Originally published at Forbes.com
Organizational culture can determine companies’ fates and fortunes. And leaders set the tone for the culture. News headlines this week shine a spotlight on these facts.
Boeing’s CEO, Dennis Muilenburg, testified in Senate hearings this week. The purpose of the meetings was to examine the company’s behavior related to their plane, the 737 Max, which crashed two times in five months, killing 346 people. Since the first crash in October of 2018, emerging comments from current and former employees paint a picture of a company consumed with concern for profits and schedule. In his testimony before the Senate committee, Muilenburg acknowledged that the company culture deserved scrutiny.
Over the past year, commentary referencing problems with the Boeing culture have shown up in the media regularly. For example, an article in the Washington Post described Boeing’s lack of transparency and its culture of defensiveness. Other reports claimed the company is arrogant and believes rules don’t apply. Leaders seem to operate with the philosophy that they only put safe planes in the air, so any time something goes wrong, they blame others rather than problem-solving internally.
Various internal communications have come to light recently, revealing a culture that “rewarded production speed over quality.” Employees have reported fearing retaliation for speaking out regarding manufacturing mistakes. Those who did register their apprehensions said managers ignored or reprimanded them for documenting errors.
A Harvard Business Review article published this Spring argued that Boeing’s profit-driven culture did not provide the psychological safety needed for employees to speak up and question some of the decisions about the 737 Max.
The culture described by employees and the media over the past year does not reflect the values espoused on the Boeing website, where they claim, “a commitment to doing the right thing, no exceptions.” The website states that the company emphasizes respect, accountability, and inclusion. They say that all employees are expected to live these values every day.
In describing the discrepancies between what Boeing leaders say and what they do, some claim the company has lost its moral compass. The question of how the company came to disregard the values remains.
Evidence suggests that company leaders began to focus more and more on increasing benefits for shareholders at the expense of other stakeholders. This strategy is proving to be shortsighted as the company’s stock has plummeted recently.
No one knows whether Boeing will address their challenges successfully. Nevertheless, other companies can learn from their stories.
Lesson #1: Leaders’ behaviors set the direction for culture.
Value statements are meaningless when leaders’ behaviors diverge. If they discourage employees from speaking out, ignore them, or retaliate against them when they share concerns, they develop a culture of fear and compliance. As a result, the company loses diverse knowledge, experience, and viewpoints. Do not weaken your culture by suppressing dissent.
Lesson #2: Arrogant cultures lead to vulnerability.
Every company has strengths and weaknesses. Mistakes are inevitable. When company leaders refuse to acknowledge the existence of limitations, they are incapable of taking the necessary steps to address them. Defensiveness creates exposure. Seek out information about company blind spots and always admit mistakes to mitigate possible damage.
Lesson #3: Focusing on one stakeholder is shortsighted.
Strength comes from balancing concern across a variety of stakeholders such as employees, customers, shareholders, and the general public. Companies attending to one group at the expense of all others are unlikely to thrive in the long-run. Think about the impact of your actions and decisions on all interested parties.
In today’s world, many companies are acknowledging the need to consider all stakeholders rather than just shareholders. This summer, 181 companies, including Boeing, signed on to the Business Roundtable’s new statement of the purpose of a corporation. They committed to deliver value to each of their stakeholders, including customers, employees, suppliers, communities, and shareholders, because the future success of their companies, communities, and country depends on it.
To honor this commitment, signatory companies must ensure that their organizational cultures will support it. All companies must do the same to ensure their survival for the long-term. Take your first step by looking closely at your current culture. Rather than defending and resisting what you uncover, acknowledge and address your weaknesses. Your company’s future depends on your actions.
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