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Not paying attention to your business’ culture? There are serious financial consequences.

Mark Fornasiero
Not paying attention to your business’ culture? There are serious financial consequences.

Get a room full of CEOs and business owners together and they will tell you their most valuable asset is their people. Ask them where their biggest investments are in any given year and you get a list that includes technology, plant and equipment, etc. In our experience, staff training, learning, skill development, and building powerful cultures is not only woefully under invested in, it is usually the first thing to be cut when the business hits a slowdown. 

The reasons are varied and yet surprisingly similar across industries: culture is ‘soft’; we can’t measure the ROI; what if we train people and they leave? The flip side is, of course, what if you don’t and they stay?

Scanning headlines over the last few years reveals some extremely costly breakdowns in business cultures:

  • the misbehaviour, and poor decision-making in the financial services industries amounted to over $250 billion in fines being levied globally
  • in the energy sector, BP faced over $50 billion in fines and is looking at decades of litigation, and
  • in the auto sector, Volkswagen and Takata combined for over $25 billion in penalties.

This list is not exhaustive but the cost to the private sector for these breakdowns in human behaviour (culture) total at least $350 billion over the last 10 years. That is a staggering number. For some perspective, consider there are only about 30 countries in the world with an annual GDP larger than that. The commercial destruction to these brands is very costly and very real.

These events are all the result of poor decision-making by mostly very well-intentioned people. I don’t believe you can pin these outcomes on a few bad operators. I do believe people, in most cases, want to do a good job, believe in operating ethically, and don’t want to compromise their values when at work.

Unfortunately, business leaders have chronically under-invested in creating the environment and systems that support values-based cultures. Employees and staff want to do an excellent job for their employers. Often, the climates in corporate and SME cultures aren’t supportive of that desire. There is no system in place to communicate what acceptable behaviour looks like. Management doesn’t measure and reward people enough on cultural outcomes. There is no system in place to build the culture so that it becomes sustainable and a true business asset and, regrettably, the leaders at the top don’t always ‘walk the talk’.

Investing in your culture is critical. Developing your vision, creating and communicating your strategies and executing on them are, without a doubt, important. But remember, you will be asking your staff to carry out all those great plans and make a lot of choices in doing so. Leaders can’t be there to rubber stamp every decision, so a business must have a strong culture to act as a guidepost for its staff.

Ultimately, the only assets in your company that can’t be copied are your brand and your culture. The two are a reflection of each other. What your customers think of your business is reflected in your brand. Your employees go out into the world every day as standard bearers of your brand. They need the skills, confidence, and energy that come with working in a powerful, engaged culture supporting them. We have seen the monetary damage that can be inflicted on great brands when there is a cultural breakdown. Let’s learn from these painful, ‘hard’ lessons how to better invest in and support your best ‘soft’ asset.

Stay tuned for more blogs and podcasts on Navigating Change in Uncertain Times over the coming year as we help leaders build business resilience with agility and speed.

Mark Fornasiero