Ed. Note-The VW scandal is clearly much broader than simply corporate lying about environmental compliance. It is about an entire corporate culture that engaged in, tolerated or consciously disregarded the illegal behavior. My friend Tim Aikens, founder of Azarel, recently wrote about some of his thoughts on the intersection of leadership and culture, in a blog post entitled appropriately enough Leadership and culture. Although this post was written before the VW scandal broke, I found his insights quite powerful. 

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IMG_1181Leaders by their very nature are visible and exposed.  They personify what the organisation stands for and are the flag carriers for culture.  In some organisations, iconic leaders can become the culture.  Sir Richard Branson of Virgin is a good example.  There are many others – the late Steve Jobs of Apple, Jack Welch or GE, Terry Leahy whilst he was at Tesco.  Should a company’s culture be dependent on one leader?  What happens when they leave or retire?  In a number of cases this has led to a decline in performance and other difficulties.  Managing leadership, the ownership of culture and the existence of a small cadre of iconic flag carriers is a much more important than often thought.  And of course one of the big problems is that the issue sits at the top of the organisation!  What to do?

In this post, I want to consider briefly the impact on leadership and culture.  The two are inextricably entwined.  Losing senior leaders who are the flag carriers for culture can create a cultural vacuum that is hard to replace (or can be replaced by the wrong things)

To begin with leaders need to recognise that leaders influence culture and vice versa.

Charismatic leaders are great as long as they espouse the right culture and they are not isolated.  In the old days armies took their flag into battle.  The flag was the physical icon of what the army stood for. You never let the flag fall and there was always someone ready to pick up the flag in battle if the standard bearer fell.  The army rallied to the flag not the standard bearer.  This needs to be the same in our business world today. Leaders need to epitomise an organisation’s culture not be the culture.

Leaders naturally influence culture and vice versa.  Being clear about the process and achieving the right balance is critical to success.  Consider the Enron scandal at the beginning of the millennium.  The balance between leadership and culture was wrong, grossly leaning towards a cadre of senior staff who ‘robbed’ what might have been a very successful company.  Leaders should be chosen to reinforce what is already good or build what is needed and held to account.

Which brings me neatly to the next point.  This balance, once achieved has to be sustainable.  The company needs to develop its future leaders in a way that honours and builds up the culture, whilst also allowing them some freedom of expression and development.  Achieving this, of course, is not trivial – it is probably amongst the top two or three tasks that a CEO needs to deliver well.  How often do you read in the business news that XX Corporation appears to have ‘lost its way’ after CEO WWW retires (or leaves)?  Yet for every headline like this, there are many (very) large corporations who continue to succeed.  How many have heard of Rex Tillerson of Exxon Mobil (the worlds’ second largest company by capitalisation).  Exxon Mobil has been around in one form or other for over 145 years from its origin in the Standard oil company and its own iconic leader John D Rockefeller.  The organisation has sustained the balance between its leaders and culture, building on the latter and never letting the ownership of culture be vested in only a few leaders.  Exxon Mobil is not exactly a household name in the UK, so think of Marks and Spencer (M&S) or Sainsburys or Ford.  All long surviving organisations and all with a core culture and leadership.  They have all suffered their ups and downs but by and large survive intact and continue to do well.

So how do you do this?  As usual there is only room for a short answer here and it is best summed up in one word – planning.  These long surviving companies have a clear view of who they are and what they want to be in the future.  That includes their culture.  Vision and values are clear, as are the mechanisms that keep them in place – of which there are many.  Twenty years ago culture was mostly and internal aspect of the business, today brand is part of culture (or is it the other way around?) and in many cases as much external as internal.

Leadership is well managed.  Surprisingly, not as many organisations as you might think have programmes to identify and develop future leaders (so called High Potential or HiPot programmes).  Effective selection and development of these individuals helps to both maintain the balance and reinforce the culture (indeed a key element of selection to a HiPot programme needs to be the degree of ‘fit’ the individual has with current and planned culture).

The last element is visible and outward communication.  Being open and honest about what you stand for, what you expect from your leaders (today and tomorrow) and communicating both internally and externally.  Far from making communicating easier, the advent of social media means that communication has to be better, faster, less ambiguous and much more inclusive.

How is your balance between the organisation and its’ leaders in terms of culture and how good is your planning?

Tim Aikens is an experienced management consultant specializing in business and organizational transformation.He has have worked for several large consulting companies and  offers services as an independent consultant and as he puts it “Partner level consulting at a fair price!” He can be contacted via email at tim@azarel.org or via phone at  011-44 791756501

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