Why culture is key in an organisation | Fin24
 
Loading...

Why culture is key in an organisation

Jul 17 2018 15:13
Khaya Gobodo

Culture eats strategy for breakfast.” This might sound clever and original, but ultimately is not that meaningful. What it does do, however, is capture the imagination regarding how absolutely vital culture can be in the long-term success of any enterprise.

This cannot be overstated in as far as it relates to a knowledge industry like asset management. Unlike other financial services subsectors, in asset management, almost 100% of the value created for clients is a function of experienced, diligent, insightful and creative groups of individuals. 

The best and the brightest. There are no balance sheet assets or vast branch networks to rely on to deliver the client value proposition. 

David Fisher, chairman of Capital Group, one of the best knowledge businesses in the industry, summed up the critical role that culture plays in asset management when he said: “Our only competitive advantage is culture.” 

This is because a strong culture allows organisations to attract and retain the best talent, which is the only real currency for success in our line of business.

It substantially improves the odds of being able to organise those people into effective teams, with common values and a passion for delivering a compelling client outcome.   

It sounds simple enough. So why is it so difficult to achieve in the real world? 

The clue comes from understanding what organisational culture is: The values, beliefs, and behaviours that would differentiate one firm from others. 

The key word is behaviours. We all know how notoriously difficult it is to change our individual behaviour, let alone the behaviour of others.

We know intuitively how significant the prize is for achieving the Holy Grail on culture. 

Work done by the Focus Consulting Group captures it very well in the chart above. It illustrates the difference in how superior firms embed its cultural desire within a firm.

The evidence regarding the value of culture in asset management as a knowledge business is undeniable.

 This is not really an issue that needs debating. When it comes to South Africa, however, there are some unique and critical questions that should be asked on how you address culture within a local context. 

This is because the evolution of corporate culture in SA is inextricably tied to the pursuit of transformation and diversity. 

Leaders and corporations have an extremely important choice to make regarding the integration of diversity into the fabric of their specific corporate culture. This choice requires a high level of self-awareness, honesty and foresight. 

As I see it, there are three choices that apply to the issue: 

1. Fight to preserve the existing culture, potentially at the expense of diversity; 

2. Coast blindly without recognising the need to make an explicit choice;

3. Or adopt and evolve. 

Choice one faces those organisations that have achieved exceptional commercial success as a result of a truly distinct and well-defined corporate culture. 

Many of these businesses have made the choice to protect their formula for success by focusing their recruitment and development strategies on hiring and advancing people that fit the pre-existing mould, irrespective of race and gender. 

In other words, they answer the diversity question within the context of a pre-existing culture. 

Fit in or…  They drive transformation as long as they can find people who are naturally aligned with the existing cultural norms and behaviours of the organisation. 

This may create a high-performance culture with success built on a unique clarity of culture; however, it does not create an environment where everyone can thrive. 

They take lower risk when introducing difference into the firm and therefore will potentially take longer to transform.

Choice two is one made unconsciously, I suspect, by most organisations. 

These are the businesses that are coasting along without a clear strategy that defines their approach to diversity. 

They are so frantically on the transformation journey that they don’t stop to consider the impact of bringing so many different people (by race, gender, background, aspirations) into an organisation, and what this means for culture and ultimate success for the business. 

My view is this will only result in mediocrity, for the firm and its clients. 

The most rewarding choice is being made by organisations that are consciously transforming their cultures to embrace diversity. 

These businesses are dynamically creating an environment where the entire ecosystem thrives as a result of diversity. 

It is the most difficult to implement well because it requires real change. And as we all know, inertia is often more powerful than the desire to change. 

It requires visionary leadership and deliberate and consistent actions to entrench this kind of new culture. 

The few that have managed to succeed in doing this are the businesses that represent the future our country deserves and I believe, as leaders, it is our responsibility to find the courage to pursue this kind of change.

Khaya Gobodo is head of asset management at Old Mutual Investments.

This article originally appeared in the Collective Insight supplement in the 19 July edition of finweek. Buy and download the magazine here or subscribe to our newsletter here.

culture  |  business  |  financial services
NEXT ON FIN24X

The luxury of brand power

2018-10-18 08:51

 
 
 
Loading...