“There is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things.” — Niccolo Machiavelli, The Prince (1532)
We all have been following the “turn around” projects at some of the big companies — Walmart, Morgan Stanley, SNC-Lavalin, just to name a few.
Changing a corporate culture, even under the Sword of Damocles, can be a daunting task. In fact, in some situations, it may be impossible.
Some may question the realistic ability of a company to “change” its culture.
For example, even after Siemens suffered the largest FCPA fine and remediation program required in FCPA enforcement, there were some who questioned whether or not Siemen’s new culture of compliance was actually effective. Some whistleblowers claimed that Siemens was continuing to engage in corruption in various regions.
Whatever you may believe as to the ability of a company to “reform” itself, there is no question that fixing a company’s culture takes time and most importantly, requires leadership.
A company’s ability to enact meaningful change depends on the innate desire of its leadership to execute real change. It is too easy to say that such change depends on the CEO. Instead, a change in culture requires the dedication of two important players – the CEO and the board of directors.
One without the other is a recipe for disaster. If the CEO and the board are not on the same page, it is hard to imagine how a real and substantive change.
Too often, we hear that a company is enacting change by brining in a new Chief Compliance Officer. Again, you should take such claims with a proverbial grain of salt. A Chief Compliance Officer can only move the ball as far as the CEO or the board empowers the CCO.
A CEO needs the imprimatur of the board, and in the end, the board needs to support of the CEO to lead and carry out its intent. Too often companies get tripped up on the willingness of “senior” management to embrace a mandate for change. That is a mistake.
Not that I am in favor of totalitarianism or dictatorships, but when it comes down to it –the CEO is the lead corporate actor for change. No one else has the ability or the mandate to carry out such change.
A CEO-board alliance for change depends on three basic principles: (1) Direction; (2) Communication; and (3) Action.
First, the CEO-board plan to act requires a vision or direction, or end product to which everyone agrees. That means that the board and the CEO have to define what culture they want, what it will look like and how they will get to that point.
Second, a new culture requires communications – we have all seen how symbolic actions, clear statements and definition can provide direction to people in an organization. The same has to be done in a company – officers, managers and employees need to understand what the plan for change is and how it is going to be accomplished. Internal communications and clear messaging is a must.
Third, corporate constituencies have to see that the plan is for real – that actions are being taken to enact change. This does not mean that additional resources are being assigned to a problem – instead, corporate change depends on specific actions taken to send a message that reinforces the overall vision for corporate change.