Culture Counts

Corporate America has had no shortage of heroes: Kellogg, Hewlett, Disney, Packard, Kroc, Watson, Ash and Iacocca. These leaders come to mind as examples of lions that have emblazoned their names as corporate giants. But far more important than heroic reputations are the values these captains of industry personified and instilled within their organizations.

When reading the news these days, I sometimes wonder if we have completely forgotten the tenets these titans used to shape American industry. While it is true that history can both illuminate and obfuscate, we would do well to remember the past in the case of these great examples.

Several years ago, I had the privilege of spending a summer at Abbott Laboratories in North Chicago as a PhRMA Fellow. There I observed a wide array of Abbott executives, scientists and managers. I was struck not only by their disciplined approach but also by their freedom to discover, develop and design within broad operating parameters—conditions I did not typically associate with large, for-profit corporations. It was there that I first became fascinated with the question “what makes a successful organization.”

As a manager “on loan” to Abbott from the University of Michigan, I quickly found similarities between the two organizations. While it may be better known to some for its legendary football, winged helmets and “Hail to the Victors” fight song, Michigan, much like Abbott Laboratories, is one of the world’s premier research institutions where scientific rigor, intellectual freedom and disciplined scholarship thrive in a lively, entrepreneurial and decentralized university environment. I realized then that the same core principles could apply regardless of industry.

Perhaps the most crucial linking pin connecting great leaders and their vision is the personal value system they demonstrate and teach to others which becomes ingrained in the fabric of the firm, the so-called “corporate culture.” Today’s best leaders realize that a strong corporate culture is the glue which unites people and provides them with a raison d’ etre that’s bigger than any product or service. Profit is necessary, but it shouldn’t be the paramount goal. Results from a seven-year study conducted by the Workplace Research Foundation and University of Michigan investigator Palmer Morrel-Samuels, as reported recently in Forbes, confirmed that, as employee morale improves, a firm’s stock price enjoys higher returns.

Undeniably, today’s global marketplace is a far cry from the insular corporate environment of the past. Perhaps two of the biggest barriers today to establishing and perpetuating an enduring corporate culture are:

• excessive CEO and executive compensation packages, reflective of greed and a short-term mindset; and
• a workforce comprised of increasing numbers of younger employees who do not often remain at a company for more than a few years.

When a widening gulf in salaries and benefits between the top and bottom ranks of an organization exceeds acceptable bounds, employees are less likely to feel a need to work harder, let alone possess the sense of loyalty, responsibility and trust needed to help solve a company’s most pressing challenges. They will often point to the C-suite where executive perks and bonuses are out of control and say “Let them solve it!” As companies have had to cut costs to survive and, as result, expect remaining employees to pick up the slack, the disparity in compensation has become a battle cry across the business landscape that is now reverberating in the halls of Congress.

The younger workforce presents challenges as well. This generation is far less enamored by traditional organizations and is more independent than any that came before. They can pose major challenges for today’s managers, especially if those managers are part of a different generation. New forms of stimulus and incentives should be created to appeal to these technologically savvy, bright and environmentally conscious young minds. Presenting more stimulating assignments, frequent two-way dialogue and company-supported affinity groups can help achieve this.

The values of many former great leaders were forged by the experiences of the Great Depression, the wars in Afghanistan and Iraq, and humble beginnings. They understood the impact that a strong, adaptive corporate culture has on organizational performance, the true mark of leadership.

They treated workers as their greatest asset, investing in and motivating them. They understood that the purpose of business was to serve the customer. They expected high standards for employee behavior which they themselves modeled and reinforced.

Perhaps if today’s business leaders took a page from history, their companies would achieve the success created by the enlightened leadership of past corporate giants. And that would be a good thing.

* * * Ritch K. Eich, Ph.D. (Michigan), is president of Eich Associated, a marketing and public relations consulting firm. He is the author of numerous publications in the field of leadership, organizational behavior and management. He is the former Chief of News and Public Affairs at Stanford University Medical Center and is the author of Real Leaders Don’t Boss (Career Press, 2012) and Leadership Requires Extra Innings (with Second City Publishing Services, 2013).

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