Organization & Leadership Consulting

Financial Distress is a Symptom of Culture Misalignments

Financial Loss Distress Income Downturn

We hear it all the time, “We can’t afford to fix our organization’s culture because we are in financial distress.” This is akin to saying, “I am having chest pains, but I can’t afford to go to the hospital.” In either case, not dealing with the underlying problem just might kill you.

Two early organizational culture researchers, Deal and Kennedy, suggested that by having a healthy organizational culture, “a company can gain as much as one or two hours of productive worker per employee per day.” Flipping that on its head, this means that an organization with a distressed culture is losing up to 25% of its productivity directly because of a failure to fix its culture. Ouch!

Financial distress in organizations is very often a direct result of serious, unaddressed problems within the organization’s culture. Allow me to be blunt: Dysfunctional culture always causes financial distress!

And yet most leaders misdiagnose their financial problems. They fail to see their passive losses since they do not physically see money walking out the door. Similarly, leaders fail to recognize the revenue that never comes their way because companies do not want to do business with an organization with a dysfunctional culture.

In America, where everything revolves around the dollar, leaders have been trained to focus on revenue and expenses. Tried and true remedies for trouble in one or both of those areas are the first things that leaders look to when they find themselves short of funds. Instead, wise leaders should ask themselves, “What is it costing us to neglect fixing our corporate culture?” This is the question leaders should be asking themselves.

In our professional practice, ALL of our culture clients find themselves in serious economic straights. Our clients have discerned that their wisest course of action – and the one with the highest Return on Investment (ROI) – is to engage expert outside counsel skilled in culture change. They know that only then can they hope to fix the root cause of their financial troubles. We have yet to meet the for-profit or nonprofit leader with the requisite skills to transform a dysfunctional organizational culture at the deepest level. The best leaders can affect are short-term transformations. Permanent culture change requires a very specialized skillset of tools from anthropology, sociology, group and individual psychology, along with many other academic disciplines.

So, if you are having financial troubles, you would be wise to get a thoroughgoing professional diagnosis to discover if your culture is the culprit. It may just be that your financial distress just a symptom of a much more pernicious disease.


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