It's the Culture, Stupid


By Liz Ryan When I was in my twenties, people would ask me: "When are you going to get your MBA? You're serious about pursuing a business career, aren't you?"And I would smile on the outside, cringe on the inside, and think: "Must I?"

I didn't want an MBA. Spreadsheets bore me. Even in those moments when I would admit to myself that I was most likely going to remain in the business world (seeing as how very few Broadway casting directors were calling), I still couldn't picture myself getting excited about EBITDA.

FACTS VS. FIGURES. I liked business -- just not the numbers part. I was more interested in how people work together, what gets them excited about their jobs, and how company cultures develop. These are the things that make my heart beat faster.

Eventually, when my employer presented me with a generous tuition reimbursement offer, I did get a master's degree -- but not an MBA. I opted for a Master's in Communication Studies, and had a blast. Aha! I thought. So other people are interested in leadership and internal communications! And I learned something else:

Earnings reports and balance sheets are an outgrowth of people's behavior -- their decisions, their conversations, and messages. These are the real business drivers. The numbers on a spreadsheet aren't the business. They're just the outcomes of doing X and saying Y.

LUNCHROOM CONFIDENTIAL. Consider a business leader who reviews the last quarter's results and wants to make changes. What levers can he pull?

He can have a meeting -- a conversation. He can send e-mails issuing orders. He can have one-on-one talks with subordinates. But he can't change those numbers by himself. He has to persuade people to do what he wants. His is a people job -- like most business jobs.

Because business success is so inextricably tied to how people behave, I've become a believer in the mantra that culture is everything. Want to know something about a company? Skip the annual report, and pop into the employee lunchroom. Ask a few questions, and you'll learn more than from any financial report.

HIT AND MYTH. "What do you think of the CEO? Oh, you don't know his name? He's this guy right here, in the photo. Doesn't look familiar? Here he is meeting with a group of shareholders and saying 'Our company is like a family.' Does that ring a bell?" Hmm.

Companies talk about their cultures, but often their message doesn't reflect how people think and behave. "Our company is based on trust," they'll say. Or: "We are risk-takers." And: "We value each and every employee."

These are the culture-bites that get reprinted in New Employee Orientation materials, marketing brochures, and annual reports. Pretty soon, executives begin to believe in their make-believe culture, without having to dig to find out what life inside the organization really is like.

To discover that, don't just find an employee and ask: "What's it like to work here?" Instead, ask them to tell you a story.

THE GRIM TRUTH. Some years ago, I worked for a company that was about to be acquired. As the deal's closing date approached, we on the acquiree side were hungry for information about our new owner. The chief of our internal communications team had a rare chance to meet with one of Them -- the other company's head of public relations. Diane (ours) and he (theirs) were to attend the same conference, and arranged to have dinner. "Get a story!" we begged Diane. She didn't disappoint us.

When she returned, her face was grim. "Wait until you hear this," she said. "We chatted about this and that. He told me what he thought about the acquisition and his plans for the integration and so on. Apart from being as full of himself and bossy as you'd expect the acquiring-side guy to be, that part of the conversation was unremarkable."

"So?" we wanted to know. "Spill!"

"So then I asked him how he got his current position," said Diane. "Here's what he said. There's a young woman who worked for him at two or three different places over the years, a prot???. He used that word, in fact. One day, she applied for a new job and gave him as a reference. 'Of course', he said, 'I'd be delighted to be a reference for you.'"

"Yes, and?" We couldn't wait for the punch line.

BACK-STABBING SLIME.?"So he gets a call, he's giving this woman a reference, and he starts asking questions about the job," continued Diane. "Halfway through the call, he says, 'Say, this sounds like a good job,' and he tells the interviewer that he'd like to throw his hat in the ring. So he did, and took the job, and that's the job he's in today!" Diane was silent.

"Oh my God," we said. Then we were silent.

"He stole a job from his protégé!" said one of us. "What a pig!"

"That's not the worst part," said Diane. "Think about it."

"The worst part is that he TELLS people the story," I said.

"Horrifying," said Diane, "but that's still not the worst part."

"Oh no!" chimed in another workmate. "The worst part is that the company knew he was stealing a job from his protégé, and they let him do it! The worst part is that they hired him, knowing he was the kind of guy who'd offer to be a reference and then shank his protege!"

"Yes," said Diane. "And this is the company that will own our company, one month from today."

BASIC SOUNDNESS. Do you need to be told that this company's business subsequently tanked? Diane lasted about a week with the new organization. I myself stuck it out for six days. When a culture is bad, it's bad all the way through, and it can't deliver uplifting business results.

The good news is that the same is true in reverse. When smart people work together as a team, great things can happen. If the product mix is wrong or the Web site needs tuning or the business strategy is flawed, it's not a big deal to change -- if the underlying organization is healthy.

Companies can fail in one initiative, make adjustments, and quickly find success -- if there's a healthy platform to start with.

IN THE GENES. Now, don't get me wrong. I respect my friends with MBAs. But I wish that B-schools would add a mandatory course on what's behind the numbers -- on understanding people at work. They could use my job-stealing story as a textbook case of what not to do -- at least, if you intend to throw around words like trust and respect.

I have no bad feelings toward the PR guy, although I imagine that his erstwhile protégé might. My view is, people like that have to be themselves -- and that's punishment enough.

Incidentally, fundamental defects such as despicable people don't show up on a spreadsheet. But their impact is as real as last quarter's "cost of goods sold," and I dare say a lot more significant. Do you have any great business leadership tips to share with BusinessWeek Online's readers? Send them to Liz Ryan, an at-work expert, speaker, and writer, and CEO of online networking organization WorldWIT


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