The Physics of Organizational Culture and Performance

“Something deeply hidden had to be behind things.” ― Albert Einstein, Autobiographical Notes

The present state of organizational performance is pretty discouraging when viewed across a spectrum of sectors; government, academia, business, not-for-profit, the military, and others. Many important institutions are underperforming in major ways; the Department of Veterans Affairs wait time scandal, General Motor's systematic failure to deal with defective ignition switches, Target's and Home Depot's inability to secure the personal data of millions of customers, the Deepwater Horizon environmental catastrophe, Toshiba's massive accounting scandal, the Office of Personnel Management (OPM) compromise of millions of individuals' most personal data,  Fiat Chrysler Automobile's record NHTSA's fine for safety violations, multiple Washington D.C. Metro system fiascos; there is an almost daily recounting of monumental organizational failures. Countless millions of dollars are lost and lives are lost on a routine basis.

The New York Times covered a sweeping internal investigation of General Motors released in June that condemned the company for its decade-long failure to fix a deadly safety defect, one that led to “devastating consequences,” including at least 13 deaths.

Employees across departments neglected for years to repair a defect and issue a recall, despite a mountain of evidence that lives were at risk.

They avoided responsibility with a “G.M. salute” — arms crossed and pointing fingers at others — and the “G.M. nod,” described in the report as “the nod as an empty gesture.” The report also lays bare a bureaucracy. “The Cobalt ignition switch passed through an astonishing number of committees,” “But determining the identity of any actual decision-maker was impenetrable.”

“Although everyone had responsibility to fix the problem, nobody took responsibility,” the report said.

And the working lives of the people who inhabit organizations like these are often very dispiriting, even miserable, with quiet desperation the defining attribute of what should be rewarding and fulfilling professional lives. Abysmal morale, institutional incompetence, and extravagant waste go unaddressed year after year, with only the faces changing as time passes.

Sometimes, there are calls for changes in leadership and occasionally this actually happens, but normally with little significant effect on organizational performance.

Quite frequently, there are condemnations of the organizational culture and the need to change it.  This is closer to the truth, but lacks depth, an understanding of root causes, the elements of organizational culture, and a serious commitment to long term organizational reforms.

Enduring solutions start with understanding what is meant by organizational culture.  I define it as the "habits, attitudes, and practices" of the company/organization; everything that it does every day, by everyone, over a period of years, even decades.  These thousands and millions of small and large actions, words, and thoughts all comprise the culture of the organization and predict and define how it will perform over time.

The physical laws of organizational culture and its relationship to performance work like this:

  • Organizational performance is directly linked to organizational culture--the habits, attitudes and practices of the company/business/organization.
  • Culture is created over years by the daily practices of the organizations.
  • Those habits, attitudes, and practices can be “good” or “not so good”.
  • Good habits, attitudes, and practices equals good culture, which, in turn, equals high organizational performance.
  • Not so good habits, attitudes, and practices equals not so good culture, which, in turn, equals not so good organizational performance.
  • Habits, attitudes and practices (culture) is/are changed the same way it’s/they’re created; by changing what the organization does every day.

This basic cause and effect relationship between culture and performance needs to be understood if the performance of organizations is to be changed for the better.  It's the beginning of understanding the root causes of failures; grasping those cultures which produce calamities and makes drudgery of the professional lives of so many employees.

It's a fundamental understanding on the path to authentic and enduring reform.

In my next post I'll describe the key components of the framework that shapes habits, attitudes, and practices that in turn creates and changes organizational culture.

“Nothing happens until something moves.” ― Albert Einstein

Keith Stalder, #56

Copyright © 2015 Keith Stalder & Associates, LLC. All rights reserved.

Keith Stalder has over 40 years of leadership experience in organizations from the very large and established to small technology start ups and everything in between.  With a broad and deep appreciation for, and understanding of, the fundamental challenges of organizations and businesses, both in government and the private sectors, his passion is to help all organizations become all that they aspire to.  He is the founder of Keith Stalder and Associates, LLC, a company dedicated to advancing organizational visions and fundamentally transforming how businesses everywhere are run.  Visit www.ksaintergration.com for more information.