by Dr. Kathy Miller Perkins

Note: this article is part of The Transatlantic Debate Blog series, which forms a conversation between Dr. Katrin Muff and Dr. Kathy Miller Perkins on business sustainability. Read the previous post here.

On September 18, 2015 the Volkswagen Group received a notice of violation from the Environmental Protection Agency (EPA) of the United States for intentionally programming their diesel engines to activate emissions controls only during laboratory testing.  According to the New York Times, this “diesel deception” could cause hundreds of deaths in the USA alone, due to the tons of pollutants released into the atmosphere.  And an October 28th headline in  the  New York Times proclaimed that “Volkswagen, hit by Emissions Scandal, Posts its First Loss in Years.”

Shortly after the scandal broke, CEO Martin Winterkorn resigned amid claims that his management style and the company’s “relentless drive for growth” contributed to the deceit.   Critics argued that VW’s corporate culture of arrogance, fear and blind obedience impeded communications and prevented employees from questioning orders.

Culture Counts!

The culture of an organization has a profound impact on company accomplishments in the long-term.   And the corporate culture also contributes to the impact that the organization has on all of us.  We are corporate stakeholders in our interconnected world.   The actions of our corporations can and often do have a profound impact on each of us as we are employees, customers, and citizens.  We share a common and increasingly endangered planet and how corporations treat it affects all of us.

What is Organizational Culture?

About now you might be asking yourself, “What is organizational culture anyway?”  First, there are several disparate views on how to define it.  My definition is simple. l believe organizational/corporate culture is shared attitudes, beliefs and values that hold a company or any other defined group together.  In more complex terms, organizational culture is composed of the collective viewpoints of group members about what actions are appropriate and, in fact, rewarded or punished. Culture is dynamic.  The collective shared assumptions that comprise it underlie behaviour.  It influences the choices that people make virtually every day.

Why Should We Care About Culture?

So why should we care about culture?  Company leaders should care because culture can affect an organization’s bottom line and impact its future. Just ask Volkswagen’s Board of Directors and stockholders! But even more important, all of us should care because these companies have an impact on our lives.

Here are three good reasons why you should care about corporate culture:

1. Corporate culture impacts the engagement and wellbeing of all of us who are employees.  Overwhelming evidence indicates that employees want work to be meaningful. Our own individual wellbeing connects with our feeling that our efforts somehow make the world a better place.   We want to work for companies that are ethical and trustworthy.  I can’t help but wonder how the Volkswagen scandal is impacting the sense of wellbeing of its 600,000+ global employees.
2. Corporate culture contributes to how we are treated as customers.  Fortune Magazine estimates that the VW scandal could cost each owner $5,000. And that isn’t the worst of it.  Owners of the VW Diesels that have been vomiting pollutants into our communities have to live with the fact that they unwittingly contributed to our planet’s degradation.
3. Corporate culture has an impact on the wellbeing of our world.  Increasingly our companies function within a very broad global environment where many and varied stakeholder groups share a collective fate.  We are all stakeholders in relation to these companies.  Because we share the same planet, we share a common fate.

So what can we do to ensure that corporate cultures support healthy and ethical behaviours?  Most of us are consumers and many of us are employees.  All of us are global citizens.  In these roles we can press companies relentlessly to create cultures of transparency where every employee can speak up, customers are treated with respect, and ethics trump profits every time.

Author: Dr. Kathy Miller Perkins 

Dr. Kathy Miller Perkins is a social psychologist and is the CEO and owner of Miller Consultants , a firm specializing in organizational development, executive coaching and change management. Her work involves helping companies create and sustain organizational cultures that are conducive to executing sustainable strategies. She has worked with companies such as Toyota, IBM, Kindred Health, Brown-Forman, Lexmark, Anthem, Ashland Chemical, the U.S. Military and BC Hydro.