What New Leaders Too Often Overlook About Company Culture

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Originally published in Inc.

By Joel Peterson

When corporate boards hire a CEO, they do so with the company’s core values in mind, because CEOs dramatically influence culture, tone, and priorities. I’ve often said that to maintain a culture, it’s best to consider promoting from within. And to change a culture, it’s worth considering recruiting from the outside.

No matter which path is taken, it’ll impact culture. And in either instance, it’s wise for an incoming chief executive to tread carefully. Cultures are easier to damage than they are to repair. And a CEO will have a disproportionate impact on maintaining or recalibrating a culture.

If a new CEO has little sense of the values that created the company or its brand, its self-image, its way, as it were, the board might prepare for a crisis and/or line up back-ups, just in case.

One of the most studied examples of the difficulties with a leadership transition and the maintenance of culture happened at Hewlett-Packard. For over 70 years, the Silicon Valley high-tech pioneer had built up a decentralized and egalitarian culture, known as “The HP Way.”  But despite extraordinary leaders, the legendary 350,000-employee enterprise famously lost its way when it brought in outside CEOs.

Along the lines of taking great caution with a culture, I remember a story I heard about the Bristol Hotel chain, which had built its brand around measures of cleanliness, customer satisfaction, ethics, and incredible friendliness. One of the owners and board members strongly recommended that the management team hire a very talented and impressive young woman at the hotel chain. While the woman did well in interviews, the hiring committee paused. She was very friendly–but not incredibly so.

The management team not only took seriously the “incredibly friendly” standard, but, more impressively, owners and investors didn’t overrule or object. They realized that the company’s culture was at risk and, even if one hire wouldn’t have made a material difference, the idea of overriding values from a board perch would send a message and signal a change in culture.

Finding the Right Person

Identifying a leader who fits with your company’s core values is never any easy task, but it is possible as long as the board takes its time and identifies exactly what it needs in a candidate. In my experience, the responsibility sits with the board to first take a long look at the company’s culture in order to identify exactly what matters and what needs to be retained after a new CEO takes over. If they do not fully understand what they want their new executive to preserve in terms of culture, their new hire never will either.

From there, it helps to hire for a thoughtful leader who knows about the importance of culture and has opinions on building a successful, positive workplace. Not every candidate will share this dedication to your core values, so that should be a determining factor when hiring.

As Peter Drucker observed, “Culture eats strategy for breakfast.”

And CEOs are culture carriers, standard bearers for the core values of an enterprise, and symbols of what matters in the enterprise. Consider CEOs and culture in the same breath and take great care with both.

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