What is an organisation’s culture? A view from the bottom up.

The notion of upholding an organisation’s culture is something that the whole management chain promotes, from the junior manager to the CEO. The culture is the essence of the organisation and a key ingredient in the success of the organisation. In this blog, I’d like to focus on a small number of factors that I believe threaten the culture and therefore the success of an organisation.

As professionals working in our respective industries, we all have an idea of what a company’s (or organisation’s) culture is. Having searched the Internet looking for a definition, I concluded that the definition offered by Wikipedia covers most aspects of my understanding and beliefs:

• “Organizational culture encompasses values and behaviors that contribute to the unique social and psychological environment of a business.”
• “culture influences the way people interact, the context within which knowledge is created, the resistance they will have towards certain changes, and ultimately the way they share (or the way they do not share) knowledge”
• “Culture includes the organization's vision, values, norms, systems, symbols, language, assumptions, environment, location, beliefs and habits.”

From the late ‘90s, I recall a comment made by my-then CEO, that has stuck in my mind ever since. His presentation was regarding the end of financial year and as you’d expect, it covered the great success’ and growth the company had achieved in the past year and the even greater outlook we were facing in the forthcoming financial year. During that presentation, the comment that really stuck with me was a warning he voiced regarding the risk to the company’s culture that we will face given our growth at the time. The risk of “inherited cultures” and “middle-management filtering”. At the time I really didn’t take much notice as I was too busy enjoying the benefits of the existing culture and company growth at the time.

It wasn’t until a few years later that I realised the foresight of that comment and the effect it could have on culture and me personally. Don’t get me wrong, I’m not writing this blog as a critic on the companies I have worked for but more to highlight the importance of culture in an organisation in general. I’d still recommend these companies as a place to work to my closest of friends and would not hesitate in returning there myself. 

At the end of the day, an organisation or even a country does not have a culture themselves, the culture is in the employees and citizens respectively. As human beings and citizens of a given country our behaviour is shaped by many factors, some genetic but mostly by the society and people around us such as family, teachers and friends. We look up to these people in our lives as protectors, leaders and mentors learning from them as we grow and develop as mature adults. As we complete our formal education and move to the workforce, these protectors, leaders and mentors still exist but instead of our parents and teachers we have our senior colleagues, managers, directors and leadership team we look up to and aspire to become. Our sense of culture continues to develop and evolve, eventually being representative of where we come from and belong to. 

Looking at the risk of “inherited cultures”, what does this really mean? Keep in mind that this is from the context of a relatively small up and coming organisation with growing from hundreds or thousands of employees to tens of thousands and beyond. If this organisation was to grow organically through a graduate intake program and promotion of existing employees, culture can be maintained and evolved without any adverse influence. However, this is not practical when you are looking at 20% plus growth. It is inevitable that an organisation will poach and hire experienced people from competitors and other organisations depending on the skill set required. As experienced external people enter the organisation, they will bring their own culture that evolved by their prior employer(s). We often hear of “cultural fit” when looking at hiring people and organisation endeavour to hire people that would assimilate and fit in the given culture, not easy attribute to assess in a handful of interviews.

As more senior positions are filled with external people, the risk posed to your culture increases exponentially as these senior leadership team will naturally be responsible for further hiring for growth. Making a cultural fit mistake at a senior level opens the gates for the cancer (for lack of a better word) to grow and multiply. The senior leaders will poach and hire people they trust and know, very likely from a similar background and culture as themselves. As this hierarchy grows, a single cultural fit mistake can quickly grow to tens, hundreds or thousands of mistakes. In the context of a country, this is not as big a risk primarily due to the economies of scale, allowing a few thousand immigrants from an foreign culture will not pose a risk to the culture considering it will be upheld by the existing tens or hundreds of millions of citizens of the country. However, within the context of an organisation with hundreds or low thousands of employees, allowing just one or two senior leaders from the wrong culture will pose a very real risk. 

The risk of “middle-management filtering” or what I would call “management filtering”, is not necessarily imposed only from inherited cultures but can be homogeneously grown as well. In my view, management filtering occurs when the view from below is not the same as the view from the top. Looking at the extremities, as an organisation grows, the CEO will personally lose touch with what is really happening at the ground level whether it be knowing how the troops are feeling or how their outputs measure up. This is only natural as the CEOs responsibilities grow, and time constraints come into play. At this point the CEO is relying on their subordinates for feedback and status reports, and so forth down the hierarchy chain with VPs relying on their directors and they on their senior managers etc.  

Why would a leader want to filter information upwards to their management or downwards to their staff? From my experience, I’ve observed this to occur for two primary purposes, either to protect the team below or for personal gain such as self-preservation or self-promotion and empire-building. Protecting the team can be a positive or a negative action depending on the circumstances. In both cases, I’m referring to the impact or effect to the organisation as a whole. The negative case in most cases in most cases is for personal gain under the pretence of protecting the team. The team itself could be inefficient and ineffective due to poor leadership and management but the manager will blindingly ignore the obvious and instead take the high road in the pretence of protecting the team and of course themselves for as long as possible. The self-promotion and empire-building are self-explanatory and, in most cases, go against the benefit of the organisation. As an example, a manager would put up the case for promotions and expenditure, not to improve efficiency and output but to bolster their case to be promoted or to bring in an unnecessary manager to support a friend, this is what I would call poor culture.

Regarding the positive case, it is one that I have personally benefited from for a long time in my career. I would go as far as saying it is “shielding” by the manager rather than filtering, and directly relates to culture as discussed in the context of this blog. As the inevitable “inherited-culture” risk bites a growing company, you will always find leaders that will fight it and in doing so shield and protect their team from the unwanted attributes of the foreign cultures. Unfortunately, as time goes by and the political manoeuvring in the upper layers play out, it is inevitable that it will become harder to find a team with the old culture you desire to move into within the organisation. 

At this point, I’d just like to touch on a point where I’ve witnessed a culture strongly promoting innovation transform into a culture promoting survivalism. As organisations grow, policy and process are necessary and inevitable in order to enable the organisation to scale and succeed commercially and for its shareholders. Two challenges faced by a growing organisation are:

1. How do I measure my employees to ensure the organisations and employees success?
2. How do I fairly rank my employees so I could manage out the non-performers?

With regards to measuring performance, an acronym you frequently hear is the SMART principles (specific, measurable, acceptable, realistic, time-bound) used for goal setting for an employee. This approach implicitly sets constraints on an engineer that stifles innovation and overall output. Innovation, particularly in the IT software and hardware engineering circles is synonymous with invention, the act of discovering a product or a process/methodology that is new, that will be the next billion-dollar product or service/feature that will give the organisation a competitive advantage. Just like a top rate novel author or song or movie writer, a top engineer cannot be expected to be set a SMART goal to discover what is unknown today. And when the top engineer and their respective management is rewarded based on meeting these SMART goals, it is only human nature that they not commit to anything that they cannot “realistically” achieve in the given time. This approach simply forces engineering teams to set the goal/bar as low as possible, so they meet or just exceed it and receive their bonus/reward. It does not encourage engineers to strive for what would normally be an unattainable challenge to prove their ability. Instead, they protect their income and family finances by playing the game of SMART goals.

The ranking of engineers is a method in which the HR (Human Resources) believe they can fairly identify the top valued engineers and the bottom to manage out. In theory, this is not a bad idea if you can apply the ranking fairly across your entire engineering workforce, not easy to do. I recall the terms “we hire the top 10%” and “we fire the bottom 5%”, great! you have a 5% growth. However, as it is next to impossible to rank your entire engineering workforce fairly across multiple engineering disciplines, HR chose to narrow it down to the director level. Let’s now take a step back and think about this, take myself as an example, I consider myself to be at least in the top 20% (company-wide) and I really enjoy working with top engineers that I can learn from and challenge me. I’m now faced with a dilemma, do I join a team of top engineers, work on great projects and risk being ranked last, losing by job or at best get minimal bonus, shares and unlikely to be promoted, or do I look for a boring mediocre team where I can be top-dog and get all the bonuses, shares and promotions/raises? During the good times, this policy was rarely enforced but as things toughened, particularly around the GFC, it was enforced with a vengeance (coupled with “limited-restructures”) to help balance out the numbers at the end of quarter or financial year. From the GFC onwards, you’d see great engineers pushed out only to be quickly picked up by competitors. The culture of the organisation changed dramatically from that time onwards for me, from an innovation, customer and employee focused culture to that of just another big multinational share-holder focused culture.

To conclude, it is a fact of life that culture evolves and changes as an organisation grows, a country grows or we as individuals grow. As an immigrant myself, the evolution of culture was most evident when I returned to my country of birth 18 years after leaving it at the age of 9. It was so evident that the snapshot of the culture my family and I took when we departed was no longer the culture of our country 18 years on, the countries culture evolved and moved on with the times. The same applies to an organisation’s culture, it will evolve, sometimes for the better, sometimes for not what you’d like to see. I’ll refrain from saying “for the worst” as that is a matter of personal perspective and preference.