The world was still reeling from the after-effects of the global financial crisis and organisations were only just beginning to spend money again on developing their people.
The organisations that survived the recession intact were those that had put time and effort into creating great cultures, such that they were better placed to be more flexible around the way they delivered and were clearer on their priorities.
The financial crisis itself was a product of poor workplace cultures. Take Lehman Brothers as an example. It had years of unethical behaviour that senior managers walked past and therefore (by their inaction) endorsed. Continually manipulating figures on reports and statements to produce large bonuses became the ‘way we do things around here’ and this shocking behaviour led to the downfall of America’s fourth-largest bank.
Fast-forward 10 years and has the world learned from its mistakes? It would appear not.
In Australia a royal commission was established in 2017 to address the poor behaviours of the banking, financial services and superannuation institutions. What it unearthed was widespread misconduct.
Commissioner Kenneth Hayne said in February 2019: "There can be no doubt that the primary responsibility for misconduct in the financial services industry lies with the entities concerned and those who managed and controlled those entities: their boards and senior management." He went on to say that regulators now have a role to play in the supervision of culture, governance and remuneration.
In other words, ‘you haven’t learned anything and we don’t trust you'. The banks were fined heavily and told to change their cultures. Most are still trying in vain to do this.
Culture issues aren’t just the domain of legacy organisations, however.
Uber has been one of the biggest success stories over the past decade (from a user perspective), but profitability continues to be an issue and so does its culture.
Founder Travis Kalanick built the company, surrounding himself with people who knew how to get things done. Empathy was low, tempers flared and people were routinely dismissed if they didn’t hit deadlines. It was frequently described as toxic. This approach doesn’t work when staffing increases. It’s fine in a garage when you’re surrounded by people who understand each other, but not when you have management and supervisor lines who pass the bullying down.
This is something that Steve Jobs found out at Apple more than 10 years earlier. Jobs was famously suspicious of others and commissioned ‘task forces’ to spy on teams and have them report back to him. This led to a culture of fear and intimidation.
Under Kalanick, Uber had a ‘bro culture' where discrimination and harassment were commonplace and brilliant jerks were tolerated. Kalanick himself set the tone for this and in 2017 was famously recorded abusing an Uber driver. That set in motion a chain reaction that led to his dismissal. But it didn’t end there. In 2018 the head of HR was sacked for using ‘discriminatory language and derogatory comments’ about a peer. The head of HR!
New CEO Dara Khosrowshahi continues to do his best to address the cultural challenges Uber faces.
Some organisations, however, chose not to conform to such ways and have reaped the rewards of investing time and money in their culture.
In 2015 Dutch bank ING set out to do things differently, recognising that it had to deliver products in a way that added value to its customers more quickly than it had done before. It chose to invest in cultural evolution and actively managed out people that sought to work against the new culture.
The leadership team put a great amount of effort into role modelling what was expected of others and put employee experience before customer experience – knowing that if you had a great environment for staff the flow on to customers would occur naturally.
Net income went from €2.7 billion in 2014 to €4.9 billion in 2017 and culture had a big hand in this.
In the past 10 years, the emphasis on creating a great culture has gone from ‘fluffy stuff’ to business imperative, with Microsoft recently finding that it’s the number one issue on leaders' minds. Not only that but the new generation of adults entering the workforce view employee experience with the same importance as remuneration.
Those that make the mistakes of the past decade will not only continue to underperform but will also lose talented staff and find it hard to recruit new people. Investing time and money into defining the culture required to be successful continues to be the best investment an organisation can make. History is very clear on that.
Colin Ellis is a culture change expert, an award-winning international speaker and a best-selling author. His latest book is Culture Fix: How to Create a Great Place to Work