CEO and company performance
How can a CEO leverage an element of the organization’s culture to enhance company performance?
Peter Drucker many years ago wrote “The culture of an organization eats company strategy for breakfast.” It turns out that even a clear organizational vision and strategy planned by the CEO without taking into account the organization’s culture has little chance of being implemented, or more precisely, only 1 out of 3 strategies have a chance in such a case.
Many studies, including the McKinsey Group, indicate that the reason for the failure of 2 out of 3 implemented strategies is not intellectual problems, but emotional so-called “soft stuff” related to people and company culture, which account for 72% of the barriers to organizational success.1
This is also confirmed by our experience at Infinity Power International from working with managers and CEOs. When we work together to plan a project to increase company profits, solve an employee turnover problem or open new sales channels, the first questions we ask are: Who should lead this venture? What competencies do we need for the role, the position? What kind of communication should we use so that employees will willingly and without much resistance want to complete project tasks, that is, how to make them motivated for the long term? CEOs often in such situations point to the low level of emotional maturity of managers, the reactivity of teams, the pre-conventional thinking of co-workers i.e. in terms of punishment and reward, among others, as a problem. Adding to the repertoire of challenges is the “great resignation” and another trend of employees from the “Z” generation, who, as Money.pl points out, “Would rather be unemployed than unhappy at work”.2 The times when work itself was treated as the highest value are long gone, and money is no longer the only motivation. What can be done so that emotional problems or low levels of “soft skills” in the organization cease to be 72% of the barriers to achieving company goals? CEOs are asking.
Focus on developing one habit
The above study underscores how important a high level of soft skills of managers, including emotional maturity or the ability to motivate a team, is in effective organizational management. Skills that are also part of the organization’s culture. However, “telling people to change is a very difficult and labor-intensive task. That’s not how the human brain functions,” stated former Alcoa CEO Paul O’Neil. It is much easier to make a change in, for example, one habit in actions, reactions and thinking throughout an organization. If we start systematically and over a long period of time to break and develop a particular organizational habit, that habit will spread throughout the company. Many leaders of global organizations have followed the practice of implementing “one change agent” in the companies they led. An example is the previously mentioned Paul O’Neli, who introduced “Employee Safety” as a priority. When he took up his post at Alcoa, he found the company in a state of noting the biggest crisis in its history. He needed to motivate people by providing a common, unquestionable line of thinking that would become the beginning of a great change. An indication of how confident he was in his idea is the fact that at that point Alcoa was not a company with a high number of workplace accidents, it was within the national average. However, putting employee safety as a priority, which no one dared to question, made it possible, among other things, to analyze and streamline all production processes. When Paul O’Neil retired in 2000, Alcoa’s annual revenue was 5 times what it was when he took office.3 This is just one of many examples of companies where a leader gave a new direction to an organization by implementing a new habit in its culture and broke down barriers and limiting ways of thinking for employees. Other examples of companies that have implemented new habits include Netflix: “Freedom and Responsibility,” Mastercard: “The Orderliness Factor” (supporting the “World Beyond Cash/Kill the Cash” mission), Microsoft: “Growth mindset” or Sony: “Kando” (“Wow” people).
As our experience working with managers and organizations confirms, a new, goal-supportive habit in employees’ thinking influences their behavior and reactions, which in turn translates into more efficient work, fewer conflicts, good cooperation, and ultimately influences increased profits. However, what can be done to identify it?
One element of the broad process during which we work with CEOs and managers on habit emergence is a set of questions:
- When I observe my company, area, what would I like to change in the behaviors, reactions of employees to increase company profits, achieve the vision, mission of the organization?
- Which habit am I the first to develop in my team, so that it “spreads” throughout the organization and leads the team to change and then to success?
- The habit that supports the realization of the vision and mission of the company? What specifically am I doing to develop this habit every day?
- In how many ways does the new habit support the company’s strategic goal?
- How will I know that I have successfully implemented the above-mentioned habit?
Changing one habit in thinking is a prelude to making a significant change that starts from the top, cascading down the organization, where it reaps a bountiful harvest in the form of, for example, more motivated employees to build the company’s success, which translates into increased profits.
Bibliography:
- The CEO Excellence – C.Dewar, S. Keller, V. Malhotra, McKinsey&Company
- Money.co.uk “They’d rather be unemployed than unhappy at work. Generation Z is making a real revolution.”
- The CEO Excellence – C.Dewar, S. Keller, V. Malhotra, McKinsey&Company
A manager must have a clear direction for his or her area that is consistent with the organization’s overarching goal and fits with its Mission and Vision. A direction that will not only be profitable for the company, but will also develop people’s careers.
