Torben Rick

The costs of a misaligned organizational culture

The business impact of a weak or misaligned organizational culture has become more pronounced over the last couple of years as company after company, from banking, insurance, auto manufacturers and energy utilities have experienced billions of dollars in fines and major declines in share price ultimately resulting from a misaligned or even toxic corporate culture.

Culture has a powerful positive or negative impact on business performance, company reputation and brand value and should be of increasing concern to CEOs and Board Directors.

The consequences of a misaligned organizational culture:

• The banking fraud at Wells Fargo perpetrated by a culture of relentless pressure on staff to meet very aggressive sales quotas
• Not even death stopped some CBA customers being hit with fees for financial advice they did not receive
• The cover up by Volkswagen of fake CO2 emissions data
• The endless numbers of scandals at Deutsche Bank, continue to make headlines across the world

On the other hand, Southwest Airlines and its “culture of LUV” has contributed to 43 straight years of profitability, plus the highest customer satisfaction scores in the airline industry. And the “innovation culture” at Amazon enables it to penetrate and dominate in multiple business sectors by disrupting old business models and revolutionizing the customer experience.

The economics are compelling, manage culture well and the organization can experience growth, brand recognition and financial rewards that attracts and keeps employees and makes customers highly satisfied. Manage culture poorly and the organization may experience massive fines, customer defections, high employee turnover and loss of brand and shareholder value.

When organizational culture does not align with the strategic goals of the company, optimal performance will be impossible to sustain. Just as a garden must be carefully tended to keep weeds from taking it over, culture must be consciously maintained to prevent it from morphing into something unintended.

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Business impact of a weak or misaligned organizational culture — https://www.torbenrick.eu/t/r/pvb
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