A healthy business culture operates as a workplace democracy of sorts, where each member has their own voice, but the final decision ultimately falls at the feet of the person in charge. In some newer startups, the trend edges a little closer to collaborative socialism where hierarchy is dismissed entirely.
But a toxic business culture - where employees are unmotivated and unappreciated - runs the risk of becoming a dictatorship.
Dictatorial leadership isn’t always deliberate, and a toxic business culture isn’t always as dramatic as a Trump presidency, but the effects of aggressive leadership are felt by employees, stakeholders and customers alike. Employees who feel stifled and controlled at work may, at best, become disengaged; at worst, actively rebel, sabotaging from within and giving away secrets as freely as US government employees on Twitter.
I recently presented this talk to Vistage members.
The point is, if you don’t want a corporate coup on your hands - but can see disgruntlement beginning to build - you need to set things back on track.
Let’s look at each of those five traits inherent in business leaders heading up non-toxic businesses.
1. They take on board what their staff tell them
Good ideas come from anyone, anywhere, at any time. The best leaders, according to Arne Sorenson, Chief Executive of Marriott Hotels, “do more listening than talking”. Those who don’t run the risk of what award-winning business leader and writer Margaret Heffernan calls wilful blindness, a tunnel vision resulting in corporate inertia.
Employees who are heard feel empowered to act: Sainsbury’s ranks in the top 30 for employee engagement thanks, in part, to their ‘Tell Justin’ suggestion scheme, which encourages staff at all levels to put ideas, concerns and proposals forward to senior management. As a vocal advocate of active listening, Justin King - during his ten year role as Sainsbury’s CEO - implemented 1 in 10 of the 65,000 suggestions received from staff.
When Google researcher Krishna Bharat took his idea for Google News to then CEO Eric Schmidt, it was as a solution to a problem rather than as a result of a management directive. That it became the largest news aggregator on the planet is testament to Google’s creative and collaborative business culture, where innovative ideas are both heard and acted upon.
Leaders, no matter the size of their business, can create a culture that listens and acts by encouraging employee feedback, actively soliciting ideas - through 121s, suggestion schemes or collaboration sessions - and rewarding successful contributions.
2. They talk through thinking process with staff
According to research by IBM, 42% of Gen X employees and 35% of millennials cite readily sharing information and being transparent as attributes of the perfect boss. A study by Oxford University also found CEOs are increasingly required to be more approachable and authentic; leading from the ground up, not from the ivory tower.
Employees of animated movie powerhouse Pixar enjoy an open business structure, and are encouraged to approach anyone within the company, regardless of position. As a result, staff feel connected with both the micro-concerns of their own roles and the macro business goals.
Leaders can communicate challenges, opportunities and thought processes through company newsletters, quarterly presentations, or Q&A sessions. Braintrust meetings - an idea Pixar implemented to bring cross-departmental colleagues together in open discussion groups - can be particularly valuable. Keep communication simple and frequent, like Adobe’s Bradchat, a weekly vlog where senior vice president of digital products, Brad Rencher, shares strategy, information, and interviews with other Adobe leaders.
3. Their personal values and business values are aligned
Some of the most effective leaders live, breathe, and exude their company’s culture, acting as true brand champions. Authenticity is key: when leaders walk, talk and act in line with their business values, employees feel connected to something meaningful.
Elon Musk is renowned for his relentless work ethic, perfectionism and personal accountability. He expects nothing less of his employees, and they perform because he leads by example. On leadership, he says “If you’re CEO, you have to do all kinds of tasks you might not want to do. If you don’t do your chores, the company won’t succeed”, a drive which is mirrored by his business’ commitment to innovation and ambition, from space travel to electric cars.
Not everyone has Musk’s space-high expectations or Richard Branson’s extravagant advocacy, but everyone can learn from their integrity and commitment. A leader whose personal actions mirror their business philosophy will filter down to every level, creating employees who become brand advocates from within.
4. They allow people to excel
Leaders identify and appreciate diversity - of background, skills, and thought. When unique contributions are valued and nurtured, everyone feels motivated to succeed.
Expedia - ranked the number 1 UK company to work for in 2017 - replaced annual reviews with ongoing constructive feedback, motivating employees to do their best work, every day. Adobe also shuns micromanaging in favour of continuous training, following their own findings that 61% of millennials would switch to a company with no performance reviews. As fellow Vistage speaker Steve Head describes: performance equals potential minus interference.
By contrast, the New York Times claimed Amazon has an unhealthy business culture where staff are actively encouraged to tear apart colleagues’ ideas and report on each other’s failings.
In practice, leaders who cut loose a little can reap the rewards of excellence. I said in my recent podcast for Vistage, “leaders should rely on the power of trust, rather than trust in power”. To emulate this - and increase employee accountability - leaders should focus on coaching techniques or mentorship programmes that focus on positive feedback rather than punishment.
5. They higlight small victories to win support for change
Change management is one of the toughest challenges a leader will face: 39% of employees are resistant to change. Get it right, and the rewards are big. Get it wrong, and you may find yourself the subject of a negative management case study.
John Kotter’s iconic strategy recommends regularly celebrating short term wins to encourage a positive mindset and derail cynicism. Change doesn’t happen overnight, but if employees see no visible benefits, dissatisfaction and fear can set in. Appointed in 2012 to turn the ailing Yahoo around, CEO Marissa Mayer is often cited as an example of how not to handle change. Employees reported low morale and disenchantment over the way in which change was handled - on one occasion, being told that there would be no more job losses, only to have more cuts announced just weeks later.
Streamlining is sometimes unavoidable, but for Yahoo, the atmosphere of uncertainty - and lack of a positive change strategy - resulted in more than a third of the company’s workforce leaving for other jobs.
To avoid becoming a victim of corporate brain drain during a period of change, leaders should focus on celebrating the small wins - a new contract, positive customer feedback, or savings being made - so employees can appreciate the real-time benefits of large-scale organisational change. Don’t simply rejoice, reward too: whether it’s recognising the employee of the month with a personalised thank-you in the company newsletter, or taking the sales team out for a meal following an increase in revenue.
Achieving a healthy workplace culture is essential to running a successful business: according to HR leaders, it is also the number-one challenge in attracting and retaining the best talent. As a business leader, culture begins with you. Listening with intent, talking with authenticity, acting with integrity, rewarding excellence and explaining change will set you on the path to success.
Find out how to build a healthy business culture. Download The Business Leader’s Library. Vol 2: Business Culture.