Corporate Culture More than Just Gestures

Not wearing a tie while presenting quarterly results is a nice gesture, but it doesn't really represent meaningful change in corporate culture. That requires much more effort.
Dieter Zetsche, boss of Daimler, sporting the open collar look in Berlin this month at the Allianz Forum.

Heinrich Hiesinger has his top ThyssenKrupp executives photographed in Shanghai performing Tai Chi exercises.

At Volkswagen, Matthias Müller reportedly does away with the executive board’s priority in the elevators at headquarters.

Dieter Zetsche appears without a tie when he presents Daimler's balance sheet. The management teams at Continental and Bosch, as well, occasionally like to go without ties.

And all of the 53,000 employees of the Otto Group may now address compoany boss, Hans-Otto Schrader, with the informal form of German usually reserved for one’s family and friends.

The managers want to change the culture in their companies because competition or a crisis is forcing them to do so.

The symbols the bosses are using might vary but the goal is the same. The managers want to change the culture in their companies because competition or a crisis is forcing them to do so.

The problem is that cultural change can be quickly invoked – particularly in a pinch – but only a few bosses are able to succeed in making the change.

That’s because it’s a lengthy and laborious process and demands profound upheavals. Such pivots shake up assumptions, norms and values that have shaped the working climate for years or even decades. And it doesn't stop at the desks of authority but breaks up traditional ways of thinking, organizational structures and patterns of relationships.

That alone is a monumental task that requires time and patience to accomplish. But that’s exactly what many bosses are not being given, so making cultural change becomes all the more difficult.

The shuffling of management on Germany's executive floors is becoming increasingly hectic. Last year, every third chief executive was replaced before his or her contract had run out.

In most cases it wasn't because the person in question had become too old or was having health problems but because their performance was no longer what was expected or others’ confidence in them was lacking. The pressure from the stockholders is increasing, and supervisory boards are getting involved earlier and more strongly. Taking energetic action is what is called for, and that’s pure poison for cultural change.

Don't get me wrong, symbols of change can provide power and expression and are useful tools. Culture is always something vague and difficult to comprehend. Many employees can neither explain their company's culture to a third person nor pass it on. In addition, culture is something stable, a long-growing framework of rules for all employees. But the framework is constantly changing, so it must adapt.

If a culture is not really tangible, how then is a chief executive supposed to portray its change?

That’s why it’s smart when mangers use symbolic gestures. The change can be made more understandable and capable of being passed on – both within the company and in public.

For example, Mr. Schrader: The use in the Otto Group of “du,” the German familiar “you,” is “an outward sign that something new has begun, sort of a verbal starting gun for our Cultural Change 4.0 project.”

But symbols can't be all.

Consider someone like ThyssenKrupp’s Mr. Hiesinger, who wants to get out of the steel business and into the service business and improve team spirit using Tai Chi. He must also see to it that fair game rules exist and a dog-eat-dog mentality is prevented.

Or someone like VW chief executive Mr. Müller, who, as a lesson learned from the diesel-emissions scandal, aims to change the carmaker’s corporate culture. Instead of a climate marked by employees’ fears of making mistakes, a change would put honesty front and center. By symbolizing the change through something like unaccustomed intimacy in elevators, Mr. Müller must also be accessible in day-to-day business and respond to his employees.  

Or Daimler boss Mr. Zetsche, who wants to keep up with the titans from Silicon Valley in areas such as digitalization and autonomous cars and aims to signal speed and flexibility via open shirt collars. He shouldn't insist on a constant presence in the office independent of the work performed.

Lastly, someone like Otto Group’s Mr. Schrader, who wants to compete with online retailers like Amazon that are both dynamic and aggressive and demonstrate flat hierarchies via the informal “du.” He must also allow and promote open discussions.

Such bosses must see themselves as role models and show others how to live the new culture, and in everyday life too.

Deutsche Bank once failed to meet this challenge. Anshu Jain and Jürgen Fitschen, at the time the co-CEOs, wanted to restore the bank’s reputation in the aftermath of multiple scandals and penalty payments in investment banking. A code of conduct with six virtues – from integrity and discipline to partnership – was supposed to do the job, but the package remained more of an empty shell.

Right after taking office, new CEO John Cryan distanced himself from his predecessors’ strategy: “From now on, words don't count, only actions.”

A good intention. Now it’s up to him to show that he can actually do it.

 

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