Corporate culture is a valuable business asset too
Blog Post › Enterprise-Wide Transformation
Manufacturing equipment wears out. The company’s technology network needs upgrades. Offices get refurbished. (Especially those outdated colors from 1998.) These are the maintenance costs every business deals with. But something else needs to be maintained, too, even at a cost. That something: Corporate culture.
Goldman Sachs has been very publicly paying the price for cultural erosion. Goldman Sachs executive Greg Smith recently resigned from the company in a very public fashion, blasting the firm for having created a “toxic environment” and totally transforming itself from the workplace he had joined 11 years earlier. Smith blamed Goldman Sachs leadership for focusing only on profits and not on the best interest of its clients.
The company’s response: Hey, in an in-house survey, 89 percent of our employees say we provide exceptional service to clients.
Well, that’s not good enough. In our experience at Insigniam, consulting for companies around the world about cultural transformation, we’ve learned executives tend to underestimate the impact of the 11% that did not give a favorable response —if 11% of your customers were as disgruntled as Smith, a well-run company would respond aggressively. The same ought to hold true for your workforce.
Consider it this way: A business is a network of conversations. All day long people are speaking and listening to others. That’s how work gets done—through conversations. The single biggest activity in any enterprise—even the most industrial—is conversing. And from these conversations emerge the culture of any enterprise. The network of conversations plays the music that sets the dance of the enterprise.
That means every conversation matters—especially the 11%. Smith even held his conversation in the pages of the New York Times, reaching millions of people and probably almost the entire Goldman Sachs organization. That is an extreme example, but who else in the company is having similar conversations in the break room or along the hallways?
A marketer knows that every unhappy customer complains to at least 11 other people. If 11% of the enterprise is having negative conversations with 11 other people at work, can we really believe that the culture at Goldman Sachs has not begun to decay?
The unfortunate experience at Goldman Sachs can serve as a wake-up call. All business leaders must realize that fostering corporate culture is as important as maintaining and improving any other more tangible piece of business property. True, culture — the way the people in a company speak, act, and interact — may not be as tangible an element in a company as is an IT system, but it is still a system that can be improved. And it requires regular maintenance, continual investment, and constant monitoring.
Just like IT systems can become obsolete over time, so, too, can cultures erode. Cultures have to be changed on purpose and not by neglect. If any company wants to continue to prosper and in turn foster breakthrough performance, it’s time to pay for maintaining and reconstituting its culture. Isn’t your financial performance worth the investment?
For more innovation research and discussion about business innovation, check out the Insigniam innovation blog.