10
Understand Your Organization
Peter Drucker famously claimed, “Culture eats strategy for breakfast.” And it’s true. Cultures shape organizations in a way similar to how thoughts shape our behaviors. Cultures aren’t visible, but they’re powerful. If we as leaders want to guide our organizations toward greater success, we need to understand culture and how to influence it.
Culture, as elusive as it may seem, is stronger than the bricks of any company’s headquarters. Culture is created, maintained, and expressed by the many minds making up any organization. You can tear down an office and build a new one in a month. But you can’t change a culture that quickly. You can design an office to be just the way you like it, but you can’t design a culture to be exactly the way you want it. You can own a building, but you can’t own a culture. And if you move your organization into new offices, the environment will be new, but the culture may remain the same. Consider research that finds that 90 percent of all desired organizational change initiatives fail because organizational culture is not sufficiently taken into account.1
A culture is created by the people inhabiting it. It’s layered in the minds of those people. It’s layered as emotions, values, and principles. As discussed in chapter 2, most of the time these emotions, values, and principles exist below our level of awareness. We can’t see them. And most of the time, we have no idea that we’re being influenced by them. Consequently, we all shape a culture we’re part of, but often with values and behaviors we’re not aware of.
At the same time, we’re shaped by the cultures we inhabit. We are far more influenced by those around us than we might think. Researchers have found that the culture we’re part of shapes our brain structures and functions.2 Living in a Western culture, like that of Europe, the United States, or Australia, makes our brains more individualistic and causes us to see business interactions as more separated or compartmentalized. In contrast, living in an Asian culture shapes our brains to be more collectivistic and causes us to process information in a more inclusive manner.3 This strong reciprocal relationship—the individual as both the shaper of culture and shaped by culture—happens because we’re social beings - constantly driven to pick up on social cues and orient our behavior accordingly.
As leaders, the responsibility for shaping organizational culture rests on our shoulders, because people’s brains are wired to see and respect hierarchies.4 Human brains are oriented toward understanding where we fit in social structures and looking to those who appear to be dominant or in charge for guidance on how we should behave. As noted by author Daniel Goleman, although everyone has the ability to influence a culture, “it is the actions and behaviors of the leader that matter most because everyone watches the boss.”5
In fact, being a leader is a much greater responsibility than most of us realize. Through our behavior, we have a powerful impact on one of the most prevalent cultures in many people’s lives. Since most us spend far more time working than on most other elements of life—and because we’re social beings heavily influenced by those around us—what happens at work influences nearly every aspect of our life.
The simple fact is, culture matters. Because of this truth, we as leaders have a responsibility to shape culture in ways that are beneficial for the organization and the people in it. This chapter shows how culture rules organizations and how we as leaders can influence it. It will also show why putting people at the center of your strategy and creating a truly human culture is important for organizational performance.
Influencing Organizational Culture
Edgar Schein, professor at the Sloan School of Management at MIT, is highly regarded for his research on organizational culture and leadership. Schein has identified three levels of organization culture: visible artifacts; espoused values and beliefs; and invisible, unconscious values and beliefs. Schein contends that leaders are the primary source of organizational culture because of their ability to influence the invisible, unconscious values and beliefs that are the ones most difficult to detect, define, or manage. Because of this, he believes leaders’ primary responsibility should be to understand how cultures are created and influence it in ways that will be beneficial for the organization.6
For most leaders, this process begins with establishing a set of core values. Typically, these values represent the highest ideals of how leaders would like to influence individuals’ behaviors and functions at work. It’s necessary for people to know what a company values so they can determine whether their own values are aligned with the company. It’s also important for leaders to be able to articulate which behaviors are in line with desired values and which ones aren’t, so they can help shape individual behaviors to align with the collective whole.
It would be wonderful if influencing culture was as easy as creating a set of aspirational values and then letting the culture take shape on its own. If that were the case, most organizations would be great places to work, with high levels of engagement and trust. Publicly stated corporate values are universally positive and are all very similar. According to a study by James Archer, the twenty most common corporate values are: integrity, respect, innovation, teamwork, excellence, customer focus, trust, diversity, accountability, openness, quality, honesty, passion, safety, community, service, collaboration, responsibility, people, and commitment.7 If all organizations lived by these twenty values—well, we wouldn’t have issues with unhappy employees and plummeting engagement scores. Influencing organizational culture goes deeper than articulating a set of values and posting them on the wall.
Far too often, leaders fail to connect espoused values to workplace realities. The most common reason for this disconnect is that most leaders are not aware of the realities of daily life. Instead, most leaders operate on habitual autopilot, seeing what they want to see and hoping that simple words will fix complex problems. This disconnect also occurs because the stated values are inconsistent with other important business objectives. Consider the case of Wells Fargo that proclaims that it values “ethics” and doing “what’s right for customers.” Yet in 2016, more than five thousand employees were fired when it was discovered that, due to heavy pressure from supervisors to meet quotas, they created more than 2 million fake accounts collecting at least $2.6 million in fees from unwitting customers. Or consider Volkswagen’s proclaimed value of being “responsible for people, the economy, society, and the environment.” Yet in September 2015, the US Environmental Protection Agency announced that Volkswagen had intentionally programmed its clean diesel engines to activate certain emission controls only during laboratory emissions testing, thereby defrauding both regulators and consumers.
In both these cases, we can safely assume that individuals were knowingly operating against espoused values. But in many other cases, people operate with the best of intentions, and yet the organization’s values still conflict with employee actions. Take the case of United Airlines, which aspires to be the “Friendly Skies.” In early 2017, millions of people watched an online video of a security guard dragging a sixty-nine-year-old bruised and bloodied passenger off a plane due to established procedures for overbooked flights. In retrospect, it’s easy to see how that policy could lead to unintended outcomes; but clearly in creating the policy, leaders didn’t consider the potential negative consequences.
Although it may be easy to believe Wells Fargo, Volkswagen, and United Airlines are extreme cases, they’re not. Value statements are often turned into attractive posters and put on websites, but they’re not always apparent in daily operations, in how people are rewarded, how policies and procedures are established, or how decisions are made.
Although establishing a culture that aligns with core values and creates a stronger sense of engagement and purpose is a challenge, it’s not as complex as it may seem.
Just put your people first.
The People-Centered Culture
As we’ve explored throughout this book, human beings are neurologically driven to want to feel connected and valued. Since we spend so much time at work, many of us look to fulfill these basic needs by searching for purpose and connection at work. These needs are on one side of the engagement equation. On the other side, most organizations talk about how much they value their people. In theory, there shouldn’t be any problems with engagement: people want to feel valued, and organizations say they value people.
Although many factors contribute to dismal levels of employee engagement, one of the biggest drivers is rooted in what companies actually value. In the past quarter century, it hasn’t been employees. Or even customers. It’s been shareholders.
The year 1976 was a turning point for publicly traded companies. The shift was ignited by the article “Theory of the Firm” in the Journal of Financial Economics.8 Arguing that companies were owned by—and responsible to—their shareholders before anyone or anything else, the article started a steady movement that changed the general perception of corporations’ roles and responsibilities in society. Shareholder wealth became more important than employee health. This change has had a significant impact on both societies and companies. There are two primary problems with this “shareholders first” thinking. The first is a widespread focus on short-term results at the cost of long-term benefits. The second is a lack of incentive for corporate social responsibility.9 Both problems tend to come at a cost for the general employee and do not foster people-centered cultures.
A senior leader of a national retail chain in Australia, shared with us her experience of a “shareholders first” orientation. When business was going well, it was great to be a leader in the organization. But when times were tough, shareholders still expected short-term returns. To maintain these returns, the company made sacrifices. Employees were laid off or put under unrealistic pressures. When shareholders’ wealth is the main objective of companies, the tendency is for management to lead for short-term gains. And short-term gains often come at a cost for the people in the company.
In Capitalism at Risk: Rethinking the Role of Business, Harvard Business School professors Joseph Bower, Herman Leonard, Lynn Paine argue that boards must focus on company health before shareholders’ wealth.10 Only by doing so can companies regain trust from employees, and, in turn, attain long-term sustainable performance. In our fieldwork and research, we see this trend gaining traction. There’s a slow but growing movement among executives toward focusing on the long-term health of organizations and creating people-centered cultures.
People-centered organizations value “people first,” because it’s people who make the company successful. Marriott is a great example of this approach. When you stay at Marriott hotels, the overall experience is that the people in the company enjoy their jobs. Companies like Marriott realize that when people feel valued and cared for, they do their work with stronger intrinsic motivation, meaning, and engagement. They go that extra mile simply because they want to contribute to something that’s meaningful to them.
As we’ve examined in several chapters, genuine happiness comes from a sense of purpose, from true connections with others, and from an ability to contribute. Too many organizations try to address the challenges of employee disengagement and dissatisfaction by focusing on external gratification with incentives like bonuses, raises, funkier office environments, and free food. Although these benefits are nice, they represent short-term injections of pleasure, not lasting happiness. Consider the research discussed in chapter 2, which showed that people with higher salaries are not happier than people with lower salaries. If we were driven only by financial rewards, we should be happier the more money we make. But we’re not. Instead, if we as leaders want to uncover ways of solving today’s challenges with engagement, we must look deeper—we must look at what drives us, our people, and all the employees throughout our organization.
Base the Culture on Foundational Human Drivers
To increase engagement and productivity, we as leaders need to focus on our people’s foundational motivations. To create lasting engagement, we must look at the internal drivers of our behaviors, not just external factors like money and perks. If we lead with the goal of helping people create an intrinsic sense of happiness—of meaning, connection, and contribution—in their work, they’ll leave the office every day with a sense of fulfillment. And if we as leaders create an environment where employees feel a true sense of concern for their well-being—where we are truly present—they’ll become more willing, more enthusiastic, and more collaborative team members. These characteristics are in stark contrast to the all-to-common organizational cultures of busyness, rushed interactions, and competitive pressures.
This is why creating people-centered cultures is the most logical response to today´s organizational crisis of soaring employee disengagement and widespread job dissatisfaction. A people-centered organization solves these issues by putting people first. It reverses the power dynamic. And it puts the responsibility for engagement and meaning on the company rather than on the employee.
The key idea here is rather than thinking of people as being assets of the company, it is the recognition that people are the company.
This may not seem like such a radical idea, but it is a big departure from traditional management thinking that treats people more like parts in a machine. When work requirements were relatively simple, leaders could count employees the way they counted tools. If they had five hammers and five people to use them, they could calculate the number of widgets they could produce per day. Although this may have been successful in the past, in today’s much more complex and competitive environment, it’s no longer sufficient. Simple, repetitive jobs are done by machines. And treating knowledge workers like tools will not inspire them to create, innovate, and collaborate. New ideas can’t be pulled or purchased from employees—they must be offered willingly. An intrinsic sense of happiness, of meaning and connection, promotes a willingness to innovate.
Just to be clear, this people-centered approach involves much more than just saying, “Our people are our most important asset.” Many leaders already say this. But actually putting people first and creating a culture where human beings are truly valued is, sadly, a radical shift in how most organizations operate. But it’s a shift that needs to happen if organizations want sustainable performance. And one that we believe is enabled by creating a mindful, selfless, and compassionate culture.
Create an MSC Culture
Real change starts with leadership. If you as a leader don’t walk the talk, no one else will. This is particularly true for a people-centered organization—and certainly for developing an MSC culture. Creating an MSC culture requires you as a leader to visibly demonstrate the behaviors described in this book. Saying you want to be mindful, selfless, and compassionate isn’t enough: You must be mindful, selfless, and compassionate.
Chris Schmidt, CEO of US accounting firm Moss Adams, is passionate about the benefits of mindfulness for himself as a leader and for his organization. When he introduced mindfulness into the organization, he started with the executive committee and the firm’s managing partners. It was obvious to him that it was critical to start with leaders before engaging the rest of the organization. This would allow mindfulness to cascade down from the leadership through the various inter-organizational divisions and teams. “Any significant organizational initiative requires leadership support,” he told us. “If leaders aren’t onboard, the organization is unlikely to become more mindful. Also, mindfulness triggers a lot of discussions about the organization’s working culture. How do we manage interruptions? How do we minimize distractions in meetings? If leaders aren’t actively involved, it limits the positive change that can come from these discussions.”
But Chris discovered something even more impactful in helping create a more mindful culture. He realized he needed to be more explicit with people about how he was using mindfulness, moment to moment, to help his performance and effectiveness. For example, when a group came to him with a difficult issue to solve, he told them he would first take a mindful pause. “I wanted to ensure that my mind was calm and clear before responding to their request,” he explained. “That way, as I told the team, my response would be thoughtful rather than reactive.” By modeling mindfulness in action, he was better able to demonstrate its benefits.
Culture change and values must be modeled, not just posted on the wall.
A Truly People-Centered Organization
A great example of an organization that matches aspirations with actions to put people first is Barry-Wehmiller. With more than eleven thousand employees and revenue of $2.4 billion in 2015, it is a highly successful global supplier of manufacturing technology and services. Although most organizations measure success based on revenue, Barry-Wehmiller’s leaders measure success based on “the way we touch the lives of people.” Its mission statement reads: “We are in business so that all of our team members can have meaningful and fulfilling lives.”
And this isn’t just an empty slogan.
In the book Everybody Matters, chairman and CEO Chapman shares stories of how executives at Barry-Wehmiller guide policies and decisions based on putting people first.11 For example, during the 2008 financial crisis, Barry-Wehmiller’s revenue declined. While many other organizations laid off employees to save costs, Barry-Wehmiller chose a different approach. Chapman asked, “What would a caring family do in tough times?” The answer: everyone in the organization made a sacrifice so that no one would experience undue suffering. To help spread the pain, Chapman and his team initiated cost-saving strategies, including asking everyone to take one month of unpaid leave. These measures ensured that no one had to lose his or her job. In 2010, Barry-Wehmiller emerged from the recession with record revenues—and levels of commitment and loyalty unparalleled in its industry.
The example of Barry-Wehmiller shows what a truly people-centered approach to business looks like. When the overriding business goals include ideals like trust and compassion, the outcome is financial success. Chapman believes it’s a leader’s responsibility to “create an environment where people can discover their gifts, develop their gifts, share their gifts, and be recognized and appreciated for doing so—which creates an opportunity for them to have a more meaningful life, a life of purpose in which they feel valued and get a chance to be what they were brought onto this earth to be.”
An overarching belief in caring for every human being in your organization is a powerful shift in values with a direct, positive impact on the organization’s culture. Be careful, though, not to confuse this people-centered approach with being soft. Recognizing that people must be at the center of corporate strategy is not just about being kind and good—it enables true engagement and thereby high performance. To do otherwise is a recipe for disengagement, dissatisfaction, and, ultimately, suboptimal performance. Think about it. Do you really want your customers served by people who don’t feel valued? Do you want your equipment and tools handled by people who don’t believe you care about them?
Although you may not choose to go as far as Barry-Wehmiller, caring for people is the starting point for addressing organizational disengagement and dissatisfaction. It’s the first step toward creating happier, healthier, and more productive work environments. A truly people-centered business strategy requires a hard look at traditional approaches to leading organizations. It requires a rethinking of organizational values, operations, policies, and, of course, leadership models. But when good intentions are put into action, the increase in engagement, commitment, and innovation will benefit your organization—and the bottom line.
In the following chapters, we will explore how to cultivate a more people-centered organization through bringing more mindfulness, selflessness and compassion into the culture.
Quick Tips and Reflections
Reflect on the culture of your organization; can you identify three aspects that create barriers to people being able to perform at their best?- Reflect on the core values of your organization and consider whether they need to be reinforced or revised to better guide desired behaviors and outcomes.
- Consider how central people are to your strategy and what putting people more at the center of your strategy would look like.
- Commit to one thing you will do to influence positive change in your organizational culture for it to become more people centered.
- Consider ways you can create a more “human” work environment, where people can realize more of their potential.