Culture Clashes

The right workplace culture can enable a company's success, or be the key to its undoing. There are four distinct types of corporate cultures, according to a recent study, and each is tied to various levels of engagement.

Wednesday, April 4, 2012
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Anyone with doubts about the importance of workplace culture only had to read Greg Smith's stinging resignation letter to Goldman Sachs to be reminded, in quite a visceral way, of the critical role it plays.

"It might sound surprising to a skeptical public, but culture was always a vital part of Goldman Sachs' success," Smith writes in the New York Times op-ed section. "It revolved around teamwork, integrity, a spirit of humility, and always doing right by our clients. That was the secret sauce that made this place great and allowed us to earn our clients' trust for 143 years."

In Smith's view, however, that "secret sauce" has curdled into something unrecognizable.

"I attend derivatives sales meetings where not one single moment is spent asking questions about how we can help clients," he writes. "It's purely about how we can make the most possible money from them. If you were an alien from Mars and sat in on one of these meetings, you would believe that a client's success or progress was not part of the thought process at all."

Today's Goldman bears little resemblance to the investment bank Smith joined 12 years ago, he writes, with traders referring to clients as "muppets" and the goal being to make as much money as possible -- regardless of whether potential financial harm is done to the client.

Smith's assertions are sharply disputed in a statement from Goldman's CEO, Lloyd C. Blankfein, and its president and COO, Gary D. Cohn, who write that they "do not reflect our values, our culture and how the vast majority of people at Goldman Sachs think about the firm and the work it does on behalf of our clients."

In the statement, posted on Goldman's website, Blankfein and Cohn write that, of the 85 percent of Goldman employees who responded to its most recent employee survey, 89 percent said the firm provides "exceptional service" to its clients.

The culture at Goldman described by Smith stands in sharp contrast to the one at QlikTech, a fast-growing software company based in Radnor, Pa.

Each year, the company flies every single one of its 1,100 employees to an annual retreat to review the company's performance and reinforce its values, which include challenging oneself, moving fast, taking responsibility, teamwork for results and being open and straightforward, says George Bradt, managing director of PrimeGenesis, a New York-based executive-onboarding consulting firm.

"Their big thing is that, with culture, you have to actually believe what you're saying," says Bradt, who attended Qliktech's most recent meeting earlier this winter and spoke to 100 employees, including the CEO, during the event. "As an organization, you can't say you're values-based if you're not leading with those values."

QlikTech tries to embed the values of its corporate culture into as many processes as it can, including recruiting and performance management, he says.

"During job interviews, they ask candidates to explain how something they've done in the past that correlates with one of the organization's values," he says.

Every new hire spends a week at QlikTech's research-and-development facility in Sweden, where the company was founded, to learn about its culture. At the last day of the annual meeting, five employees are honored for actions they took during the previous year that best exemplify the company's values, says Bradt.  

"It's never about the stated values; it's about the values in action," says Bradt.

Corporate culture comes in different forms: There's four distinct workplace cultures, according to LeadershipIQ, a Washington-based consulting firm.

Those cultures are "hierarchical," in which companies are built on tradition and rely on clearly defined roles; "dependable," in which a heavy emphasis is placed on process and change tends to occur slowly; "enterprising" organizations, which are creative, competitive and meritocratic; and "social," in which emphasis is placed on collaboration, trust and relationships.

The findings were based on a LeadershipIQ survey released earlier this year of nearly 1,500 executives from a variety of U.S. companies.

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Interestingly, the same survey found that, on a seven-point scale, enterprising companies had the highest engagement scores, at 5.1. Next-highest were social companies, at 4.8, followed by dependable companies at 4.6. Hierarchical companies had the lowest engagement, at only 3.9.

Those findings came as a surprise to Mark Murphy, LeadershipIQ's CEO.

"I was surprised to see enterprising cultures outpacing social ones," he says, adding that the same survey conducted in China yielded similar results. "In terms of engagement scores, the enterprising culture basically crushed the other ones."

The employees of an organization with an enterprising culture may feel more tightly connected to its mission, thus leading to higher levels of engagement, he says. By comparison, the camaraderie fostered by a social culture may be a double-edged sword in that employees may lose sight of the organization's core purpose, he adds.

"It's easier to get confused and end up thinking 'Hey, we're here to enjoy each other's company,' " says Murphy.

Larry Senn, founder and chairman of Senn Delaney, a Long Beach, Calif.-based consulting firm and an expert on corporate culture, says the most effective workplace cultures are a mix of enterprising and social.

"People want to be part of an organization that is winning and performance-based, but where collaboration and trust, positive spirit and integrity are also part of the organization's culture," says Senn, author of the upcoming book Up the Mood Elevator: Living Life at Your Best.

"We tend to find that companies, in general, are doing a better job fostering enterprising behavior than they are on social behavior," he says. "Unfortunately, this social deficiency is driving employee turnover."

Mergers and acquisitions, new systems implementations and elaborate initiatives typically fail because organizations become caught in the so-called "jaws of culture," says Senn, noting that factors such as hierarchy, resistance to change and other various dysfunctional behaviors can unravel even the best-laid plans.

On the other hand, when HR leaders collaborate with their CEOs to design and implement a well-thought-out culture that encourages the types of employee behavior they desire, that creates a winning organization, says Senn.

Or as Bradt says: "In the end, an organization's only sustainable competitive advantage is its culture." 

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