6 Signs Your Corporate Culture Is a Liability

 

By Sarah Clayton
March 27, 2020

Workplace culture, which is often thought of as a company’s most precious asset, is increasingly a liability for companies that don’t tend to it.

In fact, corporate misconduct has become so prevalent recently that 1 in 5 employees report experiencing a cultural crisis — a significant incident indicative of troubling workplace attitudes and behaviors — in their organization in the last year or two.

In our research, we found six items that together account for the majority of cultural risk. When employees agree their company is not being vigilant in one or more of these areas, a cultural crisis may be looming:

Inadequate investment in people: When employees join a company, they’re entering into what’s often called “a people deal” where they receive compensation, career development and various benefits in exchange for the work they do. When employees perceive their employers aren’t living up to their end of the deal, they’re less inclined to live up to theirs.

Lack of accountability: When employees sense there are no consequences, or that consequences are handed out unevenly, they may use it both as a justification for not reporting poor behavior (why bother?) and as a reason to be less careful about their own actions.

Lack of diversity, equity and inclusion: With matters of sexual harassment and discrimination at the fore, many companies are revisiting their policies. While we can’t know how many crises have been averted because of these efforts, we do know that a lack of diversity, equity and inclusion in the workplace is the third most predictive indicator of cultural risk, and that more work remains to be done. As recently as last summer, diversity leaders were still identifying organizational culture as the No. 1 challenge standing in the way of their objectives.

Poor behavior at the top: Executives are under intense pressure to deliver results, and far too many are rewarded on what they achieve without factoring in how they achieved it. According to our survey, almost one-third of employees say that their leaders don’t behave in ways consistent with company values.

High-pressure environments: Thirty-seven percent of employees in our survey say their companies are not always vigilant about managing high-pressure environments. Unrealistic deadlines, overly aggressive sales targets and poorly structured incentive systems can lead people to take extreme — and often illegal — measures to deliver business results.

Unclear ethical standards: Our research shows that company values — which should provide a North Star for employee behavior — often don’t exist, aren’t known or aren’t enabled by systems and processes. One-third of employees don’t feel confident explaining their companies’ stated values; employees simply can’t live what they don’t know.

Having values, principles or beliefs is just the first step; enabling and enforcing them is what will ultimately lower cultural risk. Now more than ever, companies must build and maintain cultures that not only embody their stated values and ways of working but are built to withstand today’s volatile business environment.

Copyright 2019 Harvard Business School Publishing Corp. Distributed by The New York Times Syndicate.

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