Walking the Talk: How Leaders Shape Company Culture

The 2009 Annual Review for BP stated, “The priorities that drove our success in 2009 – safety, people and performance – remain the foundation of our agenda.” The Deepwater Horizon accident happened a few months after that publication appeared. Integrity was one of Enron’s espoused values prior to its collapse in 2001. Today, about 65% of companies claim integrity as a core value. It seems accurate that a study found no correlation between a company’s stated values and the employee’s perception of the company culture. BP talked about safety as a value but failed in their walk. Enron talked about integrity but their walk was criminal behavior. How do leaders walk the talk?

Why is culture so important?

“Culture eats strategy for breakfast,” are the oft repeated words of Peter Drucker. According to a MIT Sloan Management Review article, companies that focus on culture are five times more likely to achieve breakthrough results. Companies whose culture sees employees as leaders and values employees achieve four times the revenue growth compared to companies with poor culture. A Fast Company article identifies the number one driver of employee attrition is a toxic work culture. About 1 in 5 employees left their job because of company culture.

Culture also determines behaviors. Yet behaviors also influence the culture. What’s the difference? Culture has a more far reaching impact on an organization, but it is reasonable to say that observed behaviors are an indication of company culture.

How are core values and culture related?

Companies typically list about five values as principles that guide a company's behavior and decision making. Culture may be defined as the practices and processes that make up the environment. Values guide the what and why while culture answers when and how. Edgar Schein adds another element to understanding about culture — the underlying assumptions, which are unconscious beliefs that determine how individuals perceive, think, and feel.

Examples of successful culture

When Alan Mullaly began at Ford, he had his top executive team report progress on their initiatives by displaying a color code with green representing good, yellow indicated some problems, and red meant no solution was imminent. At first, all the executives reported everything in green. Previously it was believed that pointing out failure or problems would lead to being blamed for those issues, so the executive team learned to only report green - meaning everything was ok.

Mark Fields took a chance and decided to report the truth in an executive team meeting. When he first showed red in a report, Alan clapped and asked the group who could help Mark with that. Mulally valued truth and responsibility and rewarded Fields for demonstrating those values. Mulally also valued collaboration, which he showed by asking the rest of the team to help Fields. His actions proved his walk was consistent with his talk.

Jocko Willink describes an account of a battle in Ramadi, Iraq. His task force was about to destroy a building and the fighters inside. When Willink investigated further, he found those inside the building were fellow US Navy SEALs. While destroying a building with American soldiers inside was avoided, the reason that building was targeted was because those Americans relied on inaccurate reports of no friendlies in the area and killed an ally who had entered the building. The mission was a failure because of the death of one of their own by friendly fire. In the after action report following this battle, Willink took full responsibility for the error as the senior commander at the scene. This level of accountability made a dynamic impact on the task force and minimized the opportunity for similar incidents to occur. The values of responsibility and accountability went from words to actions in the eyes of all who witnessed.

Embracing adversity

It seems counterintuitive to embrace adversity. Usually things are better when everything is going smoothly. As seen in these four examples (BP, Enron, Mullaly, Willink), true values were not revealed until adversity was encountered. Challenges and hardships present a leader with the opportunity to leverage the situation by action with behaviors that reinforce values.

Walk the talk

Both Mulally and Willink powerfully demonstrate that the most effective way to influence culture is for the leader to demonstrate the espoused values. They did not need to list integrity as a value, their behaviors showed what integrity in adversity looks like. To ensure sustained cultural change, leaders must reinforce the desired values and behaviors in all organizational systems, especially in how employees are rewarded. This is a responsibility that cannot be delegated.

The CEO is responsible to ensure they consistently walk the talk when it comes to values and culture. All eyes are on the leader of the organization assessing if that leader will demonstrate values in action, or simply ask the organization to, “do as I say, and not as I do.” The aspiration of every leader is to embody what Ralph Waldo Emerson said so eloquently, “What you do speaks so loudly that I cannot hear what you say.”

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