CEOs should lead corporate culture

But it takes a rare breed to do it.

It’s become something of an obsession, particularly for business leaders under pressure. Perhaps one of the most unlikely advocates for the idea of corporate culture in recent times has been former Barclays chief executive Bob Diamond. Before being forced out of the bank he claimed to “love”, Diamond repeatedly spoke about the importance of building a culture of integrity and trust and he once defined true organisational culture as being “how people behave when no one is watching”.

Meanwhile on the G4S website, the security outsourcing giant states that it is proud of its “distinctive culture and strong values that are cascaded through the organisation”. It would be interesting to hear Nick Buckles, the G4S chief executive, explain what part that culture and those valued played in the current Olympic security farrago.

Both examples demonstrate how closely culture and leadership are connected. Both organisations fall into a category that might be called macho management.

Hierarchical, slightly old-fashioned and reliant on a supposedly “strong” leader to set the organizational tone, which can then cascade down through the ranks. In these situations, the values, ethics, behaviours and attitudes of the top people in an organisation set the tone and culture. Such leaders usually feel the need to add their seal of approval or stamp of authority on every major decision.

They also like to keep organisational power secure in the centre. They surround themselves with people who agree with them, people who defer to the position and authority of the leader rather than challenge their wisdom. This is a culture that has little or no place for dissent and little time for discussion. These leaders would agree with the old-fashioned concept that it is lonely at the top.

Rather than a strong, open culture, this approach breeds fear and resentment and encourages people outside of the hallowed centre to keep things under wraps if they think it might displease the leader. It encourages people to misreport activity in order to make sure those they are reporting to hear what they want to hear. When the leader shouts jump the rest of the management team ask “how high?” and then rush off to organise jumping practice and instigate new height measurement protocols.

Management and leadership writers have spent the past 30 years filling business school library bookshelves with reports, books and academic papers about the value of low-profile leadership, open and transparent management processes and creating cultures that empower people to make decisions at the lowest effective level in an organization. Those as close as possible to the front line should be the ones making the most important decisions quickly and effectively.

The trouble is that this rhetoric and research is hard to put into practice. The modern corporation was born in the image of the military and too many leaders appear hard-wired to continue this approach. Worse still, too many senior and middle management adopt the attitude of followers, rather than challengers.

While most people can probably name a company that does things differently, if you ask lots of people you get a depressingly short list of the same usual suspects. It’s refreshing, and yet also shamefully rare, to hear of a successful organisation that adopts an upside-down culture or whose leader seems to embrace the idea of an open culture and is big enough to actively invite dissent and discussion around the boardroom table.

That’s because it takes a rare breed of leader confident enough to do it. And a rare bunch of shareholders and investors to allow it happen. The financial crisis and recession have made things even harder. The upshot of this is that senior executives are not used to dealing with confrontation or dissent. Perhaps that’s why so few CEOs seem to know how to cope with the uprising among the shareholder and investor community.

The bad news for CEOs — and shareholders — is that culture change is difficult and painful to do at all, let along do well. The good news for all of us is that recognising there is a problem with culture is a good first step towards making things better.

This article originally appeared in economia.

Some CEOs. Photograph: Getty Images

Richard Cree is the Editor of Economia.

Photo: Getty
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Can Philip Hammond save the Conservatives from public anger at their DUP deal?

The Chancellor has the wriggle room to get close to the DUP's spending increase – but emotion matters more than facts in politics.

The magic money tree exists, and it is growing in Northern Ireland. That’s the attack line that Labour will throw at Theresa May in the wake of her £1bn deal with the DUP to keep her party in office.

It’s worth noting that while £1bn is a big deal in terms of Northern Ireland’s budget – just a touch under £10bn in 2016/17 – as far as the total expenditure of the British government goes, it’s peanuts.

The British government spent £778bn last year – we’re talking about spending an amount of money in Northern Ireland over the course of two years that the NHS loses in pen theft over the course of one in England. To match the increase in relative terms, you’d be looking at a £35bn increase in spending.

But, of course, political arguments are about gut instinct rather than actual numbers. The perception that the streets of Antrim are being paved by gold while the public realm in England, Scotland and Wales falls into disrepair is a real danger to the Conservatives.

But the good news for them is that last year Philip Hammond tweaked his targets to give himself greater headroom in case of a Brexit shock. Now the Tories have experienced a shock of a different kind – a Corbyn shock. That shock was partly due to the Labour leader’s good campaign and May’s bad campaign, but it was also powered by anger at cuts to schools and anger among NHS workers at Jeremy Hunt’s stewardship of the NHS. Conservative MPs have already made it clear to May that the party must not go to the country again while defending cuts to school spending.

Hammond can get to slightly under that £35bn and still stick to his targets. That will mean that the DUP still get to rave about their higher-than-average increase, while avoiding another election in which cuts to schools are front-and-centre. But whether that deprives Labour of their “cuts for you, but not for them” attack line is another question entirely. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to domestic and global politics.

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