5 Huge CEO Culture Fails

Evidence shows that a highly-engaged workforce (good culture) generates much higher margins than one with low engagement.

No one wants to make a HUGE mistake. CEOs of fast-growing companies must build a highly-effective organization rapidly to exceed expectations and carry their vision beyond the startup phase.

As your company scales to $100M, the CEO and leadership team will need to cultivate a healthy culture that embraces and furthers the organizational vision, values, code of conduct, and standards of performance. Doing so could pay HUGE dividends in performance and financial strength.

“Companies with high and sustainable engagement levels had an average one-year operating margin that was close to 3 times higher than those with lower engagement” (Towers Watson 2012).

Here are 5 ways that CEOs fail to develop a high-performance culture:

  1. They fail to design their culture. If you are not satisfied with the way your people behave then you have not clearly set the boundaries. Culture is about the behaviors of your managers and employees.
  2. They only choose nice words. Enron, whose leaders went to jail, and which went bankrupt from fraud, had four nice-sounding values chiseled in marble in the main lobby: Integrity, Communication, Respect, and Excellence. Those values were not, however, what was really valued at Enron. The actual company values are shown by who gets rewarded, promoted, or let go.”
  3. Their core values are not guidelines for behavior and decision-making. One company has “fun” as a core value. Does that mean if someone is not fun they will be fired? What does it mean as a guiding principle? Herb Kelleher [the longest-serving CEO of Southwest] once told someone, “I can teach you the secret to running this airline in thirty seconds. This is it: We are THE low-cost airline. Once you understand that fact, you can make any decision about this company’s future as well as I can. Here’s an example… If it doesn’t help us become the unchallenged low-fare airline, we’re not serving any damn chicken salad.”
  4. Set it and forget it core values and culture. Many organizations bring in a consultant, have a retreat, come up with their core values, post them on the wall, and think they are done. They can check that off. Culture is a living conversation that comes up again and again. One CEO sends an email for every decision explaining how a core value influenced his behavior.
  5. Their core values are not unique. If you choose what everyone else does, nothing sets you apart. The values should create a feeling of, “this isn’t for me” or “Yes, I want to work here.” A company in Michigan, United Shore Financial Services, was voted the number one place to work in Metro Detroit. Its cardinal rule, “Give us 40 hours. The rest is yours.”  A core value of work/life balance is subject to interpretation. Working 40 hours is clear. No tweeting or online shopping is clear. You either like this culture or not. And if you don’t, it’s ok.