CULTURE: WHAT DIRECTION ARE YOU HEADED?

Ever wondered how such a seemingly little word, Culture can sound the death kneel for an entire organization or open great vistas of opportunities at once? In a lovely piece written by Cathy Perme on organizational culture, she says, In the early years of an organization, the entrepreneur or leader influences an organization greatly, because it is that persons perspective on the environment and the business fit that is implemented. That is, if the perspective is out of touch, the company probably goes out of business. However, if the company survives and even thrives as a result of this perspective, culture has begun to take root. In the beginning, culture is passed on orally and with much passion, as in this is how we do things around here. Eventually, however, organizations grow up and their perspectives about how to operate become embedded through policies, processes, hiring, promotion and reward structures. At some point, the organizations culture becomes bigger that its leaders and it molds leaders to fit culture instead of vice-versa. Edgar Schein (the originator of the word) said, Cultures are framed by what we assume to be true, that is, shared assumptions and values that deeply influence the behaviour of members. Culture Defined Culture is often defined as the way we do things around here. It is also feelings, underlying beliefs, values, history and as Schein said, assumptions about an organization. These are rooted in experiences, stories and behanioural patterns sometimes several years old. The culture tells people what is and is not acceptable. Culture is enduring and difficult to develop or reshape. It expresses itself, says Professor William Pietersen, through very specific, observable everyday behaviours that re every bit as tangible as cashflow and have just as profound an effect on organizational success. In fact, culture is so specific and concrete that a faulty one can sink an organization. A CASE IN POINT In the words of Pietersen, IBM was being buffeted by changes in its environment in the 1980s. Rapid advances in semiconductor technology were drawing its customers away from IBM style mainframe computers into the so called clientserver world ruled by personal computers. By 1993, when Lou Gerstner joined the company, the core mainframe business was collapsing. After earning a record $5.9 billion in 1990, IBM had lost a stunning total of $7.8 billion in 1991 and 1992. Its rapidly declining mainframe sales werent being replaced by client server revenues; the company was hemorrhaging cash; and its image in the eyes of the public was seriously tarnished. Gerstner believed that nothing short of a

fundamental change in the companys business model was required. And in his view, there was no greater barrier to his plans than the rigid, complacent culture at IBM. Yet before tackling IBMs culture, Gerstner resisted the plan he inherited, to break the company into a number of operating companies but rather formulated a strategy that would leverage IBMs unrivaled size and scope to competitive advantage. He believed that large enterprise customers would increasingly demand top-to-bottom technology solutions. IBM had to become an integrated company. To help him wage the battle, he recruited 5,000 volunteers, he called, Gerstners guerillas- with the profile: Committed to the long term success of all IBM; commitment to your career and to your business unit are not enough. Zealous in making things work for the customer, especially when the customers needs require the involvement of several different parts of IBM. Turf barons and baronesses need not apply It is important to note how cultural behaviours and attitudes Gerstner called for were in direct support of his integrated solutions strategy. As Pietersen further observes that Gerstner told his guerillas, we cant share knowledge; we cant reach out to customers, if we continue to operate in silos inside IBM. If were going to share knowledge, if were going to increase our speed, if were going to have a complete connection between our customers and us, we have to integrate inside of IBM. Weve got to work as a team. We cant be part of a division or a product; weve got to be part of IBM- coming together, delivering solutions. Pietersen further said, It is not a strong culture per se that creates organizational success. The key is to create a strong and relevant culture- that is, one that directly promotes the strategic aims of the business by measuring and rewarding the right behaviours. The existing culture, Pietersen retorts, in an organization is already being measure and rewarded. Thats why it exists in the first place- individuals in an organization are constantly being judged by their compliance with expected norms of behaviour. Inappropriate behaviour is discouraged through sanctions of one kind or another, and desired behaviours are rewarded in various ways anything from pay raises and promotions to pats on the back. Pietersen also says that if youre seeking a cultural transformation, it is imperative to decide on the new behavours you need, and then measure and reward them. As the old saying goes, what gets measured gets done; what gets rewarded gets done repeatedly. The key is to be very specific about the desired behaviours, and very deliberate about measuring and rewarding those behaviours. One of the things that Gerstner did was to change the companys compensation and reward system by replacing an undifferentiated, largely fixed system with a

pay-for-performance approach of variable rewards. And where bonuses had been paid to executives based solely on the results of their individual business units, he now tied much of incentive compensation to the performance of IBM as a whole- In fact, bonuses for the highest-level executives including those who ran the business units, were based entirely on compensation results Changing the compsensation and reward system of a company could lead to a change in behaviour. I like the way Professor John Kotter put it, culture changes only when or after you have successfully altered peoples actions after the new behaviour produces some group benefit for a period of time, and people see the connection between the new actions and the performance improvement. THE LEADERS ROLE IN COMMUNICATING THE NEW CULTURE Pietersen said, Its true that a leader must consciously and deliberately transmit the culture to employees. And clear communication is vital. Employees cannot perform unless they know specifically what is expected of them. But verbal and written communication works only if leaders behave the culture faithfully, visibly and sincerely. If they behave the culture in an exemplary way, they will set expectations unambiguously. If they dont, it doesnt matter what they say. The moment a leaders words and deeds diverge. His leadership will fail. As Ralph Waldo Emerson put it,What you do speaks so loudly that I cannot hear what you say Leaders must not only walk their talk, they must also drive their message into the fabric of the organization as Jack Welch said, Whenever I had an idea/message I want to drive into the organization, I could never say it enough. I repeated it over and over, at every meeting and review, for years, until I could almost gag on the words. I always felt I had to be over the top to get hundreds of thousands of people behind an idea. All these show the Herculean cultural transformation and integration that survivors in the banking industry need the need to harmonize compensation and rewards systems, the need to fully integrate all merging factions and silos into a team. The need for the new leadership to drive or communicate the desired behaviours; however, we must remember that it is not just what you say, it is what you do. It takes more than words and exhortations to inspire staff- what makes for effectiveness is action by management to adopt the change themselves- to walk the talk.

Kayode Olufemi-Ayoola Nb: cant actually remember when I penned this. Must have been some time in 2004 in Daily Independent newspapers.