A Harmful Corporate Culture Can Destroy Your Company
Your culture exists by design or by default. If you and your leadership team do not thoughtfully assess your organizational culture and then work diligently to proactively shape your workplace culture to align with your strategy, your beliefs and practices can morph into a harmful corporate culture that can derail your people, your customers, and your business.
The Definition of Workplace Culture
We define company culture as the way work actually gets done in an organization on a day-to-day basis. It includes the overall purpose of a company’s workforce and their collective attitude, assumptions, and behaviors. When company culture is aligned with company talent and business strategies, you have an unbeatable combination of factors that drive success.
Culture Accounts for 40% of the Difference
Corporate culture matters to the success of an organization. Our organizational alignment research at more than 400 companies across eight industries found cultural factors account for 40% of the difference between high and low performing companies in terms of revenue growth, profitability, customer satisfaction, leadership effectiveness, and employee engagement.
Yes, for sure, workplace culture matters.
Three Examples of Harmful Organizational Culture — Brought to You By United Airlines
But there is a risk in being too rigid in the way culture is defined and interpreted. From passengers being dragged off planes to dogs dying, United Airlines harmful corporate culture may have cost United over $800m based upon the 3.8 percent drop in its stock overnight. Here are three ways harmful corporate culture can manifest.
You only need to look at United Airlines’ recent disastrous negative publicity to see how they blew it.
In United’s case two teenagers were denied their flight because of “inappropriate” attire — leggings for heaven’s sake! And just two weeks later, a passenger was dragged off the plane (and injured in the process) as a result of the airline’s policy of overbooking seats.
Employees were so-called “prisoners” of ill-conceived and inadequately explained policies; they made poor decisions that hit the headlines and dramatically hurt the organization in the public eye.
Make sure your culture does not allow leaders to create an environment where employees feel like they must:
— Refer to rules and procedures to justify their actions
— Do things the way they’ve always been done, Accept the “status quo” by default
— Dismiss new ideas as irrelevant or too “different”
— Conform and “fit in”
— Give the appearance they’re conforming (even when trying something new or different)
— Strictly adhere to policies and standard operating procedures without question
— Focus on procedures rather than customer-centric outcomes
The teenagers would have been granted their seats. The overbooking would have been handled without the use of physical force. And most recently, a dog would not have been placed in an overhead bin without access to air.
A company’s cultural goal should be to empower employees to serve their customers without having to read the fine print of company policy or without being afraid of “doing the right thing.”
In 2013, United ranked last in airline quality ratings. In 2017, United ranked eighth ahead of only one regional carrier and two ultra-low-cost carriers.
While a strategy of operational excellence and an organizational culture that aligns with that strategy can certainly be effective (e.g. Walmart and Dell), United is learning that you cannot compete without a satisfactory level of customer intimacy. Southwest Airlines is a classic example of an airline delivering competitive pricing while delivering a compelling customer experience.
Misaligned performance metrics can cause cultural havoc on a business strategy. From the outside, it sure seems like United could create better results by better balancing how they measure operational excellence and customer intimacy
A COVID-19 Update — Pressure and Corporate Culture
Challenging times are when a healthy and aligned corporate culture should provide the fortitude and clarity to help leaders and organizations to perform at their peak. Challenging times are also when true corporate cultures and priorities emerge from the shadows. How is United behaving during the pandemic?
There is no doubt that United, like all airlines, is under fierce financial pressure. United posted a $1.6 billion dollar loss in Q2 alone. How are they responding to the pressure compared to the competition? It tells you a lot about their culture and priorities.
In June, United and American Airlines announced that they will go back to booking flights to 100% capacity despite the health risks to passengers and crew. Josh Earnest, United’s chief communications officer, even said “When it comes to blocking middle seats, that’s a PR strategy, that’s not a safety strategy.”
Conversely, Alaska Airlines, Delta, Hawaiian Airlines, JetBlue, and Southwest are all blocking seats for sale to limit the number of passengers onboard. Delta promised to keep the seat next to you open and was the first to remove passengers for refusing to wear a mask.
In what sounds like a step in the right direction, United Airlines has partnered with Cleveland Clinic and Clorox to help improve passenger and crew health and safety. Hopefully it is more than a PR stunt, and United is shifting to be willing to put people, not profits, first.
We will have to wait and see.
The Bottom Line
To thrive, we believe companies need be on the lookout for warning signs of a harmful corporate culture. Strive to simplify and reinforce policies that align with your strategy, give employees discretion to carry them out in a way that is in the best interests of the customer and the organization and align success metrics with what matters most.
To learn more about the early warning signs of a harmful corporate culture what to do about it, download The 3 C’s that Leaders Must Get Right to Create a High Performance Culture — According to Research
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