The attitude of a company’s CEO is crucial to business success. But how do you tell the CEO that the real problem lies within his or her own company? Mary van der Boon talks about the need to bridge the gap between the mission statement and reality.

One should always tell the truth — and leave immediately afterwards, according to an old Slovenian proverb.

But in corporate culture assessment, do top-level managers really shoot the messenger?

Usually, outside consultants with expertise in corporate culture conduct such audits. Unlike HR staff or other managers who work for the company, consultants can tell the CEO and senior management exactly what they’ve heard and observed without having to worry that their job is in jeopardy.

Monika de Waal, managing partner of Unique Sources BV in Delft, has helped develop a cultural due diligence model that can effectively assess the impact of different cultures in international business ventures.

She has firsthand experience with — to quote organisational psychologist Richard Hagberg — "telling the CEO his baby is ugly".

Says de Waal, "The critical success factor in breaking bad news is the insight of the client into his or her own cultural awareness concerning the various types and levels of culture." And this insight, she explains, is a competency that anyone can learn.

Believing your own PR

Often times, the problems start at the top. The values that a CEO and other senior managers preach may well differ from the culture they have helped create.

Enron, the US energy trading company once known for its innovation and fast-paced growth, has become a cautionary tale for all companies since its massive accounting fraud and corporate corruption became public in 2001.

But Enron, like many companies, painted a very different picture of its values in its annual report in 2000, with such statements as "We treat others as we would like to be treated ourselves" and "We work with customers and prospects openly, honestly and sincerely."

There is no doubt that when he signed the report, CEO Kenneth Lay genuinely believed these and other value statements to be true. And yet the problems at Enron did not appear after this report was published: the culture of greed and a high stock price at all costs had been in place for years.

A parallel universe

How do you reconcile these parallel universes: the one which senior management so fervently wishes to be true (or at least to be believed) and the true nature of the beast?

The simple answer is "Know thyself", followed as quickly as possible by "heal thyself". This idea takes on crucial importance in mergers and acquisitions, but also when companies venture into international business arenas after successfully dominating a local market.

Elizabeth Marx, a partner with executive recruitment firm Norman Broadbent, describes the very real impact of organisational culture differences on those involved in the process.

"For those who have been through organisational mergers, the reality often does not match the initial positive rhetoric," she explains.

"Staff suffer high levels of stress and the rationale for the merger — producing higher shareholder value — is often put into question. The failure rate of many international mergers may be the direct result of a culture shock that is similar to the shock executives experience when they are posted abroad for the first time — a feeling of foreignness, otherness or the unfamiliar”.

One frequently cited example of this corporate culture shock is the 1998 merger of German auto manufacturer, Daimler-Benz, with Chrysler, an American automaker. Despite repeated promises to benefit from the unique aspects of both cultures, most Chrysler executives at the new DaimlerChrysler were quickly shown the exit by the Daimler board.

A crucial role for HR

Stanford management professor Jeffrey Pfeffer says that while integrating organisational cultures effectively is important to the success of acquisitions, it is difficult to accomplish because it requires changing individual and organisational values and beliefs.

Human resources may provide firms with a competitive advantage in this process, especially if they are aligned with the organisation’s business strategy. An organisation’s culture influences the degree to which strategic planning and human resources are integrated, however, and this is seldom a seamless fit.

Watson Wyatt consultant Alan Schnur told a workforce.com survey recently “sometimes CEOs and the line don’t really want HR to be strategic. HR is given a double message: Get out of the box, stay in the box."

But for every organisation in which strategic HR is an oxymoron, there is another in which HR is actively helping to run the company.

Vision of the future

According to Corrinne S. Shearer, District Activities Director with Carefree Senior Living in Las Vegas, CEOs must have a picture of the culture that is required to support the organisation's strategies.

This requires CEOs to have a vision of the future that everyone in the organisation understands and shares, a vision on where the organisation wants to go, and how it plans to get there.

It should also include more immediate goals to guide managers' and employees' efforts in the short run. HR is in a unique position to lead this process.

Mark Clemente, president of mergers and acquisition advising firm Clemente, Greenspan & Company in New Jersey, believes "ultimately, many mergers fail because of human resources-related issues, such as culture clash. A company that embarks on a merger or acquisition without early and direct input from HR is living extremely dangerously."

October 2002

Mary van der Boon is the managing director of global tmc international management training and consulting, www.globaltmc.com