Is Your Company Culture Dying?

A few weeks ago I met a women at a conference in San Diego. She is a social media manager for a technology company in central California. She told me a story we have heard before.

The technology company she is employed at was recently sold to a bigger company, and along with that went the vision and autonomy of the company. I then explained that capitalism is designed to increase capital by buying other stuff, which is then used as a write off (an expense) against corporate taxes. Big fish need to eat a lot.

When we buy other businesses, we can reduce taxes against the profits in the parent company–this is an expense right off to protect wealth. This is the essence of capitalism, eat a lot or see your profits get eaten.

When the original founders of a business sell, new owners enter the picture, often without vision, and often without value-adding leadership. While we can see these qualities in free enterprise, we cannot see them in capitalism. Capitalism is strictly a financial decision to preserve wealth and avoid higher taxes. There could be strategic benefits to own the business or other assets to protect or grow market share, but mostly it’s a decision to protect wealth. Capitalism is about wealth protection.

The culture in the original company, according to this woman, is already in free fall. Talent is leaving and new client acquisition is dropping. Selling a company can be a real problem because it can destroy once thriving business cultures. Build and sell a business or buy and let it die, it does not matter as long as the loss or expense is used against higher taxes. A write off can easily bury taxable profits. In fact, inflated losses from one division of a company can hide profits in another. Chief financial officers are always looking for right offs to hide profits, or they are looking for capital expenses to do the same. If most companies could get away with it, they would operate at zero every year. As long as an investment expense can build more equity to reduce taxation, this is the basics of capitalism, which is good at protecting wealth but terrible at free enterprise in adding value.

My dad faced this problem of a company being sold many times in his career. In one particular situation he was employed as an engineer in a company that built auto-testing equipment. The company was owned by the same family for over thirty years. With no debt the company looked good on the books and became a prime target for a buyout, which actually happened. A larger investment firm in Chicago bought out the company and immediately started cutting costs. They shut down one factory and centralized all management and all operations for a quick resale to another unsuspecting buyer.

Buying businesses to then resale for a gain or to avoid higher taxes is not something that sustains optimism. Genuine Optimism is found when everyone’s full potential in a company is conserved and never sold off. The only way this can be maintained is if the culture in an organization believes that every human being should fulfill the best they have to offer.

For instance, buying a business to protect wealth is far less optimistic than letting each person add their best value in the company. Which do you think creates more value to the company and its owners? The challenge is that adding value is called risk. Optimism is about exposure to some degree of risk. It’s the only way new ideas can surface. When a company shuts down all risk in the hands of the people running the company, we see a dying culture.

Maintaining a vibrant company culture requires that we conserve some if not most power in the hands that created that culture, namely the employees and the leadership vision that inspired the company. In next week’s post I will talk about the real divisions of power. Suffice it to say that preserving culture has a lot to do with leaving some risk inside the company. If you are thinking of selling a company, ask yourself this question. What are you passing off to the employees? Are you hoping to preserve culture or are you killing it? Are you leaving some power in the hands of the employees? Seller beware is just as important as buyer beware. Both can destroy what we have built if not done correctly. In selling or buying a company, there is always a hand off, and sometimes the handoff is not done with the best effort.

Every company or organization (even religious and government organizations) must make a decision, how much risk is healthy and feasible? Are we willing to hand off some risk and give every voice within the organization a stake in that risk? Talk with your employees or membership. Ask them how much wiggle room they need to be inventive, creative, and visionary. Then determine how much the company can risk. Giving freedom to employees is the most undervalued principle in running a successful business or an organization. It’s the best way to make sure value is being added to the company. This is the essence of free enterprise.

We have all met that person who left a company because their value was not received or appreciated. This is because there was no freedom to welcome it.

A renaissance is coming that will change how we run our businesses. It is more relational and less linear. It will inspire more voice and more involvement horizontally, and it will support visionary leadership. Eventually, successful companies will allow for the right amount of risk in the hands of employees. If you can see that this is one of the true building blocks of a company and even community culture, then most likely you are the change many want to see in the world.

Keith R Kelsch, The Genuine Optimist

 

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  • Sydney Wathen

    I have said this in a few of my previous responses to your blog posts, but I believe that currently money is what is making this world go around. We are so worried about how companies will survive financially, which is an important factor to always keep in mind. But we rarely hear about companies and what makes their teams and employees so unique and important to their work. Innovation and ideas need to be coming from the people running the business and not allowing the money to make all of the decisions. I truly hope that there is a renaissance coming within the workplace. I think that there will be more honest companies, employers and employees making influential decisions.

  • Rod Warr

    I feel like company culture is part of what gives a business it’s life. Fortunately I work for a culture rich company, that takes necessary risks and wants to grow and thrive. Each and every employee is expected to do their job, but given the opportunity to be creative and give helpful feedback. It is a family business, that adopts each each person they hire as part of the family. I have felt very welcomed and empowered to do my job since I have worked there. The business is growing rapidly, but works to maintain the feel and culture they started with. I feel like they will continue to be successful because they care about and invest in the people that work with them.

  • abby wynn

    This post actually correlates directly with my fourth paper in this class. When you are working for a company that is constantly making cuts, centralizing management and focusing on simple production instead of creativity, employees are not happy. When they aren’t happy no new ideas start churning and often times they end up leaving the company in search of a career that gives them more of a purpose. however looking from the big business side of things, I don’t blame them for utilizing tax right offs. They are looking to maximize profit and they really don’t care about the success of the smaller company or preserving any culture therein.

  • Katie Griffeth

    The hard thing about working for big corporate companies is that they have the resources to offer great benefits and perks such as 401k matching, good health and dental insurance, life insurance, discounts and free products from their company and sisters companies. The draw-back is just as you have described; there is no room for employees to be creative, think collaboratively with their coworkers, solve their own problems, etc. They also do not have much say in what goals or outcomes they should be striving towards. It is usually CEO’s that sit at a desk looking at the financial bottom line telling all the employees of the company they have certain needs to be met. The thing is they may not have worked in a store or be informed on what is going on in that particular area; they just hand out demands that are to be met. I think it is important to know what you want. Some people may thrive under these circumstances and really use the benefits that come with them. Others however, need the reassurance that they are of value to the company. The way many see this value is being able to express themselves and their opinions. They need to feel like their talents are being used in an efficient way. This can be a risk to the employer, but probably one worth taking. There are a lot of really talented people and if you have hired the staff then hopefully they can meet those expectations the employer has.

  • Sharon Rosenbaum

    This blog caught my eye because the business that I am currently in. I work for a marketing company that does custom websites, graphic design, SEO, social media management and education. We have noticed that multiple of our competitors are selling their businesses or changing their structure.
    I liked how you talked about making risks! We are in the middle of moving offices into a bigger location. It is a major risk and a huge investment. “Giving freedom to employees is the most undervalued principle in running a successful business or an organization.” The reason why I love my job so much is because of the way that treat me. They understand my values and push me to become better every day. I can honestly say the way they treat their employees will get our company a LONG way!

  • Linzi Jolley Hansen

    Big corporations are not the place to work if you want to be creative, use your mind, and make decisions collaboratively with the employees around you. Mostly because decisions that affect workers on a local level aren’t made locally. They are made by a guy sitting in a cubicle thousands of miles away who doesn’t understand the local community, the local business, or the employees. There isn’t room for a creative mind to create and make decisions because it’s not allowed.