Corporate culture: a case study
November 10, 1998
Corporate culture is important but it tends to be elusive, explains Jack Deal
C O R P O R A T E C U L T U R E is loosely defined as the attitudes, behaviours and personalities that make up a company. In other words, it is how we view our work and ourselves. If we accept this general definition, the next thought is: how does it apply? Through my consulting, articles, web site and radio show, I have been asked the question, 'Yeah, we know what it is - but what does it do?' Fortunately, and unfortunately, I have been an eyewitness to a fascinating case study. My case study involved two similar businesses, about the same size, and in the same industry. Both were struggling financially.
Upon my initial analyses, both businesses had good potential and both retained me to help them grow, create wealth and sustain profitability. Both had very similar problems and both had owners that were ego-driven and hard workers. There was never a question in either company of the willingness to work hard. There was, however, a great deal of difference in the results.
After my analysis and employee interviews, I determined that both owners were holding their businesses back. Both owners acknowledged they were a problem in their own companies. The owner of Company A became convinced he was such a problem that, for his business to grow, he paradoxically had to leave it. He turned his decision-making and management over to me. The owner of Company B also acknowledged he was part of the problem, but decided that by working harder, he could overcome the problems he created.
The first thing I did at company A was to fire some minimal employees and hire some better ones. I then turned the company over to them. The absentee owner of Company A expressed his concern at doing this but accepted it. He understood there was no alternative. I walked the managers through some tough decisions and encouraged them. They made mistakes but I made certain the mistakes were small ones and I encouraged them to learn and move on.
After several months, some very interesting developments occurred: (a) a fierce company loyalty developed among all employees; (b) they would not let the absentee owner make any decisions; (c) my intervention became less and less necessary - all employees constantly discussed how to improve productivity and deliver more value to the customer; (d) profitability increased to the point that all employees got raises; (e) morale steadily improved; (f) Company A began to gain market share.
Company B took a different route. The owner did not want to fire any minimal employees because he had become a friend and "father-figure" to them. The owner began to work longer and longer hours. He began to distrust his best people. After several months, some interesting developments occurred: (a) the stress level of all employees went up; (b) several key people quit; (c) Company B was not able to attract good employees; (d) employees began to resent the micromanagement style and looked for ways to get back at the company; (e) more and more intervention was necessary on my part to keep the status quo; (f) profitability decreased and customers were lost.
Six months later, the results were not surprising. Company A was growing steadily, morale was high and their employees were the highest paid in the industry. Employees enjoyed coming to work and worked very hard. They constantly were looking for ways to improve and look for new customers and markets.
Company B downsized and filed for protected bankruptcy. Employees were discouraged and many began looking elsewhere for work. Customers noticed that Company B was in trouble and took their business elsewhere.
These two examples are extremes and I was most fortunate at having the opportunity to carefully examine both. I think about them both quite often and have resolved to make 'corporate culture' an even higher priority in my work.
Since people drive a business, corporate culture has become the vehicle to get to the desired destination. Jack D. Deal
Jack D. Deal is owner of Deal Consulting in Santa Cruz, California, telephone (831) 457-8806, or email email@example.com. Related articles may be found at www.dealconsulting.com.
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