The Top 10 Organizational Culture Crises of 2014
2014 was a big year for the subject of workplace culture and it ended with Merriam-Webster identifying culture as the word of the year! The decision was based on growth in the number of definition lookups during a year when numerous culture crises dominated the popular press. While culture is clearly growing as a topic of interest for CEOs, it remains an elusive subject that rocks many organizations to their core. So what were 10 of the top culture crises of 2014?
#10 – Target announces a massive data breach and responds to employees’ raising workplace concerns
The year started with Target sharing details about a data breach that impacted up to 70 million people. The CEO resigned and their Chief Marketing Officer later acknowledged culture issues in response to a visible employee rant. He sent a note to all employees titled “The Truth Hurts” and shared it on LinkedIn. He wrote: “The culture of Target is an enormous strength and might be our current Achilles heel.” It’s a sober point for leaders of any organization.
#9 – Satya Nadella becomes CEO of Microsoft and shares a bold vision for culture change
We move from one CEO leaving in a crisis to a new CEO launching a culture transformation. Satya Nadella shared his vision in a letter to employees and the section on “our culture” started with “our ambitions are bold and so must be our desire to change and evolve our culture.” He later took some tremendous heat for views he shared about women and pay that he later said were “completely wrong.” We learned about the importance of a clear vision and how a top leader must be sensitive to every word and action.
We learned about the importance of a clear vision and how a top leader must be sensitive to every word and action.
#8 – A “sexualized” Ohio State Marching Band culture is exposed for hazing and abuse
You might have missed the 92-page report on this culture crisis that outlined the hazing, alcohol abuse, sexually explicit references, lack of oversight, and troubling behavior on many fronts. It’s a stark reminder of how culture impacts every type of organization and sub-group, department, or team. I was surprised how the shotgun list of 37 recommendations emphasized numerous areas of training with only limited coverage of the overall organization’s purpose, value, and oversight issues that should be re-examined with any sub-culture crisis.
#7 – Uber comes under fire for their “win at all costs” culture
Uber’s hard-charging culture was highlighted in multiple stories over the course of the year. Uber was sued by its drivers, dealt with a very embarrassing idea to dig up dirt on unfavorable reporters prompting a 14-part twitter apology, and was criticized for sexism and their stressful, disjointed culture. It definitely makes you wonder about sustainability with a business model that depends on employees and thousands of independent contractors, and not just billions in financial backing.
#6 – Sony and Samsung fight to bring innovation as results deteriorate
Ok, there are clearly two crises in this example but there are some interesting similarities. Sony is struggling with an “old-fashioned” culture as their market share in Japan dropped from 10% to 2% after being sold to a Japanese private-equity fund. They are a case study in how not to evolve a culture to stay competitive since they are now a shadow of their former selves.
In contrast, the year started with GE’s benchmarking of Samsung’s culture and stressing how they needed to learn from their fast decision making. Samsung spent the rest of the year trying to change their rigid culture to stop free-falling electronics sales and a drop in market share. They are being squeezed by Apple at the high end and Chinese competitors at the low end. It’s not easy to change a hierarchical structure. Just ask Sony who ended the year with an international hacking scandal and embarrassing e-mail disclosures.
#5 – The U.S. Secret Service needs new leadership to drive culture change
An independent panel, formed after a series of highly publicized security breaches, recommended sweeping changes at the Secret Service in an extensive report. “The panel found an organization starved for leadership that rewards innovation and excellence and demands accountability. From agents to officers to supervisors, we heard a common desire: More resources would help, but what we really need is leadership,” the report said. You probably heard about the security breaches at the White House but there have been repeated problems over the last couple of years that were not corrected. This was one of many independent culture investigations that showed a history of bad behavior long before the present culture crisis. This report included the specific recommendation to hire “a director from outside the Service, removed from organizational traditions and personal relationship.”
#4 – The New York Federal Reserve is accused of being too close to major financial institutions
A former New York Fed employee made public 46 hours of secret recordings she made with colleagues while on-site at one of the most controversial banks in the country, Goldman Sachs. The recordings highlighted many cultural obstacles and included exchanges where the Fed employee was repeatedly requested by her boss to change her conclusion about Goldman’s missing a policy to handle conflict of interests. The employee was later fired and the questions of weak oversight were probed by a Congressional Subcommittee.
The Federal Reserve also announced a broad review of its supervision of the largest financial institutions. Hmmm, another “review” where I expect we’ll hear about long-standing culture issues that continue to persist years after the global financial crisis where regulators were found to be asleep at the wheel.
#3 – The U.S. Veteran Affairs medical centers experienced a wait-time crisis and cover-up
The VA admitted that 23 patients died in recent years due to delayed medical care and Senator Tom Coburn issued a scathing 119 page report describing a culture of crime, cover-up, incompetence, and coercion at the VA. Serious problems were uncovered including managers’ training and instructing staff to use false logs, systematic issues across multiple sites, and whistleblower disclosures being ignored. Once again, an investigation report highlighted that similar issues were raised at the national or local level 18 times since 2005. How sad.
#2 – The NFL came under intense scrutiny after a series of domestic and sexual violence incidents
I love the sport of football but it seems to be a breeding ground for culture crises every year. 2014 was no different with the Ray Rice, Adrian Peterson, Ray McDonald, and Jonathon Dwyer incidents receiving tremendous visibility. All this after the special report on the Miami Dolphins workplace conduct (bullying issue) was released in February. Roger Goodell, the NFL commissioner, may have hired some new resources to help him change the culture but the NFL’s initial claim that we never saw the full Ray Rice elevator footage was a sign of far deeper culture issues. CEOs often say “I didn’t know” to protect themselves in a culture crisis instead of “I should have known.” The independent investigator’s report on this crisis is expected to be released soon.
#1 – The General Motors ignition switch recall was a live culture crisis case study
My Switch & Shift article on a culture crisis that has been connected to 42 deaths so far was the third most popular Switch & Shift article from the League of Extraordinary Thinkers in 2014. I originally predicted GM CEO, Mary Barra, would lead the greatest culture transformation of all time. I admitted my incorrect predication in a second Switch & Shift article after the full Volukas report was made public and Mary Barra’s initial response where she took the “accountability bait” and fired 15 employees. She may eventually change the GM culture but it will take far deeper action than what’s been made public so far to overcome the GM nod, the GM salute, and other classic culture crisis behavior that emerged from this debacle.
The Bottom Line
I am fortunate to be with an organization in the business of constructive culture development with the mission of Changing the World – One Organization at a Time®. Far too many organizations run the risk of having the next culture crisis as fear and a lack of trust run rampant. I have personally experienced that fear in another organization and the pain is far reaching. It can lead to tragic consequences that cost lives, damage brands, and erode market value. Culture may have been the word of the year in 2014 but I hope 2015 is the year when CEOs take personal responsibility for proactively understanding and evolving their culture.
What other culture crises occurred in 2014, especially on the global front? Why do so many culture crises occur every year? Please comment below.