The Economics of Corporate Culture

What is Corporate Culture?

What is this thing we call ‘culture?’ My favorite definition of culture is, ‘a way of life’. This is true for organizations, families, friendships, marriages, colleges and countries.  In fact, wherever there is a group, be it small or large, there is a culture… a way of life, or ‘the way things are done around here.’

Evolving Cuture

So how does culture evolve or form?   What shapes the culture?  Who decides on the culture?  Think about an organization. Essentially when we speak about culture, we are speaking about a set of values which are made visible by the way a collective group of people behave and communicate. In an organization it is the values, behavior and communication of leadership that flows down and establishes the culture.

Two Kinds of Culture 

There are only 2 kinds of Culture.

Cultures built on SPIRIT

Cultures based on EGO

Building Corporate Structures Built with Spirit

Corporate cultures built on Spirit are created by leaders who exude positive energy. They are authentic, genuine, transparent, forthright, open and honest. These leaders are perceived as being real.  Spirited leaders are also bold and courageous; they are determined, resilient, focused, accountable, self-assured, tough and collaborative. And the one characteristic that balances these great leadership qualities is humility.  Apply these leadership descriptors to the culture and what you get is a spirited culture powered by spirited employees who deliver high levels of productivity.

Corporate Cultures Built on Ego

Corporate cultures built on leadership ego have very different characteristics.  In these organizations leadership are not perceived as being real; they are perceived as having a façade, as being defensive, self-righteous, self-serving and often arrogant.  These leaders exude a negative energy which creates a culture of fear and discomfort.   The employees decide that it is not safe to be real; it is not safe to offer honest feedback, opinions, perspectives and insights.  Instead they switch off and shut down in order to cope with the fear and other negative emotions they are feeling.  But when they do this, they also shut down on their talent; they are switched off from the business goals and from each other.  Employees working in this kind of culture are incapable of delivering great results. They are in survival mode. These cultures are characterized by poor communication, distracting conflict, underutilization of talent, loss of opportunity, loss of information, loss of focus, pulling in different directions and waste of time and money.

Just look at these incredible statistics showing the cost of organizational ego!

  • 53% of business eople estimate that ego costs their company six to 15 percent of annual revenue.
  • At 6% the annual cost of ego would impact the revenue of an average Fortune 500 company by $1.1 billion.
  • 63% of business people say that ego negatively impacts work performance on an hourly or daily basis

How to Create a Spirited Culture

Keep it simple with 6 easy and highly effective steps:

  1. Leadership meet to create a shared vision of the ideal culture they would like to build in their company, keeping in mind the new economic reality and the needs of the employees to feel secure and inspired.
  2. Agree the 4 core behaviors that will support the achievement of such a culture.
    Discuss and agree the desired communication skills that will support this identified culture.
  3. Complete an audit – based on self perception plus employee perception to answer the question:  What are leadership’s current abilities in the behavior and communication skills that will build the desired culture?
  4. Budget and schedule leadership development programs to close the gap between the existing and ideal leadership skills.
    Measure before- and after-training results.
    Link these results to performance incentives.

Showing leadership spirit is easy. The tough part is having the personal courage, self-confidence and humility to openly face the topic of how leadership ego creates a culture of fear and low productivity; and how leadership spirit produces a high performance culture. Ego is not a bad thing as long as we recognize how it shows up for us, when it shows up for us and we know how to keep it in check by replacing it with the authentic spirit of who we really are. In fact just the act of being aware of our own egos automatically strengthens our real self.

I would recommend that we get over our discomfort in facing up to our own ego behaviors and language so that we can become more spirited and build an organizational culture that has the capacity to produce spectacular results.


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