Author: Daniel Forrester

The assumptions, strategies, goals and visions leaders held for their companies’ futures profoundly changed in the second quarter of 2020 due to COVID-19. An ability to pivot held some companies together, while thousands of others have shuttered. As the virus lingers, its economic wake will have an impact on corporate culture for years to come. How will things change—and by how much? What must leaders do now and in the months and years to come to best adapt?

Prior to COVID-19, the U.S. economy was at near-capacity employment. Healthy corporate culture was increasingly viewed by boards and C-suites as essential to growth. Over the past three months, new norms and habits were forged as major shifts occurred throughout the world. Employee safety took priority over productivity in many cases, and friction began to build around consequences for brands, customer experiences, and long-term company reputations. While it is too early to tell what the mid- and long-term changes to organizational culture will be, we can be certain that the way organizations work will never return to the previous “normal.”

“A lot of employees could have not imagined anything like this [pandemic] happening to their careers. They thought they would be calling all the shots with a surplus of jobs and not enough people. The tables might turn with COVID-19.” –Dee Ann Turner, former vice president talent and human resources for Chick-Fil-A, CEO of Dee Ann Turner & Associates

THRUUE, Inc., a strategy and culture consultancy based in Washington, DC, surveyed a global panel of leadership and culture experts to examine the uncertain future of corporate culture and gather insights about what’s in store. Survey insights, a list of panel members, and recommendations for leaders are available in the full report on THRUUE’s website and outlined below.

You Enter the Pandemic with the Culture you Have

Responses from leadership panelists revealed that culture change will likely be slow, even in the midst of a global pandemic, and perhaps because of it. Cultural norms, values, assumptions, and behaviors are often deeply entrenched within organizations and not easily changed.

Analysis revealed panelists perceived three distinct cultural pathways emerging as organizations respond and recover. Every pathway requires that leaders assess where an organization is before planning and acting decisively to drive positive cultural change and restart growth.

Right now, organizations are likely to be on one of the three paths:

1. Strengthened and Enhanced: Companies that entered the pandemic with a strong, managed, constructive culture will discover a new resiliency that will help them recover faster than others. The crisis can be an opportunity for these organizations to further disrupt or differentiate to grow.
2. Adaptive and Recalibrating: Company cultures that were already in transformation prior to the pandemic can be seeded with new possibility and develop adaptive leadership mindsets in the current disruption. For these organizations, the crisis can be a catalyst for evolution and growth.
3. Arrived and Deprived: Companies that entered the pandemic with a weak or poorly managed culture will find that the level of improvisation and resetting required is beyond their capacity for change, creating potentially existential risks and lowering the likelihood of future growth.

“CEOs must consider how their culture will help them navigate the new reality and then take advantage of the strengths of their culture to develop new ways to win in the marketplace.” –James Rodgers, founder of The Diversity Coach, leading strategist in the field of diversity management

Panelists noted two major risks for leaders interpreting pandemic-related changes to their organizational culture. The first is the tendency to assume the nature of culture changes rather than working to truly understand them in context. This is where an assessment is key. The second is failure to bring the full voice of the collective (employees) forward through measurement, which can and will affect performance. Human Synergistics’ Director of Culture and Organization Development, Tim Kuppler reminds rigor is necessary when assessing and changing culture, “Culture is not something you ‘fix’ like a car or toaster. Leaders must have a disciplined approach to assess and measure the culture at defined periods. This process should inform [leaders’] strategic plan and supporting priorities.” Rapid feedback and measurement processes like the Culture Mirror™ from Human Synergistics provide a quick and reliable source of data to baseline the current culture pathway and include process steps to hear employees’ views and experiences. (see overview and brief video). 

A Social Contract Under Disruption

In the context of the abrupt and extreme changes to work environments and employee routines as a result of the pandemic, the survey revealed that a fundamental reset within the social contract is expected. The social contract, or the spoken and unspoken agreement between employees and employers, helps dictate the actions and behaviors that make up corporate cultures.

Many workplace policies and practices have been rewired into a new, employer-centric social contract because time and precedent were unavailable to guide negotiation of shifts to policies and practices in the midst of COVID-19. Unnegotiated social contracts create friction and fear, and a wide range of employee protests have emerged in recent weeks. On a small scale, employees who refuse to use video in remote conferencing are attempting to preserve sacred boundaries between personal and professional life. On a grander public scale, we’ve seen organized protests of employees, such as workers of a meat-packing plant staging a mock funeral procession to highlight safety risks. Friction continues to grow as primal needs for health, safety, economic stability, and personal privacy are met with both requests and demands to “return to work” or adapt to a “new normal.”

“This [pandemic] experience has raised the level of importance of having trust in each other to be successful in whatever is the mission of the company. It has also emphasized our interconnectedness as well as our responsibilities to each other.” –Jane Delgado, president and CEO of the National Alliance for Hispanic Health

The social contract renegotiation between employees and employers during this crisis is broad, leaving much open for discussion and negotiation. Panel member responses pointed to employee health (first and foremost), commuting, teleworking, traveling, office space, training, onboarding, communications, leadership development, technology adoption, corporate social responsibility agendas, market surveillance, and intelligence gathering as important areas for reevaluation.

Corporate culture leaders who act decisively on this opportunity to reinvent the workplace social contract can create significant strategic, cultural, talent, and operational advantages for their organizations in a post-COVID-19 market. But it will take time, leadership commitment, and transparency if employers are to find balance and engender trust.

“The most important question that CEOs must ask is to their employees: What needs to change to help you be successful in your work? Only when employees feel safe and heard can they begin to make customers feel the same way.” –Ginger Hardage, former senior VP of Culture and Communications at Southwest Airlines, founder of Unstoppable Cultures

A Pathway Emerges

Humble Leadership author Edgar Schein, a renowned expert in culture change and organizational design, sagely advised, “Leaders must show that with complex, messy, systemic, interconnected problems like responding to COVID-19 or the next pandemic, collaboration must escalate as a central value in producing new, better and innovative adaptations.”

Founders and leaders will choose different paths moving forward in the weeks, months, and years to come. Regardless of how they move forward, survey insights suggest leaders:

1. Listen with empathy: Create a safe space for people to share their stories and reveal their truths -without consequence of judgment- to engender trust with actions that exemplify credibility, reliability, low self-orientation, and compassion.
2. Measure and gather the voice of the collective: Choose a way to gauge your organization’s culture (using a Human Synergistics or similar measurement tool) to ensure it aligns with what you have heard from employees. This will give confidence and clarity about where your organization stands and where it must go.
3. Renegotiate together: Plan and generate the conditions under which culture data insights underpin renegotiations and cross-functional conversations in order to produce imaginative and innovative agreements that work for all.

Are you interested in learning more about how COVID-19 is having an impact on organizational culture? Download the full report at: THRUUE.com/culture-after-covid

There is nothing more exciting than the moment a new leader is announced. Employees Google her/his name, wondering what she/he will do to change the organization. A new leader brings new ideas. She/he offers a new vision. They may even help the organization imagine better ways to remain relevant and thrive in the future.

CEOs transition into organizations thousands of times each year across for- and not-for-profit sectors. How often new CEOs arrive, their tenure, and the rate at which they succeed in achieving a new vision versus failing to meet board expectations have been well-reported and even studied in academia—the results are stunning.

Studies suggest two out of five new CEOs fail to meet their objectives in their first 18 months. Even CEOs who thrive in their first 18 months face an average tenure of 7.6 years, down from the global 9.5-year average in 1995. The outlook is grimmer for outside CEO hires, who take twice as long to ramp up as those promoted from within. C-suite executives report that only one in five CEOs hired from outside are considered high performers at the end of their first year, while nearly half leave within the first 18 months.

Such systemic failure has nothing to do with competence, knowledge, or experience, but instead ties to how the CEO transition was orchestrated and whether major steps were missed.

The Reality of CEO Transitions

THRUUE has worked with dozens of CEOs in transition, and the stakes are always incredibly high for both the organization and the reputation of the incoming CEO. While it does not guarantee success, a programmatic approach to new executive transition can increase the odds and shorten the timeframe in which success is likely to be achieved. Peter DiGiammarino, CEO, professor, author, and Chairman of THRUUE’s Board of Directors, recommends objectives that hold an entire leadership team accountable for the success of the inbound CEO. This is critical because a CEO without leadership team cohesion is like a moon without a planet.

The objectives outlined below are easy to read but often difficult to achieve without previous experience, diligence, and sustained focus. For a successful transition, these goals should be to:

• Raise the incumbent leadership team’s individual and collective consciousness as to what the entering executive seeks to accomplish and her/his definition of success in the first six months, first year, and beyond.
• Turn incumbent executives from observers to stakeholders so their energy, wisdom, insights, and ideas are channeled constructively and can contribute to (rather than evaluate) success.
• Accelerate the entering executive’s learning curve and integration into the organization’s leadership network.
• Promote interest in and commitment to the entering executive and her/his vision for the organization’s future.

We have organized what we have learned about CEO transitions into four key program areas on which incoming CEOs should focus. Each works toward accomplishing the above goals and, when implemented, increases the probability of success.

These areas are:

1. Vision: Define what you seek to do (change vision) and translate this vision into a reality your team can understand, appreciate, internalize, and commit to doing their best to achieve.
2. Alignment: Secure leadership team cohesion and alignment around a shared plan to achieve the vision.
3. Accountability: Establish a clear, unambiguous rhythm of accountability.
4. Culture: Get a baseline picture of the culture you have inherited, formally or informally, using measurement techniques. An inherited current culture has the ability to enable or disable every vision and strategy you and your leadership team seek to achieve no matter how experienced and talented you are.

Translate Your Change Vision from Interview Pitch to Reality

Transitioning from a vision sold to the board in the interview process to on-the-ground traction and reality is one of the first steps for an incoming leader, and it begins with asking the right questions.

THRUUE has guided dozens of new CEOs to answer and act upon the following series of questions, which results in action and enables a successful CEO transition. Entering executives should not only answer these questions but also explicitly gain leadership team alignment around them—a critical yet often overlooked step in a CEO transition.

Vision to Action Questions:

1. As the new CEO, what do you need to rapidly learn about the organization and its people, history, and culture to validate or enhance your vision?
2. Do all or some members of the current leadership team share your vision, and how much time will you commit to gaining alignment and cohesion?
3. How will you listen to the voice of the entire organization? (Asking the right questions at your first all-staff meeting—what is most important NOT to change, what do you most look forward to changing, and what will make that change difficult—is imperative.)
4. What was the previous CEO’s vision for the organization, and how can you build on it or chart a new course without re-litigating past mistakes?
5. How will you bring the voice of your customers or key constituencies into the vision? How will you make time to meet with customers so their input is woven into the change agenda?
6. How will you co-create an 18-month plan (focus areas, work streams) with the leadership team to achieve the first steps toward your vision? (New leaders must define tangible first-year milestones that show clear progress toward the vision. If nothing is written down and agreed upon, then leadership team members will likely self-synchronize to old ways and priorities.)
7. How will you align and communicate with dozens, hundreds, and possibly thousands of employees around the shared vision? (In THRUUE’s experience, leaders and leadership teams under-communicate their vision for the organization by an order of magnitude of ten.)
8. What role will the board play in enabling your change vision, and what are their expectations for change and strategy that must be factored in?

The above questions assume both the new CEO and the organization fully understand and can answer why their organization exists and why anyone should care. If you don’t know your “why,” “mission,” or “purpose,” then your vision will be rudderless. We encourage new CEOs to ensure the organization’s “why” is clear and compelling. If it is not, they must convene a session with leaders and the board in the first 120 days to define the “why” and ensure the mission is clear.

Success Factor 1: Make Time with the Board

In the first 120 days, we advise incoming CEOs to have explicit (weekly if needed) conversations with the Board Chairperson so the four program areas are made explicit and seen as the first component of the change agenda. Many first-time CEOs fail to understand the power of a strong partnership with the board chair in advancing the goals of the organization. Too often, CEOs implicitly drive forward, and board leaders implicitly imagine what the CEO is actually doing. CEOs must gauge and then engage in formal, ongoing conversations so the board is made fully aware of adoption or resistance to the change vision as the transition unfolds. It is our experience that when there is a mutually supportive partnership between the chair of the board and the CEO, the probability of success is exponentially enhanced.

Alignment: Build a Team of Leaders and Followers

Over the past two decades, there has been a clear evolution in how CEOs are viewed by employees. We now see more emphasis on a leader’s capacity to build and sustain an inclusive, high-trust relationship with a loyal, capable, and motivated followership as paramount to CEO success. Leadership, then, is being redefined as a relationship between leader and followers, and it requires a new set of competencies often neglected in the past. Being a leader today means winning over and convincing a mobile and demanding followership to stick around and help your organization achieve its potential for performance and growth.

Opening a wide channel of communication requires incoming CEOs to spend hours in one-on-one meetings with direct reports, where both participants are actively and equally engaged in listening and speaking. This enables CEOs to ensure the team shares the same vision that the board expects the CEO to implement. For organizations that have 5-7 direct reports to the CEO, this means 10-14 hours of conversation must first occur and then be channeled into one or more leadership team meetings, conducted offsite so as to avoid distraction and gain the necessary team cohesion and alignment.

Leaders must be competent in uncovering everything they can about who they are and how they engage with their followers. A followership is far less likely today to trust and follow those who hold command-and-control views of leading and who do not reach out for input.

Creating Shared Accountability

It is critical to also drive accountability after rapidly creating an 18-month plan that your leadership team owns. After a vision plan is designed, CEOs must begin to immediately hold weekly or bi-weekly “check-ins” (one-on-one) with direct reports and have them report on sub-plans to syndicate the vision. It is a best practice that feedback should be clear and direct, with a constant conversation that asks:

• What are you trying to make happen against the plan?
• What have you done to accomplish it?
• What happened and what did you learn?
• What do you plan to do next?
• What are the obstacles to making this happen?
• What are you doing with your peers to collaborate?

Ensuring constant communication and holding all team members individually accountable for their part of the plan will further buy-in and ensure that their time is being spent on what matters, not on what they may previously have engaged in.

Success Factor II: Make Time with the Leadership Team

In the first 120 days (and for your entire tenure), we advise incoming CEOs to have explicit bi-weekly reviews of the vision and plan. Each executive will own a piece of that plan and must be held accountable for answering how her/his team is executing against it. CEO success is tied to sustained management attention. When CEOs fail to gain traction in new organizations, it is often because they failed to drive accountability and clarity about the hundreds of things that must happen to move toward the vision.

Understand the Culture

Every organization is undergoing a profound set of external threats and technology-driven disruptions that seek to consume a new CEO’s clearest vision. In addition, every organization has a deeply ingrained set of values, behaviors, and habits that can either embrace or thwart the clearest vision.

New CEOs should rapidly administer a cultural assessment so the values, behaviors, and norms in the current culture are quantified and understood. Surveys administered to employees and, when appropriate, the Board as well, enable you and your leadership team to identify the gaps between the current culture – “the way things are done around here now” – and the ideal culture – what people believe it will take for the organization to succeed. Diagnostics can also help you understand the systems, processes, and structural elements that reinforce current behaviors and norms. This provides insights on the functional changes that can be made to improve workplace culture and remove roadblocks to the ideal culture. Measuring cultural change also reveals your organization’s strengths: the cornerstones upon which your vision for transformation can be built. Even if you choose not to use a formal survey to diagnose what’s happening within the culture, new CEOs should spend time in small “focus group” settings and immerse with dozens of employees in understanding what norms and behaviors are alive inside the organization. Without question, the Board also has a role in understanding the culture, particularly in modeling the values of the organization and holding the CEO accountable for fostering a healthy workplace culture.

Final Thoughts

With two out of five new CEOs failing in the first 18 months of their tenure, it is clear that organizations and leaders need to invest in well-executed transitions. THRUUE has partnered with many CEOs to increase their chance of success. Culture will “eat your vision for breakfast” unless you measure and manage what is happening in your new organization. Use the reflection questions and insights in this post to evaluate your transitions, identify improvements, and increase the likelihood of success.