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.

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Will Jeremy Corbyn stand down if Labour loses the general election?

Defeat at the polls might not be the end of Corbyn’s leadership.

The latest polls suggest that Labour is headed for heavy defeat in the June general election. Usually a general election loss would be the trigger for a leader to quit: Michael Foot, Gordon Brown and Ed Miliband all stood down after their first defeat, although Neil Kinnock saw out two losses before resigning in 1992.

It’s possible, if unlikely, that Corbyn could become prime minister. If that prospect doesn’t materialise, however, the question is: will Corbyn follow the majority of his predecessors and resign, or will he hang on in office?

Will Corbyn stand down? The rules

There is no formal process for the parliamentary Labour party to oust its leader, as it discovered in the 2016 leadership challenge. Even after a majority of his MPs had voted no confidence in him, Corbyn stayed on, ultimately winning his second leadership contest after it was decided that the current leader should be automatically included on the ballot.

This year’s conference will vote on to reform the leadership selection process that would make it easier for a left-wing candidate to get on the ballot (nicknamed the “McDonnell amendment” by centrists): Corbyn could be waiting for this motion to pass before he resigns.

Will Corbyn stand down? The membership

Corbyn’s support in the membership is still strong. Without an equally compelling candidate to put before the party, Corbyn’s opponents in the PLP are unlikely to initiate another leadership battle they’re likely to lose.

That said, a general election loss could change that. Polling from March suggests that half of Labour members wanted Corbyn to stand down either immediately or before the general election.

Will Corbyn stand down? The rumours

Sources close to Corbyn have said that he might not stand down, even if he leads Labour to a crushing defeat this June. They mention Kinnock’s survival after the 1987 general election as a precedent (although at the 1987 election, Labour did gain seats).

Will Corbyn stand down? The verdict

Given his struggles to manage his own MPs and the example of other leaders, it would be remarkable if Corbyn did not stand down should Labour lose the general election. However, staying on after a vote of no-confidence in 2016 was also remarkable, and the mooted changes to the leadership election process give him a reason to hold on until September in order to secure a left-wing succession.

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