Your Organization’s Culture: Help Or Hinderance?

Culture must be deliberate, intentional, and given its due consideration before the next crisis arises

Organizational culture is ubiquitous. Every organization has one, although not all can clearly define or articulate what it is. Organizational culture refers to the values, beliefs, purpose, behavior and expectations of a particular business or other institution. It can be felt more than it can be seen, yet it is powerful enough to alter the course of an institution.

Many organizations work very hard on their culture. There is an awareness that culture impacts everything else in the organization. In fact, in a 2016 survey of Global Human Capital Trends, Deloitte found that 82 percent of respondents believed that culture is a potential competitive advantage.¹ McKinsey reported on research of 1000 companies that demonstrated that those with top quartile cultures post a return to shareholders 60 percent higher than median companies and 200 percent higher than those in the bottom quartile.²

The global pandemic that has been with us for the past approximately 18 months has challenged organizations in ways that could not have been previously imagined. The very framework and foundation of organizations required rethinking and culture played out and was tested whether employees and their managers were aware of it or not. As we come up for air, it is essential to consider our organization’s culture and whether it was a help or a hinderance as we faced a crisis of unimaginable proportions.

One of the primary ways, in which culture impacted organizations during Covid-19, was in how employees were treated. As employees who could do so, were told to work from home, organizations demonstrated varying levels of support and attention to the stress and challenges their employees faced as they individually dealt with uncertainly, illness and sometimes death of loved ones. For example, PepsiCo gave at least an extra $100 per week to employees who produce, transport or deliver its products and provided a full salary for 14 days for any employee who had to be quarantined because of Covid-19.³

Shipstation⁴, a shipping software company in Austin with about 300 employees, hosted activities for its staff's kids at home to keep them entertained and busy, such as a magic show, webinars, and virtual lunches with characters such as Elsa from the Disney animated movie Frozen. Other companies made sure that all employees remained employed even if salaries needed to be cut temporarily. No matter the effort or initiative, these actions were a manifestation of values and beliefs, of culture.

Culture also materialized in decision-making or the lack thereof, in the days immediately following the declaration of Covid-19 as a global pandemic by the World Health Organization in March 2020. The determination of who authorized what adjustments and how fast was a component of culture. Did major decisions need to be made only by senior leadership, or did middle-level management have the authority and ability to alter their business operations? In most cases, speed was essential and decision-making bottlenecks could have had significant negative ramifications. As an example, on March 15th, 2020, local health officials of Seven Bay Area jurisdictions met and decided to issue legal orders on March 16th to shelter in place for their 6.7 million residents. It was their belief that “hours mattered” and they were able to mobilize efficiently. This was the first such order in the United States and it is believed that the speed at which this action was taken prevented many hospitalizations and deaths.⁵ The fact that various organizations were able to work together to expeditiously make decisions is a testament to not only their organization's individual cultures, but to the culture of a work group that came together in haste.

There are of course many other components of culture and demonstrations of its ramifications both positively and negatively. The key point to note is that culture exists in all organizations. Culture can be defined and harnessed, or it can take on a life of its own by virtue of the behaviors of individuals within the organization and the decisions that are made. As we move forward and look towards the day when Covid-19 is in the past, it is important to take the lessons we have learned and make use of them. Culture cannot be a stroke of luck; it needs to be cultivated in a thoughtful and determined manner. And the best place to start is at the top of the organization, with the board of directors.

The board of directors influences and impacts the culture of the organization it serves deliberately as well as unintentionally. One of the main responsibilities of the Board is to hire and oversee the CEO, who in turn, has profound effects on the culture of the organization. The board is also intimately involved in the strategy of the organization which significantly impacts culture. For example, earlier this year, Saks Fifth Avenue made the expansive decision to stop selling fur by 2023. This sent a message not only to the market and its customers, but to its employees as well. The company was signaling attention to social good over the pure pursuit of profits. The trickle-down effect from the boardroom is palpable.

Unintentionally, the composition of the board reflects the culture of the organization and vice versa, the culture of the organization is impacted by the board. The most obvious manifestation of this is in the diversity of the board or the lack thereof. All the best intended diversity initiatives within the organization fall a bit flat if the board remains a bastion of homogeneity. If an organization’s culture is truly one where diversity is valued, this must be reflected in its board of directors, not just in words but in actions, in its composition.

Legendary management thinker Peter Drucker famously stated, “culture eats strategy for breakfast.” This is as true today as it was when he said it in 2006. The pandemic has tested organizational culture and, in some cases, revealed components that did not function very well. As culture is set in motion from the top of the organization aka the board of directors, it is incumbent on these leaders to be aware and proactive. Culture must be deliberate, intentional, and given its due consideration well before the next crisis arises.

Notes