Is Your Culture Working For or Against You?
Today's leaders face a new era of corporate reputational risk from both inside and outside their walls, making it more important than ever to articulate and embed a shared purpose and set of values that will serve as a guiding light during troubled times.
By Samantha Weiner
Traditionally, companies invest more in reputational risk response to address negative press, allay employee concerns, and more. But in today's environment, it's essential that companies focus on preparedness -- which means knowing what the company stands for and making sure that everybody who works there knows it too.
Think about companies that have faced risk from the inside where performance-driven at all costs cultures have led to employee misconduct and tarnished company reputations. And an increasing number of companies face reputational risk from the outside when issues in the public sphere cause employees, customers, or even activists to demand that companies take a stand on hot button political topics or executive orders from the White House.
Before taking a position externally, companies need to look inward. Culture is an organization's most valuable asset, and while it is intangible, it can be shaped. Culture is a driver of company reputation and, if working against you, can increase an organization's reputational risk. A culture by "design" rather than "default" strengthens an organization's core and gives a company purpose, allowing it to be unwavering in its deep commitment to shared values. These values should serve as a filter for company actions and decisions made, both proactively and in response to a crisis.
A company's culture is not only defined by its values and purpose, but also by the things that bring them to life inside the organization -- its history and stories (like IBM, which celebrated its centennial with an immersive "THINK" exhibit); how people work together, what kind of actions are recognized and rewarded, and even its physical workspace (like Apple's recently opened "Apple Park" campus in Cupertino, Calif.).
Consider the way that values-driven culture at Starbucks helps to make the organization more reputation risk resilient. Over the past few years, Starbucks has taken a position on social and political issues. Values such as "Creating a culture of warmth and belonging, where everyone is welcome" and "Acting with courage, challenging the status quo and finding new ways to grow our company and each other" gives Starbucks a platform to take a stance and holds them accountable for it.
Companies that proactively define their purpose, values, and culture know where they stand when issues arise, eliminating the need to reactively define a point of view. For Starbucks, their public position on social or political issues, while sometimes provocative, is viewed as credible because of their deep commitment to their company values.
Think about your organization. Do you let culture happen around you or do you proactively strive to shape and nurture it? Are there cultural risks that have been exposed as a result of recent events? An evaluation of these cultural "pressure points" should be an integral part of your reputational risk management and preparedness strategy.
Based on my experience working with clients across industries and geographies, here are four warning signs for organizational cultures that breed reputational risk.
Management, not "walking the talk." Organizational culture starts with leadership and that extends well beyond the C-suite. Leaders and managers across the organization need to actively model the behaviors the company is seeking to drive among employees in alignment with the values; when they don't, a company's reputation is at risk. We saw an example of this in Volkswagen's recent efforts to pass vehicle emissions tests which, according to Volkswagen Chairman Hans-Dieter Pötsch, were taken because of "a mind set in some areas of the company that tolerated breaches of the rules," a mindset that goes against many of the company's core values and led to the suspension of nine managers.
Profit over purpose -- incentivizing and rewarding performance without regard for core values. Corporate values and purpose should not be hollow words on a page, but rather a filter through which decisions are made and guide for employee behaviors. An example of this involves companies that reward sales teams based primarily on the dollar amount they're contributing to the bottom line against set targets without regard to the way they reach those sales goals. Doing that creates an unspoken understanding that the end justifies the means. This can lead to variations in employee interpretation, and detriment to the integrity of your company values. When actions (internal or external) are disconnected from a company's core values and purpose, reputational risk rises. Instead, rewards programs should recognize performance while also holding employees accountable for embodying behaviors that align to the company values.
Employee feedback sounds too good to be true. No company is perfect, which means that an absence of criticism could signal a bigger cultural issue like lack of empowerment and a fear of retaliation against perceived criticism. Companies should proactively seek input from their employees on a regular basis and make a point to highlight what changes are made as a result, and employees should feel empowered to share their candid feedback without fear of personal retribution. This includes reporting instances of ethical violations.
Ignoring the fresh perspective of new hires. Every industry has a different definition of what "healthy" employee attrition means. If your organization sees higher turnover than industry standards, there is an opportunity to take a step back and figure out why. Exit interview data can be a goldmine for this type of information. Keep in mind, though, that employees leaving an organization may not be willing to say much during exit interviews if they don't think the organization is willing to change for the better. Glassdoor can also be a helpful window into what former employees say about the corporate culture and work environment. High turnover among recent hires brought in to be change agents can be an indicator that the organization isn't willing to hear new ideas, be inclusive, or adapt to its changing environment.
Assuming that old and reliable ways of working will help hedge against a reputational risk is dangerous. Instead, think about how elements of your current organizational culture could restrict your company from being able to adapt and respond to the external environment, industry shifts, and disruptive market forces.
Company values, and the culture that stems from them, should be at the center of your organization's reputational risk management strategies to help steer through the ambiguity of today's environment, and well beyond.
Samantha Weiner is a director in the employee engagement and change management practice at Weber Shandwick.