High Performance Organizational Culture

Office Space (1999)

There has been a lot of discussion about employee retention. Talking about "bad managers" or "poor empowerment" is a common way of describing problems. Our hypothesis is that these are symptoms of a more fundamental root cause.

To begin, let’s be explicit about the personas and circumstances. Arguably, the spectrum is broad. As they say, the most complex part of organisations are humans.

On the one hand, we are talking about seasoned individuals with critical skills for the organisation. These people are opinionated and highly sought after by competition. A significant part of their psychological make up is being a missionary, as opposed to a mercenary - e.g. it matters to be part of a great idea and resolving interesting problems.

The other type of the persona is perceived as less seasoned. These individuals are associated with high expectations, talent and overall potential - we talking about millennial+ types of personalities. These people are extremely focused on developing themselves, and can be maximalists.

For simplicity of the argument, we will leave other types of employees out of this discussion. However, the idea presented below will apply broadly to most types of employees who may be in danger of jumping ship to competition.

The common use-case for any valuable employee reads something like this:

• As an individual, who is on a mission to make myself better, or on a mission to solve interesting problems...
• … I want an environment where my ability to make an impact is not held back by the system or specific individuals
• … So that I achieve meaningful wins without fear, and within time-frames I perceive as reachable

There have been call outs about the context that leads to the environment where people choose to leave. Prof. Sumantra Ghoshal was one of thought leaders in this space -  “The Smell of the Place - Fantastic Talk on Culture”.

Recently, the issue has been inspected through the lens of bad management - e.g. that “employees join companies, but leave managers”. Gallup’s 2015 study called for this to be the reason for leaving in 75% of cases. Others have called this out as a bit of a myth because data, as well as anecdotal evidence, suggest that good managers may also struggle to retain good people. The discussion about the solution has been fluctuating between various “do this first” proposals. In our humble opinion, the demand has been skewed towards simpler answers.

Our proposition is that there is something else at play. Ideas around the quality of management or development opportunities do not hit the nail on the head.

People leave stale organisational cultures, if you were to buy into the way we described personas and their needs. Yes, bad leaders can turn the whole company into a swamp. However, the root cause of rotating doors should be thought of in terms of the culture itself.

Yes, there are recommendations to double down on culture. However, what does it actually mean? In addition, there is an Achilles heel that is rarely recognised. It is not efficient to be doubling down on something that defines the current system. Let’s inspect this in a bit more depth before discussing better solution options.

There are two fundamental reasons why organizations struggle with culture.

The first reason is overconfident leadership. No matter how experienced you may be, it is statistically unreasonable to expect for the average leader to be above average. It sounds bad to feel like you're “average”. Nevertheless, this lens is simply about remembering what happens to the seed once you have planted it. The ecosystem will eventually have a life of its own. In most cases, the collective team is going to be more intelligent than the leader. You are already a good leader if you are being honest about this aspect. You are a great “average” leader if you know how to nurture solutions from within the team.

"90% of good ideas don't come from the executive suite" - Handling Complexity with Professor Richard Jolly, London Business School.

The second reason for the lack of resilience of organizational culture is the inappropriate emphasis on conflict mediation models. We are using conflict in a broader sense rather than outright issues. Organisations that “weed out” descent, under the guise of alignment to a single vision, shoot themselves into the foot. A manager pushing top down a particular vision will create a culture that exhibits all positive and all negative traits of the source. Resulting DNA will lack capabilities to reinvent itself. Even if the setup were comfortable enough, good employees will still leave because of the one-trick-pony prospect.

Given the proposed reality reflections, one champion (SEO or a manager) is unlikely to be systemically successful at changing stale cultures fast enough. The nuclear option is very rarely applicable.

The truth is that people are looking for less “managerialism”. The reason why change is hard is because doubling down on the ecosystem that got you into a predicament may only reinforce the perimeters, but it will not change the climate inside. 

The depth of the issue lies in the long argued view that in order to go higher and faster, one needs to slow down for a time-boxed period of time. There is ample research in this area - see studies from McKinsey or posts on HBR. Same is the case with organisational change. 

Below we explore an important gotcha to this lens, applied to the context of employee retention.

Employees join companies based on some promise. They leave when organisations do not leave up to the promise. In such circumstances, it is not effective to shower employees with more promises.

When the realisation of an issue with employee retention happens, the worst thing leadership can do is to accept the fact that change is hard  - e.g. argue for patience. It is a common gotcha to cultural transformations - e.g. the call for many months worth of patience. Transient competitive advantage is about the speed of change. This point may appear to be in dissonance with the suggestion that one has to go slower before going faster. Let’s take one step back in order to explain how both points of view can be balanced.

Each organisation and team travel through a maturity curve. If your path to a Real or Exceptional team is going to be years away, there will be a retention problem. The reason is not just the duration of time itself. Such long journeys result in a limbo that people wish to escape. The fear of losing opportunities outside will override any perks and new promises. Let’s face it - there are many interesting things happening in wider communities where capable individuals can feel fulfilled.

Being stuck at a particular stage of team development cannot be resolved by doubling down on any particular theme. There is no silver bullet solution if something is not working well systemically.

Where is the gap?

Most organisations gloss over the lesson from the beginner level of agile principles training, whereby team member issues are to be resolved by the team themselves. New age management science expresses a similar idea through the concept of horizontally distributed leadership. 

The trick and gap are rooted in appreciation of the type of influence that leadership can exert at different stages of the maturity curve. The real challenge is that people retention is the problem that needs to be owned by the team once you move past the pseudo team stage. At that stage, bad management simply accelerates exit. The root cause itself is in the culture. The leader cannot solve the problem by her/himself at that point.

The recommendation is to realign thinking and approach to be reflective of the maturity curve picture. 

1. Leader should drive and steer up to the pseudo team stage within a very short timeframe;
2. By the time a potential team stage lands, the Leader should take a mentoring mediator role and let the team define the real team stage. If a leader detects issues, she/he should call for a brief timeout and empower the team to resolve the issue themselves. Hand-holding specific individuals and top-down reinforcement are not effective;
3. The team must own the view of and the journey towards the exceptional team stage;
4. Leader should bat for the team and follow through on the ideas that the team says it needs to become exceptional.

Systemic changes do not succeed if there is no pattern for maintaining a hygiene of intent and ongoing reflection on reality. People leave organisations where agendas are hijacked by specific individuals and where leadership is pushing messages that are out of tune with reality.

“The first principle is that you must not fool yourself — and you are the easiest person to fool.” Richard Feynman

Real transparency is not about OKRs, mission statements or the messaging about “you are part of the bigger picture”. We are not bagging these necessary attributes of organisational identity. The point is that these are not systemic to the culture itself.

The most effective, and the most mature, action a good leader can take is to call for a timeout when the team struggles to ask or answer the question of “Are we the A-Team?”.

It is too easy to talk cross purposes if motivations and drivers are too different within the team. It is possible for an over-eager, well-meaning leader to push an agenda of a particular culture. However, organizational behavior models should not be pursuit for their romantic notion, because a particular pattern worked for someone else. If circumstances dictate a certain setup, then this might be appropriate for that particular stage of the team's journey.

Building resilient teams and avoiding toxicity is all about being crystal clear on what people really want. Yes, the leader might have to rack her / his brain if the split of motivations is split and conflicting. However, it is best for this theme to be clearly identified. As they say, resolution of any issue begins with acknowledgement of the problem.

The secret to good organizational culture is being radically honest across the concerns of:

• what the organization wants
• what teams need to succeed
• what motivates people individually.
  

Great companies are the ones where there are systemic cultural mechanisms that ensure a thriving culture and rewarding work. These organisations are capable of re-inventing themselves. Maturity curve is not a one-way journey. It is a mistake to think about the “exceptional team” status of the North Star vision (e.g. the direction that may not be reachable). Instead, exceptional team maturity must be reachable within the lifetime of a particular “ambition” that is stated by the team. Once that point is reached, the team will come up with a new ambition, and the maturity cycle journey will begin again with the new context. It is this constant reinvention of the new challenge that will retain talent.

Key recommendations:

1. Move beyond doubling-down on 1-1s. Transparent team journal is the one that accelerates the maturity curve journey beyond the pseudo-team;
2. The longer you delay organisational transparency, the harder it is to change the DNA away from the legacy culture of “the boss fixes issues”.