Why culture matters

Pardon the Interruption

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The mallowstreet Culture Conference kicked off with leadership consultant Tim McEwan, a former officer in the Scots Guards and founder of TMD International, who, together with the audience, explored culture and leadership. 

Three dimensions to culture

A society’s or organisation’s culture has three basic dimensions, he explained – the physical manifestations of culture in the form of artefacts, the values – what is perceived as right or wrong, important and unimportant. These are “just under the surface” and only become visible during stormier times, McEwan maintained. 
Culture is also based on assumptions, things that are never made explicit but are nonetheless expected, he explained. McEwan illustrated this by asking mallowstreet CEO Stuart Breyer on stage for a chat, first standing very far apart, then too close – showing that we have assumptions around what is a good physical distance to have a conversation with someone, and feel uncomfortable when these unspoken rules are broken. 

‘You can’t choose to have a culture’ 

Although it might be easy not to pay attention to culture in an organisational context, doing so is not really an option, as it exists regardless, said McEwan. “You can’t choose to have one, you have one. The question is, is it shaped the way you want or is it something that happens by accident?” 
Leadership is key in creating a specific culture; McEwan defined culture as “the worst behaviour that the leadership is willing to accept” or the lowest common denominator. An organisation’s followers, he argued, will behave in the way that the leadership creates the environment for them to behave in – hence leaders who want to have engaged, enthusiastic employees need to create the environment for this to happen. 
However, the different aspects of leadership exist on a spectrum, and each might need to be ‘tuned’ up or down depending on the requirements of the situation. “Leaders need to be adaptable in moving around this spectrum,” he said.  
According to McEwan, the different leadership ‘buttons’ that need to be moved up or down, and their extremes, are: 

  • centralised versus devolved control; 
  • confidence versus humility; 
  • challenging versus supportive; 
  • standards and procedures versus creative and innovative; 
  • big picture versus detail; and 
  • empathetic versus callous. 

How can investors assess an organisation's culture?

How does this translate into choosing asset managers that will deliver sustainable returns? What should investors be asking? 
While ‘what gets measured gets managed’, measuring culture is not a scientific endeavour. Nonetheless, some consultancies compile statistics for culture audits, based on diversity, inclusion, employee survey results, Glassdoor, and turnover, as well as the existence and contents of policies on risk and compliance, ESG, diversity and inclusion, flexible working and innovation. 
However, while these statistics give some grip on the culture of an organisation, McEwan recommended investors should walk the floors of a company and stop to speak to people. Whether they get a chance to do so can in itself be an indication of culture. By speaking to people, investors should seek to get a ‘feel’ for the place – what stories are being told, what is the reputation of the company among employees. Ideally, a firm should be well aligned yet allow for diversity of thinking and new ideas. 
The leadership expert encouraged investors to be insistent. “Don’t let people off the hook, dig deeper, ask uncomfortable questions, demand effective leaders and followers,” said McEwan. “Ask people what it’s like.”  

Do you consider culture before making an investment?