Corporate Culture – The “What” and “Why” (Episode 1)

This is a true story.

A 5-star international hotel in Macau has a practice of giving a card to its staffs who have family members passed away. The card contains condolence words handwritten and signed by department heads and the General Manager. It is a gesture to show empathy to the staffs who have just gone through difficult times in life. The design of this gesture was sound. However, it’s execution was poor. Staffs whose family members have passed away will be asked to approach the HR department. Then, a HR representative will hand the card to the staff, “It’s for you.” That’s it. No extra words or any sort of verbal condolences, as if the staff is picking up a letter from the post office. In one incidence, the card wrote “I am sorry for the loss of your grandfather.” In fact, the one who died was the grandmother – the grandfather was still alive! The staff who got the card was furious, “Are you cursing my grandfather?” Due diligence, obviously, was not done. Disappointment was inevitable. As a matter of fact, the staff who received that card didn’t bother to tell her HR about the mistake – she couldn’t care any less.

It is not hard to suspect that this hotel was trying to create a culture of caring. They want to treat the staffs with kindness and care and hopefully it will translate into how customers are treated. The logic is fine, but companies that wish to create a culture by merely following policies and procedures will eventually fail. The card given to the staff was real in nature, but fake in spirit. Corporate culture is more than posters on the wall. Culture is not a set of rules to follow – it has to be lived.

What is and is not culture?

Culture, in the context of organizations, is a set of beliefs, values and experiences that guides the thoughts, feelings and behaviors of those in the organizations. It is invisible – beliefs and thoughts cannot be seen. Although many people like to make it visible by putting attractive posters on the walls, whether the practice is effective is another story.

Culture is not a Standard Operating Procedure (SOP). SOP can be written with corporate culture elements in it but we can’t write the culture per se on SOP, just as we won’t, and actually we can’t, write how we think on an SOP. Take the condolence card mentioned earlier as an example. Suppose the culture that the hotel wants to cultivate is caring. It takes genuine effort and a comprehensive delivery of the card to make the staff who receives the card to feel being cared. We can write a SOP about giving a condolence card whenever a staff’s family member passes away, but we can’t write on the SOP how the card can be presented with empathy and genuine condolence. Even the best idea in the world can do more harm than good if it is delivered poorly. Therefore, culture can be described but cannot be defined by policies and procedures.

Culture is not what we post on the wall. For instance, a company wrote “Speak Up” on the wall in order to encourage its staffs to express their opinions instead of hiding their thoughts. But when a staff tried to raise a concern during a meeting, the manager quickly jumped to conclusion by dismissing the value of the concern. That action alone, in terms of shaping a team culture, is way more powerful than what we post on the wall. Regardless how many team building events we do or have a world class design of the “Culture poster” on the wall, a quick comment by the manager himself can easily wipe out all the effort. People won’t remember the poster, but we can recall the manager’s comment vividly.

We can imagine that staff’s behaviors are shaped by two forces: Visible and Invisible. Visible forces are Policies and Procedures, SOPs, compensation and benefits. Invisible forces include purpose, mission, vision, values, culture. Visible forces are comparatively more tangible. They can be measured and rigidly followed. Invisible forces are less tangible, more sophisticated, but more powerful than visible forces in terms of guiding staffs’ behaviors and decision making if cultivated and sustained appropriately.

Why is culture important to an organization?

The answer is simple – it makes business sense. In one study conducted by John Kotter[1], a Harvard Business Professor, found that companies that strategically built a high performing culture turned out to be outperforming. Compared to competitors, their revenues increased four times faster, stock prices increased 12 times faster, new revenue grew 700%, customer satisfaction doubled, and many more.

It is not difficult to understand why companies with a healthy culture are outstanding. A common trait of a high performing culture is high trust among team members. As a result, toxic conflict and office politics are minimized. People are more cooperative and less silo thinking. A good culture can help company attract and retain talents, hence maintaining competitiveness in the long run. Lastly, it is simply more enjoyable to work in companies with a great culture. We spend more than 1/3 of our lives in career – who wants to waste our lives working in a toxic environment?

Can culture be trained?

If a healthy culture is so important, can we train people to adopt a certain kind of culture? The simple answer is no. Culture can’t be trained literally. It has to be modeled, molded, and sustained. Once the culture is formed, it guides people’s thoughts and behaviors. In situations where there are no SOPs to follow, culture will dictate the decision making.

Zappos, the online retail giant, is a case in point. Zappos is known for its extraordinary customer service and the fun culture. Its motto is: Create fun and a little weirdness. Their customer service representatives are known to go the extra mile for their customers – they will even order pizza delivery for you if that is what you want. It’s not an urban legend. It’s real and in fact a little bit crazy. Ordering pizza has nothing to do with their product offering. But if that’s what you want, they will make it happen[2]. No training in the world can create this “Wow” moments, and certainly no SOP will be written to tell you to order pizza for the customers.

While company culture can’t be literally trained, it can be created by applying many practices from the areas of leadership, corporate Learning & Development, and employee engagement. Before I explore how leaders and managers can help to form a healthy culture in the workplace in the next episode, I want to dig deeper on the characteristics of corporate culture.

1. Culture is Inside out, not outside in

Culture should not be defined by the company’s strategy or external factors. It should be created inside out. Think of yourself as an individual. Your identity defines who you are, how you think, speak, and act. The very traits that define who you are do not, and should not, change as you, for example, interact with different groups of people or travel in other country. You are still who you are because the way you think, speak and act are the basic building blocks that make up who you are as a person. What defines you as an individual comes from inside, not outside. The same goes for companies. Its identity, defined by the company’s mission, vision, values, culture, don’t change as the company adjusts its strategy or introduces a new product line. If it does, every time we change our strategy we will need to update our culture, which is not effective.

The other way to look at the principle of inside out is that we don’t cultivate a culture because of recent hot topics of what resources the company needs at the moment. For example, we don’t want to build a culture of LEAN just because it has become a hot topic and every competitor is talking about it. By the same token, we don’t create a culture to specifically attract talents in preparation of the new expansion plan. If we were, the culture would be dictated by external factors, which are uncertain and uncontrollable. Such outside in approach is like putting the cart before the horse.

2. Culture is unique to the company

Simply put, culture is unique and cannot be copied. Strategy can be copied, talents can be poached, but successful culture cannot be copied. Take Walmart as an example. Their senior executives used to fly in economy class. The company ended up buying private jets for the executives not because of status or luxurious purpose, but because the cost is cheaper in the long run. When their executives go for business trips, they share a motel room. It’s almost impossible to imagine but that’s their culture – frugal. You can copy Walmart’s strategy and poach their staffs, but you probably won’t let your executives share a motel room. The frugal culture is in their blood – it cannot be copied.

3. Culture has been and always will be in the organization

Imagine a baby was born in a family. Her parents were too busy at work hence didn’t spend any effort to raise the kid. The child grows up without much conscious effort of cultivation from the parents. Do you think the child will still be able to develop her own personality? Certainly. Even without the conscious intervention from the parents, the child would still have a personality coming from her innate traits plus the interaction with the outside world, including school, caretakers, friends, and the environment. Some children’s personality might be stronger than others, but every child will have a personality developed. It’s just a matter of strong or weak, desired or not.

Same goes for company culture. Leaders and managers are like the parents in the analogy. Whether you intervene or not, a team or organization culture has been formed. It could be a strong or not-so-strong culture. The culture could be desired or undesired. Whether you like it or not, it is there and it will always be there. The question is whether you, the parent of the child or the leader of the organization, want to consciously mold it or let it develop organically. The choice is yours.

In this episode we have talked about the What and Why of corporate culture. In the next article we will explore the How – how can business leaders consciously cultivate a culture that fits the needs of the organization.

This article was published on Macau Manager Magazine Issue 88.

[1] https://www.rhythmsystems.com/blog/the-roi-of-company-culture

[2] https://www.socialfresh.com/zappos-just-ordered-me-a-pizza/