Corporate cultures and habits are powerful forces which influence companies to behave wonderfully, and sometimes—unintentionally—terribly. Positive behavior produces profitable, responsible, valuable companies. Negative behavior does not. When wondering why a company has acted irresponsibly, remember that culture, habits, and irresponsibility go together.
Often it takes someone from outside the culture to recognize the impact of the culture, and the degree to which it leads to positive or negative behavior. Those inside are too close to be independent and objective in their assessment.
How does culture impact behavior? Jim Dougherty, a senior lecturer at MIT Sloan School of Management, tells the story of seeing a New York City food vendor’s delivery cart accidentally turned over, spilling packages all over the sidewalk. A group of young business people, obviously visiting New York together, rushed to help the man right the cart and gather the packages.
When thanked for being helpful so quickly, one member of the group responded that they worked for a company where the culture is one of “drop everything to help a colleague in need.” The reaction was natural, they explained. The power of corporate culture in this case had a meaningful impact on behavior outside of the office.
As the story illustrates, closely related to corporate culture, but subtly different, are corporate habits. Corporate habits are the building blocks of corporate culture. Both culture and habits influence corporate behavior and corporate responsibility.
Peter Duhigg, in his book Power of Habits, writes about habits as natural, unthinking responses to cues. Habits are routines, and when presented with the triggering cue, become routine. They serve to satisfy a need or a craving, and result in a reward. Habits derive from the basic “want-routine-reward” loop but have an important role in determining how responsible companies behave.
Some iconic examples of corporate culture and habits corrupting behavior are GM and Enron. GM’s longstanding culture of “not my job”, which contributed to its safety problems, is well-documented in the Valukas Report, commissioned by GM to study the causes of the company’s safety scandal. Enron’s culture of arrogance, which is in part responsible for its spectacular crash and burn, is compellingly recounted in Bethany McLean’s The Smartest Guys in the Room. For a more recent example, we can look to VW.
But culture causing irresponsibility is not limited to stories in headlines. It happens every day in companies everywhere.
The reason corporate culture so strongly influences behavior is basic: The workplace is a social community. Advancement and acceptance accrue to those who conform to corporate culture, and adopt corporate habits. When corporate ethics, morals, and standards of behavior are lower than those of individual executives, the individuals tend to accommodate to the corporate culture. Sociologist Robert Jackall’s 1988 book, Moral Mazes, is as relevant now as when it was when it was written, and documents how corporate culture corrupts middle-management ethics.
Investors, board members, architects of corporate governance, outside advisers, auditors, and managers at every level need to access, probe, and monitor the culture and habits of their companies. In the end, culture and habits are about behavior. And so are corporate responsibility, profitability, and value creation.
About the author: Bob Greisman is a business growth adviser, coach, and consultant, and speaks and writes on business decision-making. He may be reached at firstname.lastname@example.org.