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The term “culture”, specifically “organizational culture”, is used widely and casually with little understanding of the tangible impact it could have on business.  (iStock)
The term “culture”, specifically “organizational culture”, is used widely and casually with little understanding of the tangible impact it could have on business. (iStock)

Opinion | The carrot and stick approach helps build a company-wide culture

Research shows having the right culture can swing business results by as much as 30%

It is strange that in the corporate world most people continuously enhance their understanding of strategy, technology, marketing and financial planning, but their knowledge of organizational culture remains as bad as it was when they started work 20 years earlier.

The term “culture", specifically “organizational culture", is used widely and casually with little understanding of the tangible impact it could have on business.

Try this simple exercise: Ask five senior executives and/or founders the following questions. Can you explain what organizational culture means to you? Can you describe the salient aspects of your organizational culture?

It is likely they will provide unclear and inconsistent responses. Research by IBM concludes that right culture can swing business results by as much as 30%. It is, therefore, as important to get a working knowledge of culture in the same way as most of us have of, say, strategy.

Don’t get taken in by a company’s espoused values or its office layout. They have no relationship with the culture of the company. Culture is almost always tacit and unstated. For example, you could have a company culture where disagreements are rare and there is seeming consensus at the end of meetings. You might tend to conclude that the teams collaborate well. But dig deeper and you may discover that this is often a false consensus because the culture, as Ashok Malhotra, one of India’s leading organizational development professionals, says, could be one of “outward compliance but inward resilience". This means that even though the team members may have agreed on something, each will go back and do his or her own thing. In a different company, conflict may be dealt with openly and alignment on expected actions happens quickly.

Defining culture

Culture is about behaviours that are rewarded or punished. That is precisely the reason in some companies teams collaborate well on special projects. Such companies reward good corporate citizens who go beyond their day jobs.

The reason it is so difficult to reward the right behaviours and penalize the wrong ones is because often the wrong behaviours produce some short-term gains for an organization and the right behaviours could produce some short-term pain.

It is not easy to change culture because it usually represents the DNA of the leadership team/founders and it evolves slowly. One may, therefore, legitimately ask: “If organizations can’t change ‘who they are’, what’s the whole point of understanding culture?" It is the same thing as asking: “If individuals can’t fundamentally change who they are, what’s the whole point of developing better self-awareness"? Self-awareness helps an individual better understand herself in relation to the world around her, and hence, deal with situations more effectively. The lesson in this is that you should know what your organizational culture is even if you can’t change it easily. If you know that in your organization consensus cannot be taken at face value you can evolve a workaround.

People often ask me, how should a startup (or even a more mature company) drive its culture across the company?

A company, however big or small, can drive a practice, behaviour or value if the five to 15 senior-most leaders are collectively and strongly committed to it. Whether it is conducting meetings effectively, or demonstrating speed, or respect for people, it can be driven if these leaders are serious about it. The way it works is each of these individuals demonstrates and lives what they want to drive home every day and this encourages the same behaviour in their direct reports. Their direct reports will soon start living this value or behaviour. It will slowly percolate down and across.

There are two reasons it is so difficult to drive multiple good practices across the breadth and depth of the company: getting the five to 15 individuals to agree and sign off with their heart and soul on many diverse things is not easy; and weak leaders are often reluctant to take ownership for driving behaviours and instead rely on peripheral and distracting fixes like compensation plans and organization structures that they think would magically induce the right behaviours.

In summary, culture is all about the behaviours that are consistently encouraged and rewarded by almost every leader in the company.

*T.N. Hari is head of human resources at Bigbasket.com and adviser to several venture capital firms and startups. He is the co-author of Saying No To Jugaad: The Making Of Bigbasket.

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