When culture goes wrong

June 2012

When culture goes wrong

In the last month two CEOs of high profile companies have lost their jobs. They were in different businesses, with different geographic footprints, union relationships, debt levels, shareholder profiles and levels of business performance; but they did have something in common, and it's something we should learn from.

Mark Selway at Boral and Bill Wild at Hastie both lost their jobs due to issues of culture. It's a risk that we're all exposed to, but culture is one of those things that most of us only really think about when things go wrong. 

Mr Wild was reported to have stated that "In the end it wasn't one individual that was at fault. It was a culture of 'no bad news' within this company that was at fault. An individual made a terrible mistake because of that culture, and is very sorry about what they have done.''

We help a lot of boards and organisations become more effective. So when we developed our Alignment and Engagement Survey, an employee survey, we approached a number of leading directors to find out what boards wanted to know from their staff survey. They told us that they wanted to know whether bad news rose quickly. They also wanted to know how to smell the "smoke under the door". In response to those directors' concerns we added important survey statements including "we have a culture of no surprises where bad news is promptly shared with senior management".

We also included other survey statements that are critical for boards and CEOs in understanding whether there are any potential problems either across the organisation or within certain divisions or departments of which they should be aware:

  • The person I report to is trustworthy
  • (Organisation) is committed to respecting confidential and sensitive information
  • (Organisation) has effective processes for identifying and preventing unauthorised actions
  • (Organisation) has effective processes for dealing with concerns about bullying and harassment 

In terms of risk management it's important that boards, CEOs and senior managers understand the extent to which employees in different divisions or departments disagree with these statements because that's where problems may be lurking. If you don't ask these and other important questions you will be assuming that all is well in each of these areas. Are you sure this is the case?

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