Why Companies Fail: Culture, Not HR

Author: Dave Crisp

19 Feb

In a lengthy article in The Atlantic, senior editor Megan McArdle makes very good points under the title “Why Companies Fail.”

Zeroing in on GM a year after its return via IPO as a public company, she notes it tried to revamp its culture on a number of occasions previously, but quickly fell back into its old way. She wonders whether this time will be different.

She concludes only time will tell if the culture change sticks, but this time the inputs are bit different: the unions are more cooperative, poor dealerships and factories have been closed and wasteful model duplication eliminated. In other words, there is almost literally only culture left on the table as a failure point. She doesn’t limit her critique to GM, citing a number of times when the US auto industry and others have been declared on the way out and then hailed as fully recovered only to go through the cycle again as soon as the companies began to believe once again in their own infallibility and success and old habits return.

The bottom line – it’s at least as hard to change culture, that amassed body of habit that organizations develop, as it is to change our own personal habits – poor diet, lack of exercise, procrastination or any of the hundreds of other challenges we face individually – and make them stick.

This has to be the biggest corporate culture change experiment of all time – a $50 billion bailout – will it have a payback? $50 billion for just one company! The US has recently pushed the banks into allocating just half this amount to help a massive number of underwater homeowners. Europe is hesitating at turning over not so much more, $179 billion, to bail out an entire country that could bring down the entire European Common Market. One could conclude that such a bailout for just one company ought to have a guaranteed likelihood of working. But that may be wrong. That’s why this is such a terrific experiment, if perhaps not the wisest use of money we could dream up. If it can’t work for whatever reason, we may have to conclude this sort of culture change is a foolish gamble.

Don’t hold your breath. This isn’t likely to be the over-night fix so many would like to see. That’s probably why the last year’s IPO shares have fallen by a third in price. It’s maybe easier than expecting a new US President in one term to eradicate the effects of the worst spending debacle (Iraq and Afghanistan), the worst domestic financial meltdown and subsequently one of the worst developed world meltdowns in history, but it probably depends at least in part on those being fixed.

GM has had a good start in one way – with pent up demand after the meltdowns leading to an massive 10%+ increase in auto purchasing. They were aided further by Toyota losing sight of its own cultural strengths and producing problem vehicles for the first time in memory plus massive setbacks from the Japan tsunami. With these three boosts on its side, GM has, in one year, retaken its status as seller of the most vehicles world wide for the moment and it has a chance to re-build its culture in a new image while Toyota struggles to restore its to what it used to be.

Whatever happens, this is a contest to watch that is as important to future strategies in HR as any in history. We can’t know for sure when, if ever, we can expect a definitive victory. In fact, it’s arguably foolish to expect that at all. What we really need to see is whether any of these giants can not only re-orient and recover temporarily, but whether they can keep adapting, changing and innovating to last another 30, 50 or 100 years. In theory that ought to be possible. In practice it will be a massive comment on the evolution of human behavior whatever the outcomes.

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Filed under: 3 Strategic - Thinking, 5 Habits - Action, Current Affairs, Fix The Jerks, Human Resources (HR), Learning Organization

You Can’t Make This Stuff Up File

Author: Dave Crisp

19 Feb

I know I’m supposed to focus on strategic stuff, but when something comes along that just gets me laughing I can’t resist a comment. Maybe that’s strategic. We all need a good laugh occasionally to break the stress of modern living and the economy and help our co-workers cope as well. In my leadership model humor is definitely one of the elements that can help one find balance in difficult situations.

In fact, was approached not long ago by a fellow speaker (www.laughlong.com) who is going to target HR as a potential market for humor programs at work. He’s already commented, partly in jest, that HR isn’t exactly filled with laughing matters. In fact, I’m probably going to agree when it comes to our demeanor when dealing with laid off or fired employees, harassment complaints, human rights and the like – not the best times to appear to take things lightly let alone find them funny.

I agreed to the interview with some trepidation that it might reveal how little I know about the subject and opinions I have may sound unfortunately humorless. No one really wants to appear as sourly serious all the time as dealing with on-going internal disasters might suggest. I fear he undoubtedly knows more about the subject than I so I could easily be tongue-tied and find nothing to say (however unlikely that is for someone like me who lives to speak to audiences, even individuals as audiences). Fortunately Jim’s web site reassuringly asserts that we all have a funny bone (which I think is true despite those certain individuals that every HR manager eventually meets). So I thought it wouldn’t hurt me to take a shot myself.

Maybe I was just in the mood to find things funny in the HR/leadership world. In any case this article from the Calgary Herald struck me in particular. Perhaps it shouldn’t. The subject company, www.kudosnow.com, really exists and was set up for a serious and important purpose – to promote managers and employees giving each other kudos and thanks for all sorts of contributions they make.

In fact, increasing the recognition we give each other and especially that leaders give their team members is strategic. It’s been shown to improve future results, boost morale and engagement measurably and reduce problems in the workplace. If that isn’t strategic in terms of what we want for results, it’s hard to find anything more so… and easily done for free. That’s a point we’ve made often right here in this blog, so what’s funny about a system designed to boost those objectives?

Well, maybe you just have to be in certain frame of mind. The first thing that struck me in this article, though worthy enough to be pointed out in an HRPA daily news roundup, was ‘why can’t we just do this face to face.’ Call me old fashioned. Maybe it’s a version of the tired joke that Gen Y staff text each other in the next cubicle rather than lean over and talk. I’ve got nothing against texting, but for a boss giving kudos?? Not my choice as a standard routine.

I can see how building up a pile of kudos would be reassuring and refreshing over the usual silence that surrounds one’s best efforts in most organizations. But I have a feeling more satirical writers than I could have a field day with this. It’s like Facebook where one person racks up 42,000 friends and I might have 5, where certain people’s pages become ‘go to’ spots for enormous followings while the average person’s is read by a handful of cronies. Does it mean I’m unworthy? Might cause some anxiety!

Most of all I picture stern CEOs rushing back to their corner offices to pound out 15 or 20 kudos a day to keep the wheels of engagement humming rather than exerting the exhausting effort required to say “thank you” out loud to people during the numerous conversations they have each day. I expect putting it in writing will make it more impactful, to use good management jargon.

Now, it will be on record, sort of like being in the employee’s personal file. Oops, hold on, is that legal? Would we, at least in our Canadian jurisdictions, require regulatory changes to enable us to put kudos on record without first getting the employee’s permission? Must the system build in disclaimers? What if others see a kudo before the employee him- or herself? No sense of humor, that’s us in HR for sure.

Seriously, I smell an opportunity for us to suggest this before the CEO gets this advice from his neighborly lawyer friend. He needs to command a new HR program launch – collecting signatures from every employee so the CEO can start delivering these all important kudos without fear of law suits or reprisals. Now if we could just get those senior execs to write the blurbs in positive way, not the usual kudo: “Hey, your program that just added $5 million in sales needs to be ramped up with 12 new segments. Can you do that by Wednesday?”

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Filed under: 3 Strategic - Thinking, 5 Habits - Action, Coaching Others, Communicating Effectively, Happiness, Human Resources (HR), Leaders of the Future

Wish I’d Said It: Why We Shouldn’t Hate HR

Author: Dave Crisp

12 Feb

This will be a slightly grumpier sounding post because I’m going to point you to Liz Ryan’s blog post on Huffington Post’s site for a fabulous article everyone should be reading that answers this challenge enormously well.

In future when this subject comes up – like the old Why We Hate HR article from Fast Company, which is still being written about widely these many years later – these are some of the arguments and constructive suggestions I’ll add to what I’ve put forward before.

From an HR executive’s perspective, Ryan’s comments should feel like pure common sense.

We have just one more question to ask – why aren’t more executives aware of or paying attention to similar arguments? With good arguments on our side, well thought out, perhaps now is the time to dig in a bit.

One reason has to be that most simply don’t want to sit still to hear about the logic of the most complex workplace function. Many probably fear it would overwhelm them – too distracting to master – and it won’t add value. Little value, massive time? They couldn’t be more wrong on all counts.

When we think of ‘business’ or ‘non-profit’ we think about the objectives – make money or deliver service – not about the people who do these. We hide behind umbrella words – ‘a business is an individual or an organization set up to make money.’ Somehow in that word ‘organization’ we lose all sense of the many individuals – single individuals – persons who each contribute, or don’t. Dealing with the needs of so many one at a time seems impossible, though successful companies prove it isn’t.

The second major reason to overcome, sadly, has to be because executives have long been able to ignore HR issues with virtual impunity. They can, so they do. That’s ending and we can help.

Executives can’t ignore poor sales for very long or poor budgeting or over-spending or poor IT (any more) or poor whatever, but they can ignore poor behavior on the part of managers, including themselves, for years.

They can ‘save time’ by ignoring people in the organization because ‘people are adults who can take care of themselves’ or should be, so they think. They suppose people should just grow up and suck it up, yet they are often the first to cry wounded when someone slights THEM.

If someone’s nose is out of joint, if they’re not fully engaged, having a bad day, week, month, year – well, many think, they should know how to get over it. The cream will rise to the top on its own and a handful of highly effective people will pop up who can be depended on to pull everything out of the fire one more time without all this “HR hand-holding.” Won’t they? After all, isn’t that what they’re paid for. If they want to continue to have jobs..?

So executives tolerate the admin and legal functions of HR that ‘somebody has to look after’ and complain bitterly that HR just gets in the way – especially of their personal desire to behave as they wish – and other silly rules HR imposes (which, even though necessary for some in the organization, shouldn’t be necessary for me).

Most of the time, the complaints about HR don’t arise from evil intent on the part of such executives, but from imaginary lack of time, patience or interest for people topics. Unfortunately a great many still believe that taking an interest just isn’t part of their jobs, but something that can be delegated to a function they ignore like taking out the trash. If they felt that way about budgeting or other parts of their job, well, they wouldn’t be around long after being told flatly to shape up or else. Oddly that doesn’t happen with HR in many cases.

These people like to feel they’re playing hardball. Perhaps it’s time we do, too?

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Filed under: 4 Honest - Finding Reality, Business/Strategy, Coaching Others, Communicating Effectively, Fix The Jerks, Human Resources (HR), Leaders of the Future

Leadership and The Costa Concordia Disaster?

Author: Dave Crisp

5 Feb

Be careful where we lay the blame – or it could happen again.

By Gavin Robinson, guest author

The recent tragic sinking of the Costa Concordia cruise ship raises alarm bells about the importance of leadership during an extraordinary event or crisis. Since the accident occurred, blame and condemnation has been intensely focused on Captain Francesco Schettino. Yet, accountability for the colossal failure must, in part, lie with the parent company, Carnival Cruiselines.

Captain Francesco Schettino made critical errors including turning the ship too late, hitting a reef, abandoning his ship without regard for passenger safety first, and lying about the account of events as the tragedy unfolded. He may well deserve the label of “Captain Coward” and "Chicken of the Sea," yet he is not responsible for the culture in which this happened. Lax safety standards and protocol go well beyond one ship and one captain; this gets to the heart of corporate culture. For this, we must divert attention to Carnival corporate.

As Phillip Knightley, a veteran British journalist points out, the sinking of the giant cruise liner is “the most significant event in modern maritime history.” Not only because of the Captain’s errors, but because of the complete breakdown in following safety and emergency procedures.

Jim Collins, author of Good to Great: Why Some Companies Make the Leap…And Others Don’t, describes a leader as someone who can “blend extreme personal humility with intense professional will”. Demonstrated qualities include “humility, will, ferocious resolve, and the tendency to give credit to others while assigning blame to themselves.”

Drilling down deeper, the Wall Street Journal wrote an article 10 days after the accident, entitled, “Where is Micky Arison?.” The Chairman and CEO of Carnival Corporate, has been largely absent since the crisis occurred on January 13. Arison in a press release issued on January 19 by the company, stated that a “comprehensive review of all safety and emergency response procedures across its nine cruise lines and 101 ships” would be conducted.

Otherwise, he has remained silent, choosing to manage the crisis from the US headquarters and delegating responsibility to Pier Luigi Foschi, CEO of Carnival’s Italian unit. In interviews, Foschi’s only public comments have been to blame Schettino for the tragedy.

Is Arison’s refusal to assume public command of this crisis, very different than Schettino’s refusal to ‘get back on board?’ I don’t think so.

It is a positive that the company plans to do a comprehensive review of safety and emergency response procedures. But, to what extent did they demonstrate this prior to the tragedy. Looking closer at the Carnival Corporate website, their mission statement reads:

“To deliver exceptional vacation experiences through the world’s best-known cruise brands that cater to a variety of different lifestyles and budgets, all at an outstanding value unrivaled on land or at sea.”

There is no mention of safety here except for a short blurb several pages into the Community Relations section of the website. It describes the company’s commitment to “protecting the health, safety and security of our passengers, guests, employees and all others working on behalf of the Company”.

With little or no reference to safety, I discovered the company’s values at the recruitment website, Carnival Careers. There, they state the company vision:

“To Consistently deliver fun, memorable vacations to our guests.”
Quality . Service . Hospitality . Friendliness.

At the bottom of the page, Carnival describes its core essential values for all employees.

“We work in an environment where safety, hospitality, teamwork and
respect for the environment and each other are essential.

For a company that says these are ‘essential’ values, why are they not prominently displayed on the corporate website? More importantly, what has the company done to ensure all employees on their ships are adequately trained and prepared during an emergency or crisis?

As I have said in the past, when companies behave their values from the top down, leadership and accountability become the cultural norm. Conversely when the development of core values becomes ‘a tick the box exercise’, the effort loses credibility. Despite Schettino’s actions, Carnival must bear a large share of the blame. Given Arison’s lack of leadership and empathy in the days, and now weeks, following the disaster, I surmise this was a culture waiting for disaster.

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Our usual blogger, Dave Crisp, is happy to have Gavin Robinson write this guest blog. Gavin is the Founder and President of Robinson Organizational Consulting Inc., a firm focused on helping organizations and their people achieve superior results through sustained cultural growth. He can be reached at gavin@robinsonleadership.com or www.robinsonleadership.coms

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