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Management Trumps Culture Every Time

by BILL WADDELL

There is a fundamental lesson to be learned from the BP debacle in the Gulf of Mexico - that management rules - not culture or leadership.  BP boss Tony Hayward promised to make safety BP's top priority - to "focus like a laser" on it.  He probably was sincere.  The problem is that few people actually work for Tony Hayward.  Most BP employees have probably seen more of him over the last few months on TV than they saw him - or any other BP exec - over the span of their careers.  So while he may well be a devout safety crusader, BP's employees worked for people far down the ladder who were driven not by Tony Hayward's speeches or priorities, but by the management infrastructure under which they worked. 

"Mr. Shaw, the Gulf of Mexico head, made the point at a meeting for top managers in Phoenix in April 2008. His aim, according to an internal BP communication, was to instill a 'much stronger performance culture' in the organization, based on strictly managing costs and ''this notion that every dollar does matter.' ", according to the Wall Street Journal.   So the boss can say the culture is whatever he wants it to be, but the true culture of the organization is a function of "performance targets, which determined bonuses for top managers and low-level workers alike."  Apparently bonuses were not tied to  "Total Recordable Incident Rate"—normally measured as total number of incidents resulting in injury or illness for every 200,000 man-hours worked ...  The rate was 0.97 for the Gulf drilling unit, over the target of 0.62."

So which do you suppose drove the culture and decision making at BP - Tony Hayward's 'laser focus' on safety, or bonuses tied to hitting cost targets?  That's a rhetorical question for any of you who might have missed the fact that the Gulf of Mexico is slowly taking on the character of the La Brea Tar Pits.

Now most managers are not putting the global environment at risk with their failure to follow up on their grand cultural pronouncements with a re-enforcing management infrastructure - but they often put their companies at risk.  Usually the gap is between platitudes about the employees being the most valuable asset - and accounting systems that say employees are a variable cost, and performance metrics that reward headcount reductions; or between statements about customers being #1 and financial processes that lead management to think that moving everything 9,000 miles away from the customers to some Chinese manufacturing site with dubious quality is a good idea.

Don't get me wrong.  Leadership and culture are essential elements of success, but what the big boss says is not particularly important - it is what he or she does to follow through with the management processes that matter.  People are clearly not the most important asset in management schemes that view labor savings as the primary (often sole) justification for automation.  Customers are not going to be particularly important in a company that does not measure value adding for customers - just costs.

A strong enough leader can force his cultural will on the company for a while.  Bob Galvin did when he personally hammered Six Sigma throughout the Motorola organization back in the 1980's, but without a supporting management structure it cannot possibly sustain.  Galvin's chair was barely warm before it began to unravel and within a few short years Mot had gone from perhaps the leading manufacturer in the world - on par with Toyota - to shutting down plants and laying off better than 60,000 employees in their rush to outsource.  You see, Galvin didn't change Motorola accounting, he simply used the power of his position to ignore the accounting data and over-rule the accountants.  When he left, the old accounting driven management shceme was still there, and it drove Motorola back to its old form.

Wiremold did not fall from being one of the truly great lean companies to just another mediocre manufacturer because the French owners don't like people or customers. They fell from their lofty heights as a result of how their new owners make decisions - mostly by using traditional, flawed accounting data.

You can see the opposite at play at Barry-Wehmiller, where Bob Chapman is a cultural crusader of near maniacal zeal, but the culture is solidly backed up by Jerry Solomon instilling lean accounting principles, and a guy named Dick Ryan spreading lean operational principles throughout the companies.  When backed up by such management processes that align the data and criteria for decision making with the culture, excellence can and will be sustained.

The road to hell is truly paved with good intentions.  Management is far more often than not sincere in wanting to do well by the stakeholders, and to run rewarding, safe, customer driven companies.  But when they deploy the same old management systems and processes - accounting, performance metrics, top down org structures, ROI based investment decisions - it isn't going to happen.  And there are empty beaches in Florida to prove it.

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4 Responses to "Management Trumps Culture Every Time"

  • Jim Fernandez
    6 July 2010 - 10:56 am

    This is really inspiring. It helps me understand in part why companies die and why they fail to make lasting improvements.

    This is really depressing. It reminds me, as a Lean Manager, that I can only improve a small part of the company I work for. And that if I do make progress it will be gone in a wink of an eye.

  • Linda Paralez
    6 July 2010 - 3:20 pm

    Well, it reinforces that discipline is a cultural trait as well. The discipline of “constancy of purpose” (Deming), of understanding variation, implementing LEAN in all facets of the organization — not just front line.
    In these times, it is difficult to find leaders who know what it means to model and apply discipline personally, professionally, and culturally.

  • Paul Todd
    7 July 2010 - 6:46 am

    I have been following the progress of Ford’s CEO Alan Mulally since his 2006 arrival. He has gotten great results from mostly the same people by changing the management structure, ironically to a more Toyota-style culture. We won’t really know until after his eventual retirement whether the progress is based on his personal skill or on the systems he is putting in place. The much different style of Ed Whitacre at GM will make for an interesting comparison over the next few years.

  • Michael Taubitz
    7 July 2010 - 7:08 am

    A couple things I would offer from a safety pro’s perspective. Many (probably most) companies still measure safety performance by total recordable and lost day case rates. Not only are those lagging indicators but they also have no relevance to the hazards associated with high severity – low probability incidents (e.g. explosions, spills, etc…) There is a prevailing belief within the safety community that the 70 year old teachings of a man named Heinrich are real. Heinrich’s myths have been debunked but safety pros and CEOs still believe that reducing exposures for the little cases somehow magically takes care of the really high hazard stuff that happens infrequently.

    Heinrich Revisited: Truisms or Myths [Paperback]
    By Fred Manuele is the reference

    The other concern is the reliance on behavior – based safety. BBS works off the Heinrich principle which purports that over 90% of all accidents are from unsafe behavior. It’s crap and flies in the face of Deming and those who believe that leadership, management and the system dictate results…