It seems that almost every day we hear about another organization facing ethical challenges. These stories raise important questions about the power of culture, and how employees construe that culture.
I believe the CEO plays the crucial role in creating a sustainable organization – one that achieves its financial and stakeholder metrics – by “owning” an organization’s culture. While there are many aspects that contribute to culture, it is fundamentally the responsibility of the CEO to set the tone at the top. That tone filters down and becomes the tone throughout the organization.
In my experience, having a positive, high-performance culture begins with strong ethical values at the core. This pairing of culture and values can go a long way in creating a framework for employees to operate within, which keeps the organizations on track, including with achieving sustainable metrics. When organizations do get in trouble, it can be a reflection of the failure of the CEO to have a big enough megaphone to amplify and communicate the organization’s distinct culture and values.
Culture: curbs on a highway
I think about culture and values as curbs on a highway. When the curbs are high enough, a vehicle can veer to the left or right but the curbs keep the car on the road. It is the CEO’s job to build those curbs as high as possible.
How? One way is that the CEO, at every opportunity, communicates both the financial and aspirational goals, but also the values, culture and norms of the organization and includes a call to action for people to live those values and culture. People need to know that if anything is going on that is inconsistent with those values, regardless of the level of the person engaged in the activity, an alert should be sounded. Organizations often have different methods that employees can use that maintain confidentiality and prevent repercussions.
It is not easy for an employee to take action against a company he or she works for, and this can only happen when people know the culture and values are taken seriously. And importantly, when something significant occurs, there must be consequences. As employees will tell you, it is not just what people say, it is what they do.
Much of a leader’s responsibility in creating a positive high-performance culture is setting the right tone, and acting on it consistently. That day-to-day execution – the tenor and tone – really makes the difference. One deviation – one exasperating meeting – and the CEO legitimizes bad behavior.
When the leader misbehaves
When the leader acts outside those norms, he or she may see it as a carefully calculated breach. However, it’s like a stone thrown in a pond; ever-larger ripples move out through the organization that may give people permission to behave badly. While these behaviors may result in infractions the leader never imagined, once the dam is breached, it can lead to a trickle, or a tsunami, which ultimately can wash away the company or society.
My belief is that a positive culture works best because people want to meet or exceed expectations, not demands. CEOs can go wrong by neglecting the culture. A positive, high-performance culture can quickly turn negative if the CEO is not rigorous in constantly articulating values and holding people accountable for both results and values.