Corporate culture is very topical at the moment, as we see unprecedented numbers of organisations under scrutiny for inappropriate corporate behaviours. It was hoped that the introduction of corporate reforms (Sarbanes-Oxley, CLERP 9, Etc.) would see a significant reduction in such issues, but has that really been the case?
More importantly, who is responsible for these events. Craig Smith, in a recent article entitled The Critical Consequences of Culture (read it here) provides three case studies of recent failures of corporate culture, being Wells Fargo, Volkswagen, and Uber. In the case of the first two entities, the failures resulted from pressures in either sales targets (Wells Fargo) or product to market deadlines (Volkswagen). In both cases the organisations were fined very heavily, and the people who “did the wrong things” were punished, usually by being fired. The difference with Uber, is that it was the senior corporate executives who paid the price, unlike the first two. Yet when things go well, it is the senior executive team who take the credit (and often the multi-million dollar bonuses).
And that is the nub of Smiths article – too frequently it is the workers struggling to meet unrealistic targets set by the senior leadership that pay the ultimate price. Yet who sets the culture of the organisation? Senior leadership. Smith makes the point that “while individuals must bear responsibility for their actions, the body corporate can also have some measure of responsibility, not least as a result of the goals set by senior management and the culture in which employees operate’.
The challenge for leaders is to think bigger picture to see what the real culture of the organisation is as a consequence of their actions, and whether they are prepared to personally take responsibility for the resultant culture of their decisions. As you consider your organisation and culture, Avondale Business School (ABS) may be able to help to be the ethical company to want to be. Call or email Warrick Long on 02 4980 2168 or [email protected] to find out how we can help.