The biggest hurdle is internal contradiction around values. For instance, right now, compliance and risk are major issues, but companies are conflicted. The policies and rules reflect enlightened values: be careful about risk, don’t cut corners. Other norms tell you to push yourself extra hard for performance, no matter what it takes. The values contradict each other, and none of them help you delight a customer, which should be the point of the business.
Everybody knows changing the culture is important, but we tend to approach it in an ad hoc fashion. I’ve sat with business leaders after an acquisition and found out they spent US$1 million on due diligence, and $3 million on legal issues like environmental remediation and intellectual property rights. But they spent nothing on cultural due diligence. It turns out that one CEO took the other out to dinner, and they decided they were kindred spirits, so they thought their thousands of people would be just fine together. If you could put all the executives of any company in a room to talk about their culture, they would all have very strong, intense opinions: “People love it here.” “They don’t like working here.” “They don’t see clients enough.” “They don’t pay enough attention to their own people.” But it’s all conjecture. They don’t have any real facts.
When Business Is Personal
S+B: You talk about changing not just individual company cultures, but the culture of business in general.
SEIDMAN: They’re interlinked. Remember the line in The Godfather when Tessio is found to be a traitor? He tried to set up Michael Corleone to be killed. He says, “Tell Mike it was only business. I always liked him.” That idea — that when you take advantage of someone at work it’s just business, nothing personal — is deeply embedded in the commercial sphere. You see the same cultural value at funerals of business leaders, where someone eulogizes, “He was a ruthless boss, but a wonderful husband and father.” Ruthlessness at work, especially at the expense of your colleagues, employees, suppliers, and customers, should not be celebrated.
Another deeply embedded cultural value is the classical economics concept that the only purpose of a corporation is to return investment to shareholders. And a third one is the notion that you should “just do it.” In other words, do what you must and take what you can get — just don’t get caught if you do something wrong. Yet another is the HR department’s value of motivating people with bonuses and coercing them with threats: using the carrots and sticks of behavioral psychology, instead of improving the intrinsic quality of the work. Finally, in the environmental, health and safety, and risk domains, there’s the belief in insulating business from its external costs.
These are all amoral beliefs. If you endorse them, you will end up building a culture of blind obedience or, at best, informed acquiescence. If you want self-governance, you have to give them up. When a trader at a bank can lose $2 billion in a way that affects every other businessperson around the world, we are all morally interdependent. We can’t keep talking about business strategy only in the amoral language of risk, compliance, and managing uncertainty. If I sell you a mortgage, I’d better be prepared to stand behind it, because the days when I will never see you again are over.
S+B: Is it fair to ask everyone in a company to take on the attention and responsibility required in a self-governance company?
SEIDMAN: It’s a shift, but virtue has always been its own reward. If you recognize that business is personal, and work and life are not separate spheres, you realize that neither blind obedience nor informed acquiescence is efficient. Neither can be profitable. In the end, we don’t have a choice.