, regardless of personality characteristics.
Almost ninety years ago, human development researchers Hugh Hartshorne and Mark May conducted a series of classic experiments about character, clearly demonstrating that almost everyone would cheat given the right set of circumstances. They also found that preaching about it had no real effect. Somewhat later, psychologists Phillip Zimbardo and Stanley Milrgam showed that the frightening behavior of seemingly normal people in situations that pull for bad behavior (for instance, under the Nazi regime) is reproducible in the laboratory. Good people can be made to do bad things more easily than we want to believe. We might not want to hear this, but it can’t be ignored.
Although recruiting the right people is a fundamental key to building the right kind of organization, we need to remember what psychologists call the Fundamental Attribution Error, which refers to our tendency to overestimate the importance of fundamental traits and characteristics, and underestimate the importance of the context and situation. A bad system can corrupt or run off even the best people. Remember: bad is stronger than good.
The good news is that the broken windows effect can be reversed. If the environment is cleaned up (graffiti erased, broken windows fixed, trash collected) and if minor transgressions such as turnstile jumping in subway stations are prosecuted, the message changes. The application of this theory is at least partially credited with the dramatic crime reduction in New York City in the nineties. By changing the environmental context in this manner, the message now becomes, “we care, we’re watching, and we’ll take action.” The result is that people behave accordingly. Context is as important as character when it comes to organizational culture. Not only do you need the right people: you need to be sure they’re getting the right messages, and that the incentives for positive behavior and sanctions against negative behavior are clear, effective and enforceable.
You can’t police a culture into becoming what you want, but you can provide the right examples and incentives to produce behavior you want. This is not something that can be delegated. As with most successful initiatives, culture change must start at the top. A company’s culture is a reflection of the CEO and top executive team. They must serve as clear role models and remain above reproach. Although an individual’s peer group in any organization has great influence on behavior, specific messages from the top are heard loud and clear. The executive team must always stay aware of the Executive Amplifier noted in an earlier discussion – all messages, whether intended or not, are amplified and often distorted throughout the organization. And you’re always sending a message. Unfortunately, bad news gets attention. Furthermore, reports of bad behavior get around more quickly and have greater impact than those of good behavior. The CEO must invest time to coach a team to do the things necessary to develop a different culture. It takes careful investment of time and money. Although culture changes slowly, it does change over time if you reinforce the right behavior.
A top executive needs accurate data and knowledge to make good decisions, but leaders tend to get isolated. To build strong and effective cultures, leaders need to seek out dissenting opinions and tolerate bad news. The best of them will face facts unflinchingly and respond accordingly. One of Jim Collins’ findings from the Built to Last/Good to Great studies is that the most effective leaders build a culture of consistently “confronting the brutal facts.” Along these lines, psychologist Carl Rogers’ wisdom is worth repeating here: “The facts are always friendly.” When you’re at the top, there are many ways for information to become garbled or spun by political agendas. The culture of the yes-man is one of cover-up and selective information sharing, which can easily lead to ethical problems for the company. You must be able to handle reality.
How to build a strong culture: getting the context right and fixing problems
Companies can sometimes be successful without a clear vision, but a good mission and values statement can help people keep their efforts focused and can support them to make the appropriate decisions in the absence of specific leadership direction. Companies are better off in general with some definition of their purpose and values, but if it doesn’t help people on the shop floor make decisions and execute their work in the proper manner, it’s mostly a waste time.
A mission, values and vision statement has the advantage of delivering the right message to the troops, and can help create a shared sense of purpose. But your assumptions must be explicit. It’s a good practice to publish a short and clear (that is, not legalistic or ponderous) code of ethics. It should be written by the CEO, with company lawyers checking for legality and precedent, not written by the lawyers and presented to the CEO.
Aside from developing and publishing clear vision, values, and code-of-ethics statements, the following suggestions can help build the culture you want.
- Fix the broken windows. If there are ethical lapses, take care of them. Don’t tolerate bad actors simply because they make their numbers.
- Make sure everyone reads and understands the code of ethics. It’s not enough just to have a code. You need to be sure all of your people understand the code, and grasp how its concepts apply.
- Get the incentives right. Naturally, you should reward good behavior, but it’s also important to move quickly with transgressions. Remember the hot stove.
- A leadership development culture should include not only the selection of the right external candidates, but also a systematic program for early identification of internal people with potential. It’s crucial that people who are selected for leadership development possess enough of the foundation competencies to benefit from the attention; but selecting the right person is only the beginning.
- Sensitize your top executives, not only to your ethical principles, but also to the unanticipated consequences of appearances. They need to manage the optics of their actions to avoid even the slightest whiff of questionable behavior. They need to understand that they’re always in a fishbowl, and that they must be clear and bright role models for the right kinds of behaviors. Remember, when we know others might be looking, we’re more likely to make better decisions.
- Don’t preach – it doesn’t work.
- Be visible. Leaders who are out in the organization living the culture in a visible way and reinforcing the right behavior have a huge positive impact.
- Incorporate how into your measure of what, in your performance appraisal process. If a person consistently achieves strong results but does so with questionable behavior, the company suffers in the long run.
- Pay attention to assignments. Consider them carefully, to broaden the person’s scope. Let the employee risk failure, work for a really tough boss, and work in an unfamiliar part of the business. Assign work on cross-functional teams where possible.
- Develop and reward teamwork skills, not just individual accomplishment. Practical and useful teamwork training and insights are rarely taught and reinforced.
- Build a feedback-rich environment. This includes the infrastructure of support and resources: formal and informal tools such as 360 feedback; meaningful performance assessment; and individual coaching to help people act on new insights. Provide your executives with developmental coaching tailored to the person and the situation. Aristotle noted that acquiring virtue is like playing a musical instrument. It requires practice and a teacher.
- Encourage community involvement. Not only does this broaden employees’ scope and perspective, but it also allows them to serve as ambassadors for the company.
When highly successful people are asked about the things that were most helpful to their careers, they rarely talk about training, educational opportunities, schools or seminars. Their key learning and developmental experiences were more often frightening and characterized by adversity: such as being dumped into a job where they could fail spectacularly; working for a harsh, demanding or incompetent boss; or working in a new job with no preparation. They also often mention the importance of one or more good mentors and role models.
This brings us back to the original point. A culture starts from the top. People watch what the leaders do. It has a much more important influence than what they say. If the top executives act like good leaders, others will try to find ways to act like good leaders. If they act badly, their people will also model those behaviors.
Organizational culture has a strong influence on behavior. A bad system can bring down even the best people over time. Because of this, it’s imperative that leaders build and maintain the kind of culture that fosters the right kind of behavior, leadership development, and overall success. You can’t police a culture into what you want it to be, but you can provide the right incentives and examples of appropriate leadership behavior. Culture changes slowly, but it can change, with consistent and sustained attention from the top.