Profit and Culture

CEOs seem to fall broadly into one of two categories. EITHER they are concerned about the social responsibility their company has. That extends, of course, to responsibility for their employees. These CEOs devote time to understanding and implementing the ‘decent way’ to run a business. OR they think all this is too ‘touchy-feely’ and not conducive to profits which they regard as their exclusive responsibility. Anything that doesn’t impinge on making money is out.

The explanation for these categories of managers can be found in several aspects of the business. Very competitive businesses force attention to the bottom line since a flicker of lost focus threatens to leave it short. Logistics businesses running on very thin margins have the same pressures. The personality of the CEO also determines how a business will be run. Introvert, poor communicators and those disposed to find happiness in figures rather than people will be driven bottom-liners. Their culture will be one of ‘do and / or get done’. A rather harsh, impersonal but often effective way of working.

Businesses that have a history and that want to continue forever, where the craft of making products or supplying services is as important as making money, have a culture of continuity. Is that good business and does it meet the requirements of the stakeholders – employees, clients, suppliers and the wider group business has a responsibility to? Certainly continuity and security play a big part in the lives of all of us. A reasonably congenial working place is a good base for successful business but if it becomes too comfortable it will lose focus.

The harsher business approach suffers from two main disadvantages. First it transgresses many rules, some of which are already law, that encourage employees to think they have rights – financial, social and personal. Such frivolity was unheard of seventy years ago although there were good employers like Cadburys and Rowntrees even then. Second, the modern worker won’t put up with it. Rights or no rights, they demand better conditions, shorter hours and benefits undreamt of pre WWII. The more we teach leadership the better we teach rebellion.

I also see the harsher approach leading to employee demotivation, incentive to neglect quality of output – even, occasionally, sabotage. It is wearing on both imposer and victim leaving them exhausted just at the point when they need energy most. But above all I see it as counterproductive in producing trust, the basis of all good communal living and working. Indeed, I would go further and say that the last fifty years appear to have been dedicated to destroying trust and promoting the need for compliance, the inevitable result of mistrust.

My own style is relaxed and generous with occasional sharp reminders that we make profits through discipline. How does the more relaxed manager maintain discipline while running a friendly albeit tight ship? First, decide what matters and what doesn’t. Captain Queeg in The Caine Mutiny set his sights on another helping of strawberries. When he couldn’t get it, he ‘proved’ that the stewards had eaten the fruit. But they hadn’t and the crew mutinied. Worth watching even though it is an old film. Don’t make another helping of strawberries your point of focus.

Second, watch the overall mood not the mood of the troublemakers. Much of the dissidents’ potential damage can be avoided by humour. I call it ‘loving teasing’ – they aren’t quite sure if it is fun or warning. Most people take it as fun. Those who need to, see the red light. There comes a time in every happy organisation when it is necessary to make a serious move to remind the importance of discipline. Firing someone senior, obviously for fully justifiable reasons, has a dramatic effect and is accomplished quickly and usually cleanly. If your culture of handling people is good, your culture of firing them will be equally good.

The dramatic change that is taking place in relationships between bosses and subordinates is set to quicken. Shortage of the skills we need most today, both technological and soft, will be part cause. But watch what is happening to politics. The old conventions are being thrown out. New brooms, some of them jokers, are being installed. What is happening to politics is also happening to business.

There’s a reason for that.

Business is the new politics.