Culture is top of mind as CEOs take decisions about talent retention, return-to-office, and equity (among others.) Major disruptions – with which we are all painfully familiar right now – highlight the impact of culture on a company’s success or failure. And it’s not just about people; culture affects overall performance. In fact, James L. Heskett estimates that culture can account for up to half of the differential in corporate performance among like companies.
Culture conversations are often rooted in the past.
Not long ago, while discussing strategy with a new CEO (hired from outside the organization), they told me: “I don’t want to change the culture.” My reply: “You already have.” A new person sitting in the CEO’s seat shifts culture. In my experience, denying this reality impedes progress, even with the best of intentions.
Separately, a CHRO described a culture of continuous improvement. While seemingly helpful, the result she described is a never-ending quest for perfection that stifles growth and change. These days, CEOs cite culture among their reasons for taking a return-to-office decision. As in: “We’re an office culture.”
Too often, culture conversations are rooted in the past. Some of these are well-intentioned. Yet, rather than preserving what they value about the culture, the net effect is to make it harder to achieve their objectives. Something needs to change.
CEOs shape company culture by their decisions and actions.
Simply by joining the organization, the new CEO changed the culture. Tracking metrics that perpetuated the myth of perfection slowed progress, even as the CEO set goals to accelerate performance. An “office culture” has little meaning in a virtual, work-from-anywhere world.
Every organization has an inherent culture – a fundamental predisposition that exists with or without the CEO’s direct intervention. Still, CEOs shape company culture by their decisions and actions. Failure to define (or clarify) explicitly the desired cultural norms typically results in a slew of unwritten rules that can impede productivity. It’s up to the CEO to nurture the culture that makes it easier to achieve objectives.
The CEOs I advise have learned that a positive culture can be the glue of the organization – not only to attract and retain talent, but also to get work done. The past – your heritage or legacy – is just one element of culture. It acknowledges past experiences and institutional learning that contributed to the organization’s performance to date.
Cultures that are grounded in the past neglect the other foundational elements of culture – values, image, and behaviors. Each one contributes to the organization’s working environment and how the company is perceived. It is also the combination of these four elements that makes cultures unique. The CEO guides the team to clarify or define each element. They put the pieces together in a way that best supports the future of the business.
The business environment is constantly evolving. So, culture must be a flexible glue. What worked or was valued in the past may be neither appropriate nor useful going forward. Culture can be a useful tool to navigate the changes and chart the course for the future.
This is the key question for CEOs: Is the culture you have the one you need?
Learn more about creating the culture you need in the "Elements of Culture©" tool (p. 189) in my book, Charting the Course: CEO Tools to Align Strategy and Operations.