Corporate Culture in a Frigid Business Environment
by Richard Barrett
The global environmental climate may be warming, but the global business climate is frigid, with even colder weather ahead for business in the next few years.
Without a doubt, most companies will face declines in sales, escalating bad debts, elimination or reduction of credit lines, forced reductions in labor, and significant internal adjustments in work assignments. How will your corporate culture withstand the upcoming business ice age?
Corporate Culture Snapshot
Corporate culture statements focus on “people values,” in contrast to corporate mission/vision/business statements, which focus on business objectives. A quick survey of corporate culture statements shows that many companies identify their employees as their most important asset. They also list their most important values as virtues as integrity, teamwork, accountability, and innovation.
For the sake of this post, let’s accept that the company actually means these good words.
How do you, as a business leader, honor these values in the current frigid business climate? More importantly, can your corporate culture actually help your organization to weather this storm?
The Situation
You are the leader/manager of a team of 25-50 people—a department or even an entire company. At the emergency leadership planning session last weekend, your sales team presented a revenue forecast 20-35% below last year. Your finance team predicted that bad debts will triple this year and credit will be unavailable, which means you need to find an additional 10% cash in your operations.
Worse yet, your employee payroll costs will grow by 3%, driven by increases in unemployment insurance and other state/federal payroll costs. Employee costs are 65% of your total expenses, so no matter how creative you are you know that the solution must eventually include reductions in employee expenses.
The Challenge
In stressful situations most people and organizations tend to circle the wagons, collapsing inside a small group of senior execs who run the business. Cultural values such as integrity, teamwork, and innovation are great for the boom times, but in difficult times our instinct is just the opposite. Our cultural statement that “people are our most important asset” rings hollow when we know that we must reduce employee costs by one third. How can we expect teamwork when reductions will inevitably pit team leaders against each other for inadequate resources? Who will volunteer to leave the team? Fear can constrict communications and limit feedback.
The Process
Ironically, your corporate culture statement may point the way to an effective process. If people are, in fact, your most important asset, communicate with them right now.
They are already talking with each other, already guessing about the challenges facing the organization and guessing at the possible solutions, which can start rumors that are usually far worse than the reality.
Bring them into the process at every level by opening the communication channels. Describe the challenge in as much detail as possible and in as many different forums as possible—send group emails, set up group meetings, and meet personally with the key people on your team.
Share the uncertainties also. Of the three common corporate virtues—integrity, teamwork, and innovation—the responsibility for integrity falls most heavily right now on you. Tell the truth to your team. Don’t wait and don’t hide in the uncertainties.
Structure the challenge then ask your team for recommendations. Your corporate culture emphasizes teamwork and innovation. Now is the time to count on those virtues as your team develops solutions.
The Solution
The solutions will be unique for each team and for each situation.
While each solution contains a set of action steps, the larger and most valuable elements of the solution are team ownership and acceptance. Grass-roots solutions developed by the teams almost always gain greater ownership and acceptance than top-down solutions imposed from above. However, grass-roots solutions are almost always messier.
How will your organization tolerate and accept a number of grass-roots solutions, each unique and each with distinct peculiarities? That is one of your challenges as a leader.
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