The Power of Culture

I recently had the opportunity to facilitate a weekend retreat for CEOs and select members of their boards of directors. Although the working agenda for the weekend centered on the trade organization to which they all belong, the real fireworks happened in an evening developmental session. They had requested that we find a provocative leadership topic to explore. The group had a reputation for robust discussion – and it did not disappoint. What started as a discussion about governing change turned into a heated debate about the first priority of a CEO.

I am suspicious of formulaic approaches to leadership. While blog posts and books that provide the “10 Absolute Laws” or the “Five Undeniable Truths” about anything may be commercially successful, they are usually low on content.

In practice, there is not an absolute first priority for all CEOs. A first priority would depend on the needs of the organization and the resources available to address them. But this group was adamant, so we refined the question to be “If you could fully delegate everything except one major element of the job, and you wanted to have the most personal impact on the company’s success, what single thing would you keep as your own accountability?”

We went through the phases of finance, hiring, M&A and even sales, but eventually, the consensus was that the single most important accountability is culture-building. With their permission, I am sharing with you the reasoning behind this choice.

Culture impacts everything else. A strong culture influences everything in the organization. How people are hired (and which people get hired), how resources are allocated, how work is measured and even what opportunities are pursued.  Culture is endemic.

Culture-building requires and extends the gravitas of the CEO. Creating and sustaining a common culture is the work of the entire organization, but its shepherding and integrity require that the organization see the top leaders faithfully reinforce the culture with their actions and decisions. A culture will emerge at any company of any size. Leaders who are not skilled, dedicated and consistent in their creation and development of culture leave their organization vulnerable to a culture fostered by the most cynical and disaffected of their work force. Savvy leaders are purposeful about the development of a culture that serves organizational goals. And a strong culture sustains the highest values much more dependably than managerial oversight ever can.

A strong culture is the best means to increasing effectiveness and productivity. This one is actually pretty radical. In short, the group identified a number of things that organizations spend a lot of time and money to do that could be eliminated “if only …”:

  • “If only my people would talk with each other frankly and honestly on a regular basis, our performance management and 360 evaluations could be reduced by 90 percent.”
  • “If only I could trust that people would make responsible decisions based on the best thing for the organization, I could eliminate layers of administrative overhead.”

By the end of the evening the group was focused on a different question: “Why don’t we do this stuff?”

A number of culprits were identified. Scale makes visibility into what is happening across an organization difficult, and few if any leaders are willing to entirely trust the best intentions of their employees. Also, while the CEOs in the room could see the benefits in replacing rules with highly honored values, few of the board members were willing to endorse such radical free-thinking. As one board member pointed out, someone will be the bad apple whose actions require that controls be reinstituted to protect the organization from abuse.

But I can tell you that at least a few of those CEOs are looking hard at what the culture in their organization reinforces – and does not.

Originally published in Arkansas Business, Barry Goldberg On Leadership, November 8, 2010.