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Ryan’s Journal: When Culture Betrays

Thursday, March 16th, 2017

https://www.flickr.com/photos/roryfinneren/2791004393/in/photostream/

Most of my writing is based on what is going on in my life right now. I have found it’s easier to write about what I know and tap into the emotion of it all. One thing I learned recently is culture can be a double-edged sword and should be respected as such.

If any of you are reading more than Entertainment Weekly I am sure you have seen the meltdowns that are occurring at Uber, the falling stock prices at Valeant Pharmaceuticals and maybe the second bankruptcy of Radio Shack.  All of these are a result of a culture that betrayed the very members it was meant to protect.

How do we watch out for that in our personal lives?

One way I do it is by seeking constant feedback. I have found I have a significant blind spot when it comes to measuring myself, so I suck up my pride and go to those I know will give me a real answer. Perhaps these companies could have done the same?

When looking at these three cases I have found one commonality, pride. Let’s examine each and see what you think.

Uber is pretty public at this point. The CEO had a history of being bold, in your face and decisive. This has its place but can also become unbalanced. Additionally, somewhere from the top down the idea that women should not be treated equal came out and as a result you have cases of sexual misconduct and favoritism playing out.

Valeant was a darling of Wall Street for many years. Its former CEO was incentivized to get his stock to a certain price point. If he did that he was rewarded with stock options that were incredible. Harvard did a study on it and thought the scheme was amazing. What people didn’t know though was the CEO was utilizing accounting methods that favored the stock price. He also utilized a private pharmacy that was undisclosed to the public to deliver his prescriptions. This had an added benefit to the stock. Both methods were found to be unethical, the stock crashed and shareholders lost billions.

Radio Shack recently filed for a second bankruptcy. They have been unable to turn around their stores to get to a profitable point. I am not too old to remember going into these stores as a child and enjoying them. They offered some great products, were knowledgeable and if you were a radio geek you could find just the part you needed. Unfortunately they didn’t expect a rise in cell phones, online ordering and other buying trends. These have all contributed to its losses. They are still around but I wonder for how much longer.

I bring all of these up as examples where the culture of each led to misses and failures.

Culture in my mind is the mentality of a company — its thought processes.

On an individual basis are you allowing your culture to betray you?

Image credit: Rory Finneren

Saturday Odd Bits Roundup: Recession, Layoffs And Hiring

Saturday, January 10th, 2009

Recession of not, you still have an organization that needs to be productive.

According to an Academy of Management Journal study of 200 enterprises even a modest downsizing encouraged their most valuable “keepers” to start looking and move on. Check out these numbers; a 0.5% layoff increased turnover 2.6% (13% vs. 10.4%) over companies that had no layoffs. Add to that research by Frederick Reichheld, author of The Loyalty Factor (1996) and Loyalty Rules! (2001), that proved that a 5% improvement in employee retention translated to a 25%-100% gain in earnings!

So why do companies turn so quickly to layoffs? Mainly for these two reasons

  1. Wall Street loves them because they have the fastest impact on the bottom line—and all the Street cares about is the next quarter. It will applaud you now and crucify you when the economy turns around and you have a demoralized staff and nothing in the pipeline.
  2. They’re lazy. They require the least energy, managerial skill, leadership and creative effort, whereas keeping your people and juicing innovation and productivity when times are difficult takes energy, skill, leadership, creativity and work—lots of it.

Ever thought about what does it really costs to hire? Caliper has a nifty calculator. Try it, then multiply the answer by the increased 2.6% who walked when you laid off their colleagues. (Info hat tip to The Engage Sage.)

Smart companies, and even some governments, are getting creative, not for altruistic reasons, but because they don’t want to be crippled when the economy turns around. One of the primary actions that they’re using is to cut hours instead of staff—using with four-day work weeks, X% reduction in hours or closing extra days during the holidays and maybe beyond. Employees know that in an economy such as the current one a reduced job is far better than no job and companies finally figured out that staying prepared for the turn around is as important as cutting costs.

Finally, this WSJ article offers insights on attracting top people to a company in trouble, even one close to bankruptcy. Obviously, if these approaches work in those circumstances think how well they’ll work for healthy companies.

Image credit: flickr

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