Companies are like individuals and communities, they have beliefs and behaviors that shape them.
These beliefs and behaviors are known as corporate culture.
Corporate culture may be written, but in small companies it is usually unwritten. An example is where a bank pays for all its employees’ lunch on Wednesdays and the employees identify with it.
Barron’s Business Dictionary defines corporate culture as “general organizational operating environment including ethical and value structures”.
Corporate culture transcends all aspects of the business entity. It affects how a company’s employees work, their chain of command, method of communication and how they are viewed by their customers and outsiders. Corporate culture can also determine the type of industry the company operates in and its products.
The man or woman who is the CEO of a company is the corporate leader of the company.
He or she is the one that has a vision for the company and galvanizes the support of the employees to achieve the goals the company. He or she must command the respect of followers to be effective.
The leader could rise from within the company or organization to become the CEO. This type of leader should not have problems with his company’s corporate culture, having been groomed in it. Though the leader may introduce changes by dislodging bottlenecks for greater efficiency as the CEO, such leaders are not the object of this article.
This article looks at issues that confront a CEO or leader coming from outside the company and not being properly groomed in the culture of the new company.
It is common for a company to hire a CEO from outside its fold, even from its major competitor.
Lee Iacocca in the 1970s was fired by Ford Corporation only to be hired by Chrysler Corporation as their new leader. The game is still on like Yahoo poaching Google employees, universities and banks hiring from their neighbors all with the intention of outperforming their competitors.
Boards of corporations see the sterling performance of their hiring prospects in the companies they are working. If such performance fits into what a Board wants, and the Board thinks the prospect can transform their company in the same way, they will hire the prospect. The Board’s desire will be that the prospect replicate those qualities in their organization.
The New Leader
The new leader now steps into another company totally different from where he is coming from. He has to make new friends, but above all he would be faced with a corporate culture that he has not been trained in.
The leader should understand that he has joined a company with a different corporate culture. He should start with the Board which hired him and make his vision and goals known to them. He will need the support of the Board to make changes to the corporate culture where and when necessary. Such changes must be for the overall benefit of the company and not for his ego.
The backing of the Board is crucial since they are the ones to evaluate him and can make such changes become company policy.
After securing the support of the Board he should next meet with the top management of the company to communicate his vision and goals for the company. He must bring his business savvy to bear in his effort to buy-in for his vision and plans for the company.
The New Culture
It is important that they understand and agree with him on where changes could be made.
Some resistance, at least initially, is expected because these people are entrenched in the company’s culture which they may not want changed into a new culture.
After he strikes an agreement at this level he could meet with the other employees through their managers, representatives, memos, or other forums. He should use the opportunity through these channels to communicate his plans for the company and how the company and employees can benefit from his plans.
The new leaders must:
- Be willing to listen and not suppress suggestions
- Not be a know-it-all leader
- Study the company culture to know what needs to be changed
- Be accessible
- Not see everything about the new company as bad
New CEOs Bring Changes
Changes, no matter how well thought out, will witness resistance.
Some resistance is fueled by the desire of employees to defend their rights or defend the culture of the company. A new leader, coming into a company, should expect some resistance which may boarder on defence when introducing a new corporate culture.
Sweeping changes without due consultation can damage the company. The new CEO should apply tact and effective communication in handling the corporate culture of his new organization.
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This is a very valid and common situation with outside CEO’s appointment. Here the onus to prove himself or herself is on the CEO. The effective CEO uses the rule of flexibility to understand the situation and people down the line. He applies his strategy with flexibility like a duck’s neck while catching his ‘prey’. If the element of flexibility with firmness and tact is missing he is bound to be an utter failure. With these tools he has to devise his matrix for change and acceptability by all in order to stretch his neck little more to have his goal attained. Initial phase is the wash out phase of resistance to defend the status co, next is the acceptability of changed strategy by all with clear and convincing communication and finally the implementation phase where the neck is to be starched bit more for gaining hold of the ‘prey’. Once results start flowing the stretching of neck become smaller and then the system is put on auto mode with necessary checks and controls in place. Here again the CEC has to seek new mountains in the form of new product or projects to keep the companies growth and bottom lines at par with or even exceeding the forecasts
Very important points to remember, not just as a CEO within an organization, but any leader in a company facing change. This article comes about at a very timely point in my career – one in which I will probably be facing these exact same challenges within the near future. As an ‘outsider’, I can appreciate the advise given on how to embrace the new company and the changes to culture that I will face. Thank you.
I like these articles will be very pleased if it will continue for sometime