In the book “Return to the Punjab’ Prakash Tandon, a former Chairman of Levers in India, writes with reference to his board membership of Hindustan Steel: “I have always longed to see in an Indian subordinate, but seldom seen, that steadfast gaze, open and direct, combined with a capacity to listen intently and appreciatively; a gaze returned directly with the answer that has within it the capacity to agree without ingratiation or to disagree with courage, politely but firmly”

This may seem familiar to many readers. It is indeed common. It however only describes the syndrome from one perspective and does not refer to the reflection required of managers and promoters. The case I make is that the tone and tenor of an organisation is created and led by the top people in a company. It does not just happen.

What is a company culture? It does not have numbers or process around it. It is the features around how people in the company deal with each other and the outside world. That is suppliers, customers, regulators. And includes the definitive link to how this ties in with their business objectives. This can range from secretive and questionable to open and ethical and everything in between. It is a matter of choice. Some are more risky than others, a few not sustainable and others give peace of mind and drive performance.

Culture is not limited to an approach to corporate governance or of observing the law. It includes the behaviours shown by the leadership and all employees and asks if they are aligned with where the company needs to get to and how they will do it. In my recent career as a business advisor I have had some stand out experiences.

There is a deference that is expected by quite a few CEO’s. It is unappetising to see senior people in age and position showing exaggerated courtesy or instinctive servility. The minute they are out of sight of the boss, the steel appears in their spine and they in turn compress their subordinates into submission. So what happens? Only what the top man wants, judgments are affected by form rather than content of conversation or inputs since there are none. This just cannot make for optimal outcomes. This is most evident in companies dominated by the personality of the CEO or promoter.

I was told of a company which had a training session for staff (and I cannot confirm if this is fact) on what to do during a sales tax investigation. This suggests a risky culture with potentially impact on staff, reputation and with legal consequences. Extending the argument, it could suggest that cutting corners on quality and customer service and even lining one’s own pocket is seen as appropriate. Even if that is not said, some will assume it is okay. Let us hope that they are still in business in a revised avatar.

On the other hand is the Chairman of a very large group whose son toiled in the field in another company to earn his place and then joined the family business as an equal amongst equals. Every item of personal expenditure by the family is met by themselves and they demonstrate the thrift they expect of their teams by not being showy or expansive with the company’s resources or their own. Add to this the decency and politeness they are consistent with. Now visualise this company which does not have anything other than the usual challenges. It has a culture of open communication, people as solution providers, with the right focus and working as a team. Growth happens.

There is a professional services firm which has ambitions to move up the chain and creating a brand and the ability to charge higher rates. The main person however sits in an office with a glass door and a view of every coming and going. A register which shows who made which STD call is reviewed daily. Does this fit with empowerment of the team, growth and creating value? No. Because the people representing the firm in front of clients will never show initiative or take positions and expect to be steered all the time. They are still reconciling the firm’s objective with the culture in operation and remain confused. To the credit of the entrepreneur the feedback was received with no defensiveness and maybe something was also done.

With a turnover of approximately Rs. 120 crores one would not expect that the MD of a company would intervene in truck loading and unloading rates. In one case it happens. This element must be a miniscule part of total cost. That turnover is not going anywhere higher in a hurry, since the entire organisation is geared to pettiness. While the opportunity of new markets and expansion is significant the DNA rewards inward looking small victories. The tyranny of growing domestic demand (most things sell) does not encourage change and will ensure their health until competition or business challenges increase.

To link a culture to a company’s objectives would seem academic or a luxury. It is not. Enough examples abound of serious corporate accidents due to inappropriate cultures. It requires simple deliberation and definition of how the business would like to operate. Buy in from employees and demonstration by the promoter / CEO. Then the culture has the best chance of being executed. There are superb examples around. They do not drive home the message as much as the sub optimal ones.

(The author is a Chennai-based business consultant)

(This article was published on June 22, 2012)
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