I just right now - hence with some decent delay - finished reading Russ Elliots Blog post from Sep 2, 2015 “Are employees important in defining Company culture?” Elliot is SVP Human Resources Director at Bridge Bank. He argues, that employees, who feel working at a great work place feel better, are more productive and hence result in a competitive advantage for the corporation itself.
While I agree that you might be more productive if you enjoy your work - and there is indeed plenty of evidence for that, drawing the conclusion for the competitive advantage might be right or might be wrong.
The question goes a bit deeper too. Once I followed a dispute about “What is a good organisational culture?” Whereas the majority agreed that you cannot answer this question that simply and it may differ from case to case, I let the chance of participating in this conversation passing by that day in favour of digging a bit deeper.
A good culture certainly, and I hope most of you can agree to it, is a culture, which helps the organisation to thrive as desired. In most cases, unless explicitly intended differently, this means long-term success.
But this just leads to the next question: Which are the traits that make a corporation thrive for long? Earlier already (2010-09-13, Structure follows market – and so does culture and 2010-10-03, Corporate culture & market) I published some thoughts on whether a certain culture is helpful or not.
Here I came to the conclusion, that the shape of the market, a corporation is in, demands a certain culture. So the way we are doing business influences, or even determines the way we interact with our customers and with each others – hence our culture. E.g. for an unsaturated mass production market a culture characterized by a hierarchy is most effective – and hence a good culture, although this might not necessarily be a feel-good-culture.
This is the Henry Ford and Fredrick Winslow Taylor approach. However in an innovation driven market, where success is bound to highly skilled personnel, some different form might be more appropriate, like a clan type of culture or even the start-up type.
One of my favourite authors of management literature, Gary Hamel has put it brilliantly in his book “What Matters Now: How to win in a World of Relentless Change, Ferocious Competition, and Unstoppable Innovation”:
- Today’s organizations were built for discipline and efficiency, enforced through hierarchy and routinization. They were simply never designed to change proactively and deeply.
- As a result, there’s a mismatch between the pace of change in the external environment and the fastest possible pace of change at most organizations. If it were otherwise, we wouldn’t see so many incumbents struggling to intercept the future.
You might even need to have both types – the efficiency driven and the innovation driven culture - in one corporation. And not surprisingly in a large banking corporation I encountered the interesting 3-letter Acronyms RTB & CTB, translating to ‘run-the-bank’ and ‘change-the-bank’ – meaning two distinct and considerably different worlds (and their resulting cultures) under one common roof.
Elliot is from the banking sector. I too had the opportunity to gain some experience in the banking sector with a considerable number of rather different institutions.
During an assessment of a banking merger (see 2010-09-16, Banking cultures – a case study) I found, that not accepting the need to maintain two very different cultures in parallel, as they were likely to result from the merger, may cause serious difficulties and may even threaten the envisioned ‘synergies’.
Let me quickly insert a personal story here. I once was called to deliver some IT-Consulting to an old and highly regarded private bank in Cologne, Germany – which does not exist any longer. While entering through the entrance portal I was deeply impressed by the sophisticated atmosphere of the venerable grand building and the gentility of the staff at reception. This grandeur however was not meant for me, as I quickly had to learn. Although I was dressed the finest business attire that I could factor in to my consulting fees, the trained view of the receptionist instantaneously categorise me as neither ‘old money’, nor ‘new money’ but ‘working for money’ – which translates to ‘not a customer’.
With a faint look of disgust and expressing his deepest regret, he taught me that here was not the appropriate entrance for me. Servants, employees, advisers and other personnel would have to enter the building through a side entrance in a dark back street. Obviously employees did not matter here – but neither did efficiency. So what did matter? Well, it was reputation. Maybe this was not sufficient, as this company does not exist anymore - maybe it was just false pretences.
So the conclusion is: people may matter more – or may matter less for the corporate success, depending of, how it is doing business.