Despite the results that are now published all over the world, I continue to remain perplexed why organizational leaders largely continue to embrace and embody outdated P&L management principles over Organizational Health principles as the primary strategy into their decisions for guiding change. Even large consulting giants like McKinsey & Company and other major consulting firms have not only got on board with Organizational Health in the last few years but also now consult on its principles, publish respective studies. The results witnessed first and third hand are pretty staggering even by my own standards.

In recent roundtable with several CEO’s, I began to ask the question of why as I wanted to understand what was really driving their beliefs despite all the results that have been published. What I found was not necessarily surprising but certainly revealing.

In brief, much of the conversation exchange became centered around ideas for improvements and the challenges faced in their respective cultures as a case toward instituting Organizational Health. These executives were smart, they had high degrees of integrity, they are well intentioned and respected by their peers and the industries they represent. Most notably, they were engaging and very informed leaders.

The discussion:

In the group discussion we spoke about their respective strategies for their non-competing companies, what opportunities they saw available and some of their largest challenges they believe are important to address to reach success. Much of the discussion seem to circle back to culture and values within their respective organizations but as I listened more closely, there was a distinct difference of the “what” and the “how”. Following the better half of 35 minutes into a 90 min discussion, I began to realize the “what” they were talking about I was excited to hear especially from such esteemed people and people that I greatly respected. There was a clear belief that culture is important. What caught my attention and interest was “how” they were framing their respective statements around culture and the perception of nonalignment to their strategy, operations and management team. I began to ask about the importance of alignment for them and what, if any, weight was given to the integration of culture into their business strategy for their respective organizations. Meaning, what specific areas and considerations are given to ensure alignment so an organization is healthy. After 15 more minutes of discussion, it was clear there was a pattern in their statements of separation not of integration and balance. In other words, each leader thought primarily and more importantly, operated their companies in the primary alignment of two things – strategy and operations not inclusive of culture or their management team (partially – they did agree their management team needed to embody and behave in a way that translated the corporate values). In other words, they spoke of culture as a separate strategy and was the function of the human resources in most cases to drive culture. In short, it was completely outside and apart from their business strategy. To further support this point, they also did this from a position of the financial results back into the company culture not the other way around. Another way of saying this is they waited to see what the financial statements looked like before they determined where to invest in their culture. So, I dug a little deeper…

The evaluation:

I then asked each of the executives how they would categorize the amount of politics, bureaucracy and blame in their organizations as one of five categories:

a) Very high
b) higher than it needed to be
c) neutral
d) low
e) very low

When tallied up, 75% said higher than it needed to be to very high and 25% said neutral. No one said low or very low.

A follow up question was then asked about their immediate leadership team(s) and to categorize them as one of three categories:

1. Completely cohesive – they have complete trust with each other, can have and do have ideological debate regularly, have high degrees of commitment toward each another, hold each other accountable to the team and are focused on the results not themselves.
2. In the middle – some of them trust each other but there are cliques and favorites recognized between the leader and members of the team, favorites can have debate but some team members cannot, only a few are committed to the team’s success and they are committed to the result even if sometimes it is not their idea.
3. Dysfunctional – very little to no trust, important things in the business go unspoken about in meetings or are often ignored by the team and not discussed, all feel and act as individuals and have very little commitment to the team and are only focused on the results when it benefits them or they are made to look good.

Their answers were pretty revealing – 25% told me their teams were dysfunctional and 75% said in the middle. No one felt their direct team was completely cohesive.

The Conclusion:

I then asked the question of how many “feel” this a little unsettling and not congruent to a healthy organization, 100% of them raised their hands. I then asked how many thought this had some impact on their financial results 100% raised their hands. When I asked how much revenue and profit impact it had on their companies a few shrugged as if to gesture they didn’t know and the others said nothing – it was quiet. After approximately a minute, two executives then spoke at the same time “it’s hard to quantify in terms of dollars to the top or bottom line”.

I then proceeded politely and respectfully to let all of them know that my following response was not intended, designed or manufactured from egotistical place but from one of caring, truth, honesty and a little challenge. “I suppose you won’t until you do it a different way”.

Must do’s:

As organizations today become increasing more complex, more technically savvy, diverse with talent and operate in more competitive markets than ever before, it is the intangibles will become their ultimate advantage. Corporate CEO’s must first believe there is a better way to create lasting and sustained success that is balanced, whole and complete. They should seek to aim at creating exceptionally cohesive management teams that have a tremendous sense of trust and commitment toward each other, that engage in ideological conflict, hold each other accountable to team decisions and help work to the collective success of the organization not themselves or the area/function they lead. Without this being driven by the leader, teams in their organizations and companies alike will continue to be run with an undercurrent of politics, bureaucracy and blame allowing for increased confusion and inefficiencies as teams will have a tendency to not work together for the greater good and often focus on themselves looking important. As a result, strategy milestones will almost certainly be missed, changes to products or services will slow drastically yielding lower growth, higher expenses and less than optimal returns for shareholders and stakeholders alike.

Second, they must look to balance and align all of the principles of Organizational Health so that the organization is whole, consistent and complete. Not just from their strategy and operations but inclusive of the culture needed to support their strategy, vision and operations as a company. This should include a cohesive management team.

Allowing culture to be its own strategy, left out of the business strategy or without the full alignment to a business strategy can yield accidental values and behaviors that don’t necessarily support the strategy and vision of the business. An organization is healthy when its strategy, management team, operations and culture align and make sense. It will have low politics, minimal confusion, increased sense of clarity, moral and teamwork and as a result will have lower turnover. This is not a human resources responsibility, this is the executive leadership team’s responsibility and it starts at the top.

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