Marcus Johnson

Written by:
Marcus Johnson
Deputy Chairman

What is a positive Company Culture and how does it grow?

17 May 2017

Marcus Jonhson dissects Nigel Brown's recipe for a successful business.

When I am asked what took me to work at NW Brown I frequently reply that I knew and had done business with most of the firm and liked what I had seen. If pressed to be more specific I have a problem in defining what I liked or why – and I believe that truly what I tried and often failed to define clearly was culture.

Chambers dictionary defines culture as refinement which is the result of civilisation, but I think when we describe a company’s culture I prefer to think of Alexander Fleming’s Petri dish with Penicillin spreading across it and bringing untold benefits to the world.

What the two concepts have in common is that they are the result of cultivation – they do not just happen – they need the right medium to grow and flourish, whether it is the art, literature and science implied in Chambers definition or the nutrient rich medium in Fleming’s Petri dish.

Of the two I think that a Company culture is closer to the Petri dish because Science and literature can be taught but I am not sure a company can deliberately teach culture– it needs to put the right ingredients together, make sure that the temperature is right, the light is good and try to encourage the growth, but formal diktats are certainly not enough and often will be counter productive.

Enron's motto was "Respect, Integrity, Communication and Excellence." Its "Vision and Values" mission statement declared, "We treat others as we would like to be treated ourselves....We do not tolerate abusive or disrespectful treatment. Ruthlessness, callousness and arrogance don't belong here." Just before the actual values were aired in court the annual report said “ Every employee is educated about the company's Vision and Values and is expected to conduct business with other employees, partners, contractors, suppliers, vendors and customers keeping in mind respect, integrity, communication and excellence. Everything we do evolves from Enron's Vision and Values statements.” This from a board which passed a formal motion to exempt its directors from compliance with the rules on investing in partnerships in which they had an interest and where the way in which prices were artificially inflated for electricity consumers was widely publicised as a major coup for the company. Greed, sales at any cost, lie about the numbers if they look bad and if we make enough today we need not worry about tomorrow was the message which came from the behavior of the directors and a 64 page manual exhorting good behavior was irrelevant.

It is perhaps easier to say what does not work than what works and we all know, even from outside, many companies where all the words are right – there is a mission statement of the ‘save the world and be all things to all men’ type as above, but it is clear that the staff hate what they are doing – there is an ‘Equality Policy’ which could come out of ‘Das Kapital’ but the directors hide behind their PA’s and avoid all contact with anyone below heads of department. I remember well a start up insurer a few years ago where all the staff had to pose with their arms round one another and were told it was one happy family and had a strong culture of staff involvement by the boss who flew down from Scotland for the event. I think it lasted three years, but the point is not a single person there believed the words and respected management less for saying them. It is how the directors live their jobs  which  sets the climate and that can either encourage a healthy culture or destroy it.

A healthy culture comes from the top – it permeates through an organisation over the years as people with common values encourage each other, as those who ‘get it’ are promoted and those who do not are frozen out. If the environment encourages good behaviour and rewards success, if management is seen to be open and honest, then the culture flourishes. But the opposite is so easy – wat takes years to build can be destroyed far more rapidly.

The Chambers definition of refinement and civilisation is perhaps more relevant here – because civilisation itself is almost synonymous with a trusting environment – a civilised society (and no insult is intended here to our transatlantic cousins) is one where we do not feel the need to be armed, where we do not need lawyers to regulate our behaviour or police to enforce standards for most of our daily life because we trust those around us to behave towards us as we behave towards them. When a society becomes a police state or rules and regulations replace trust as the basis of everyday life, civilisation rapidly disappears. So it is in a company – and in the same way that within a few years of their coming to power the Nazi party moved from breaking windows to burning books and then gassing millions, when a company begins to lose its way the results can be a rapid deterioration and disaster.

The good new is that a strong culture replicates and thrives and excludes threats. Marks & Spencer was an example of the strength of family values for a hundred years. Many of the Quaker businessmen who flourished in the nineteenth century left behind such a strong culture that their firms survived intact for the whole of the 20th century (Barclays, Cadbury, Rowntrees, Clarks, Lloyds,  Friends Provident come to mind but there were many less well known examples). What they had in common was a climate of absolute trust, of moral integrity and of a belief that by the application of sound business principles they could change the world for the better. The link between owners and managers was close – family, religion, and politics all played a part in this – but the strong belief that capitalism was a force for good coupled with an equally strong belief in the social duty to apply the resulting wealth responsibly allowed their companies to flourish for many decades. Curiously, all this took place without a single policy on ‘Socially Responsible Investment’ or the application of ESG scores (since you ask, an international grading system which gives companies marks for various aspects of their Environmental impact, Social impact and Governance).

In a way, therefore, I would summarise by saying Culture is about substance not about form and the reason business culture today is so poor compared to any previous decade since the start of the 18th century is the triumph of form over substance. Barclays has whole departments dealing with social impact, it has equality statements, it has mission statements, but the words are not only an inadequate substitute for the beliefs of its first century and a half existence, they are corrosive of those values because those who work there know that the behaviour of those at the top is not consonant with the words. Having detailed rules and regulations will always be inconsistent with a climate of trust – it will always encourage behaviour which is calculated to obey the rules instead of those which are right under the circumstances.

So coming full circle back to NW Brown, and why I found it so attractive a decade or so ago, what was the secret? My belief is that the Nigel Brown recipe for success was very simple to say but rather harder to do, as I have learnt. It was to employ people he liked and got on with and then pretty well leave them to get on with the job. He created opportunities but did not impose solutions – encouraged success and quietly removed those who did not fit with the firm. As those he brought in emulated him the firm became a pleasant place to work and the culture became self-replicating. A recent staff survey by an external specialist came up with a score for staff satisfaction which has only been bettered once.

Of course it required luck, but often it needs good judgement and leadership to take advantage of lucky circumstances. Culture may require the leaders of the business to be committed but it is often supported and helped to grow from the bottom and as important is giving freedom to individual business leaders was, I suspect, the welcoming environment into which even the most junior recruit came – an environment where they know their talents would be valued whatever they were. There are mechanisms which perhaps can help a positive culture to grow and I do not dismiss awaydays , picnics  involving families , bonding sessions on cross country treks or cricket matches but I would regard them as symptoms of a healthy culture as often as they are causes. Similarly share ownership and profit sharing are admirable and worthwhile but at most they encourage a healthy culture and maybe reinforce it a bit, they will fail to motivate and retain staff in a company with a poor culture because no-one will believe them. Unless the Board believes that the best way of serving the owners they represent is to be honest and trustworthy in looking after the long term interests of clients and staff and acts in a manner which makes it obvious this is their core belief it will waste any efforts to encourage a positive culture because everyone else in the company will follow their lead.

And having contrasted the reality of a strong culture with the pretence so often illustrated in elaborate mission statements, I do have to admit that even before I joined I knew that Nigel Brown had summarised what the firm was about in the words ‘the client comes first, but it has to be fun’. The difference from the meaningless     "To be the leading facilities-based provider of end-to-end Telecommunications and Internet services to business customers globally"   emblazoned on the office of Worldcom before we discovered $100 billion of alleged assets were an invention is that Nigel’s saying was passed from person to person by employees – because they believed this was the best way of summing up the culture of the firm, and because culture ultimately is what those who work for the firm believe in, they were right.

 This article was published in the Cambridge Business Magazine - June 2017 Issue 66

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