How does a firm develop its corporate culture? According to eight Canadian CEOs we spoke with, a company’s culture is influenced directly by the personality and leadership style of the CEO.
For HR managers who have implemented programs intended to steer or change their organization’s corporate culture, the news may come as a disappointment because it means that the likelihood of such programs being successful is slim to none.
Instead, the CEOs say, HR programs should support and disseminate the leader’s style to help it permeate the company.
Gaston Levac, president and CEO of the Canadian College of Health Service Executives, wrote his master’s thesis on CEOs and corporate culture. His research shows that an organization’s culture “starts with the style of the CEO.”
“I think there is an extraordinarily close relationship between the personal style of the CEO of an organization and the way the organization behaves... the corporate culture,” he says.
If a CEO believes in open communication, managers will be more open to their employees. If he believes in casual wear, ties will become a thing of the past.
If he is autocratic, decision-making will happen at the highest levels in the firm rather than on the shop floor.
After about two or three years, says Levac, the organization’s managers will have a thorough understanding of the CEO’s style and will pattern their own style after his.
The most direct way for a CEO to influence employee behaviour is through policies and procedures. For instance, if the CEO favours a more professional atmosphere, he can institute a formal dress code and strict guidelines of behaviour. Very quickly the company will start to look and act like the CEO.
But that doesn’t explain how even companies whose CEOs do not issue policies, can still end up acting in the image of the CEO.
What we discovered in speaking with Canadian CEOs is that the leader’s personality rubs off in many more subtle, sophisticated, and ultimately far more pervasive, ways.
For instance, the way the CEO views and treats the company’s board of directors is enough to send a signal to employees about how they should behave. If he delegates a great deal of authority to the board, people may get the feeling that policy should be made at the highest levels and, without specifically being told to, will direct decisions upward.
If the CEO is visionary, it may send a signal to employees that creativity is important and mistakes will be accepted as lessons to be learned from.
If the leader is not comfortable with technology, managers will likely send memos rather than e-mail.
“You’ll have CEOs that are very competent and have strong personalities. Then there are others who are not as strong, not as self-confident. There are people who have a very formal style — you call the CEO Mr. So-and-so as opposed to Fred. Others are very informal. Others are educators and mentors, (adopting a preference for) coaching versus a laissez-faire attitude,” says Levac. “The style of the CEO reflects itself throughout the organization.”
Richard Hall, CEO of Hall Management Corporation, a Mississauga, Ont.-based real estate management company, wears a jacket and tie to work. So do his managers. In an industry that has historically been low-tech, he has pioneered the use of sophisticated computer applications. As a result, new hires tend to be people who are comfortable with technology and people who aren’t “don’t survive in the organization very long,” he says.
“At the end of the day the CEO sets the broad standard that people will take their cues from,” says Ambrose Hearn, CEO of the Victorian Order of Nurses (VON).
Having said that, he recognizes that no CEO can snap his fingers and change the corporate culture instantly.
“I don’t think there’s an industry where the leaders can make change at the pace they’d really like to,” he says. That may be especially true at the VON, which has spent more than 102 years making decisions largely by consensus. He’d like to see VON’s leaders speed up their decision-making process. It’s a cultural change he intends to implement as quickly as he can without throwing the organization into disarray.
Denis St. Amour, CEO of Drake Beam Morin (DBM), says that cultural change in an organization is “like a ship - it takes a long time to turn around.”
This is St. Amour’s second stint as CEO of DBM. He left the position in 1992 because he felt he “wasn’t on quite the same wavelength” as the management team in the firm’s head office — in other words, there was a clash of cultures. He came back in 1998 when they changed their senior managers “and I just felt that I could really relate to these people. I’ve loved it ever since.”
St. Amour says he looks to the HR department to help implement cultural change “in a way that’s not negatively disruptive to the company. It’s very hard for a CEO to have a cultural and evolutionary impact without a strong HR department that can provide its own strong leadership.”
He intends to increase his firm’s focus on sales and development, as well as increasing its customer-service orientation.
“That’s a strong cultural shift for most consulting organizations.”
In order to help the company deal with that shift, the HR department is keeping is fingers on the pulse of the employees through feedback surveys and two-way communication. “Two-way communication is critical in any kind of cultural change,” says St. Amour. “We have a lot of employee meetings now, many more than we have ever had.”
Dean Connor has been with William M. Mercer Limited for more than 22 years. A month ago, he accepted the position of chair and CEO. Because he came from inside the company (and more than 85 per cent of new CEOs do), he was well acquainted with the corporate culture. In fact, it had become part of his leadership style. That likely helped lessen the cultural clash for staff.
Even so, before he started, Connor turned to the HR department for advice on how to ease into the new role. “The HR folks have been extremely helpful to me in our shop helping to act as a sounding board for what we might change — almost like an executive coach,” he says.
Ian Scott, head of Mercer’s HR department, says that because Connor is more than 10 years younger than the outgoing CEO, he brings with him a more technologically focussed culture that staff will have to get used to.
Scott says he had to be sensitive to the fact that while they were bringing in younger leadership they must not alienate the existing consultants “who are in their 50s and 60s and are very important builders of the firm — controllers of major client relationships — who have experience and wisdom. One must be very careful not to sideline them.”
John Cross, HR vice-president of Hewlett-Packard, says that the role of HR lies in taking the message of the CEO, “reinforcing it, interpreting it, answering questions from the employees” and adding insight to the message.
He says HR also has a responsibility to feed information back to the management team.
Gaston Levac takes HR’s role one step further. Not only must the HR manager give the CEO feedback, but the department can play a vital role in helping the organization cope with directions from the CEO which “they perceive to be bad for the organization. The one group that can deal with complaints of management, of staff, are usually in the HR department.”
He says he once worked in a company in which “the leadership style of the CEO was terrible — not a leader, not good for the organization. The HR department ended up being the catalyst that helped people along in the bad environment... helping them with programs for personal development and (providing) coping mechanisms.”
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