What is a healthy culture and how do you change an unhealthy culture? I have always thought that baseball was a simple game: You throw the ball; you hit the ball; you catch the ball. I had also thought that you could measure whether a baseball team had a healthy culture with a fairly easy-to-understand metric, that being wins and losses.
For example, the more wins that your team has the better it should be, conversely the more losses your team has the worse it should be viewed. Based upon this fairly straightforward metric, I would have said that the Houston Astros did not play baseball very well in 2011, when they lost 106 games and won 56 games. All in all, a pretty unhealthy baseball culture.
However, it turns out that my straightforward analysis of baseball culture is in fact too simple. As reported in the Houston Chronicle, team owner “Jim Crane said he believes ‘sophisticated baseball fans’ are in tune with the team’s plans.” I would have thought that having not only the worst record in baseball and indeed the worst record in the history of the Houston franchise showed that the culture of baseball is not particularly good right now in Houston.
However, it turns out that I simply have an “unsophisticated” view of how to approach the Astros’ culture and losing for the past three years and up to the next five years is the team’s culture plan.
I thought about the Astros culture of losing, my “unsophisticated” view of baseball when reading a recent article by Andrew Hill in the Financial Times (FT), “Lofty Aspirations.” Hill quoted Roger Steare, an expert on corporate leadership, values and ethics, as saying culture “describes the way human beings behave together – what they value and what they celebrate.”
Hill posed the question of whether it is possible for government policy makers or regulators to shift the behaviors and values of scandal hit sectors of the business and if it is even desirable. Hill looked at the ongoing crisis in the financial services sector and found that it is so deep that regulators in the UK have “explored whether to intervene to influence corporate culture.”
Hill cited a speech from 2010 by Hector Sants, then head of the Financial Services Authority (FSA), where he said that regulators can ask boards of directors to provide agencies with “evidence of healthy culture, such as functional whistleblowing regimes, positive customer and employee engagement surveys, and a system for challenging ‘group think’ at board level.” However, Sants also cautioned, “I don’t believe the regulator should be enforcing culture because it’s a contradiction in terms: if you enforce culture, you get a police state with compliance on the surface and subversion underneath.”
Hill argues that the best way to affect culture “is to combine strong leadership with the existing internal elements of a healthy corporate culture.” Further, for businesses that are “assailed by allegations of bad behavior is that, while it may take as long to create a good culture as it does to establish a good reputation, a strong set of values is usually harder to destroy unless the company is itself dismantled or taken over.”
Hill went on to cite one example where a company chief executive officer (CEO) had a strong “Lutheran philosophy” and the chairman of the board had a more creative tone. They certainly had a tension, but this tension played out as constructive discussions at the highest levels of the company and did not allow for a shift too much in one direction or the other.
Hill recognizes that many CEOs want to create the type of company at which they wish to work. However, if they desire to make such changes, they must communicate “from the start the values staff were expected to follow.” Nevertheless, Hill continued, “the message needs to be constantly reiterated, in person.” He also noted a “that a strong corporate culture will not on its own protect a company that has a bad strategy, poor governance or a weak business idea, let alone one that takes the wrong operational decisions.”
Hill cited In Search of Excellence, where authors Tom Peters and Robert Waterman point out that “poorer-performing companies often have strong cultures, too, but dysfunctional ones. They are usually focused on internal politics rather than on the customer, or they focus on ‘the numbers’ rather than on the product and the people who make and sell it.”
All of this would seem to point, again and again, that a company’s values not only starts with tone at the top, but those values must be communicated again and again. Hill closed his article with a quote from Roger Steare, who said that he always asks the directors that he consults with What is the purpose of their entity? “If they respond ‘To make a profit,’ I know we’ve got a problem.”
So how about the Astros and their culture? Do they have strong culture but are simply dysfunctional? Or do they need an intervention or structural change? Maybe all three…
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About the Author
Thomas Fox has practiced law in Houston for 25 years. He is now an independent consultant, assisting companies with FCPA and international transaction issues. He recently published the book Lessons Learned on Compliance and Ethics: The Best from the FCPA Compliance and Ethics Blog, available on Amazon.
Thomas Fox can be contacted via email at email@example.com or through his website www.tfoxlaw.com
He was most recently the General Counsel at Drilling Controls, Inc., a worldwide oilfield manufacturing and service company. He was previously Division Counsel with Halliburton Energy Services, Inc. where he supported Halliburton’s software division and its downhole division, which included the logging, directional drilling and drill bit business units.
Tom attended undergraduate school at the University of Texas, graduate school at Michigan State University and law school at the University of Michigan.
Tom writes and speaks nationally and internationally on a wide variety of topics, ranging from FCPA compliance, indemnities and other forms of risk management for a worldwide energy practice, tax issues faced by multi-national US companies, insurance coverage issues and protection of trade secrets.
Thomas Fox can be contacted via email at firstname.lastname@example.org or through his website www.tfoxlaw.com.
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