How Much is Your Unexamined Culture About to Cost You?

By Amanda Ziesemer & David W. Hasenbalg

Culture Risk #1: The Cost of an Unmanaged Culture

The lessons learned from Wells Fargo are now clear to most CEOs: culture risk is real and behaviors that are disconnected from values have a financial impact. For Wells Fargo, this culture risk can now be quantified.

More than six months after Wells Fargo was caught violating customer trust and creating fake accounts, the company is feeling the financial impact beyond reactionary dips in stock prices and some negative headlines. New checking accounts from retail customers fell 31% in January 2017 compared to January 2016, marking the fifth consecutive month of decline. What’s more, the financial impact is increasing. The same comparison shows that applications for credit cards fell 47%, the worst year-over-year decline since the scandal began.

The extent of the impact on Wells Fargo’s reputation is also beginning to show. The Harris Poll of Corporate Reputation saw Wells Fargo drop from 70th to 99th, the largest drop in the poll’s 18 years. Public trust is reacting to the deep divide between stated values and the actual culture environment experienced by many Wells Fargo employees.

Culture Risk #2: The Cost of an Unexamined Culture

Enter Uber—a success story straight from the Silicon Valley hotbed of company culture buzzwords. Despite the often cliché leanings of office culture PR, the tech world recognizes the critical role that leadership plays in shaping company culture. In 2015, Uber’s CEO Travis Kalanick was listed 2nd on Business Insider Top 100 in Silicon Valley. One former employee’s blog post and a single dash-cam recording later, 2017 will leave Travis Kalanick on a very different list.

If Wells Fargo warned us of the risk of unmanaged culture, Uber is warning us of the risk of unexamined culture. Uber’s performance evaluation system, a process with heavy influence on company culture, is the opposite of unmanaged. It was intentionally set up to drive high performance by focusing on what it takes for an individual to win and mimicking the business culture of Uber’s competitive landscape. Travis Kalanick championed a culture that encouraged Uber employees to “always be hustling [and] going toe-to-toe.” The result of this culture puts the dangers of a managed yet unexamined culture on full display.

For rapidly growing startups, comfort with risk and a “go get it” attitude are required. However, the values that push a disruptor like Uber to take necessary risks also have a shadow side. In 2014 “Fierceness” was identified as a trait used to evaluate Uber employees. Living up to this value is defined as doing “whatever it takes to make Uber successful, even when it’s hard and takes some risk to get there.” The same fierce culture that drove Uber to be first in a crowded field created the environment that ignored Susan Fowler’s allegations and is threatening Uber’s long-term success by masking serious and numerous ethical risks.

“Fierceness” itself is not bad and could be a crucial differentiator. However, without the right focus and if left unexamined, the behaviors it takes to succeed in business will leave even managed cultures at risk. Uber’s mistakes remind us all that culture risk is not eliminated when values are successfully turned into behaviors. A managed culture does not ensure an ethical culture.

Culture Risk is Here to Stay

Each new culture scandal seems to catch people off guard. But considering the pressure of what it takes to succeed in today’s climate of unparalleled speed in tech advances and innovation, perhaps we shouldn’t be so surprised. Listed just above Travis Kalanick at number 1 on the 2015 Business Insider Top 100 for Silicon Valley was Elizabeth Holmes, now infamous for her role in the ethical breaches and ultimate demise of Theranos. Once again, the values that lead to business success in the short-term can be the same values that undermine success through ethical failures in the long-term.

Values brought to life through behaviors cannot be left alone to flourish – they need continual tending and significant management attention. The financial and PR plight of two giants – Wells Fargo and Uber – and the subsequent fall of their CEOs makes it clear that talking about culture is not enough.

CEOs have a responsibility and a business imperative to assess and address the reality of cultural risk. For leaders who are actively managing culture, navigating culture risk never ends and requires serious and frequent reflection.

CEOs and their leadership teams must constantly be asking:

  • Does the culture we are managing and modeling promote behaviors that could put our company at risk?
  • What in our employees’ day-to-day world creates risk for behaviors that would violate the trust of coworkers, customers, investors, and the community?

Honest answers might be hard to swallow. They might also be the very thing that saves your company.

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