THE BLOG
07/24/2014 11:55 am ET Updated Sep 23, 2014

Horrors When Corporate Culture Goes Bad

Does it take tragedy or death to force culture change?

Are some bosses, senior staff and chief executives are so isolated from the day-to-day that they really don't know what's been going on for so long?

General Motors and the Veterans Administration make us wonder.

At last week's Capitol Hill hearings with Mary Barra, GM chief executive, and Michael Milliken, GM chief legal counsel -- the most senior leaders and long-time employees of GM -- the exchange was heated and senators didn't mince their words. They used words such as "incensed," "death inquiries" and "cover-up."

Regardless of the rhetoric, the anger, and the humiliation, we will never really know what those at the top of GM knew or didn't know. However, over the past three months of Capitol Hill hearings, testimony surely sounds as if they knew far less than they should have, especially given the magnitude of the problem.

Not to mention, death and agony for families and innocents falsely convicted.

The Veterans Administration scandal is another devastating display of senior executive ignorance. It is a tragedy of immense proportion with its toll on human life and blatant neglect of those who served our country.

Frankly, it is almost impossible to believe that Eric Shinseki, then Secretary of the United States Department of Veterans Affairs, had even the slightest clue about what was going on. A retired combat veteran himself, he spoke about our nation's "obligations" and "gratitude" to those who served in the military.

And yet, only a few months after his emotional Veterans Day 2013 op-ed and our "abiding commitment," we started to hear the first rumblings of scandal and neglect, disclosures starting in Arizona and soon followed by national news spreading like wildfire.

There is no question, though, that Ms. Barra and former secretary Shinseki should have known. No doubt about that.

So, what must happen at GM and the VA?

The reality is that changing the culture of the past will take years. It takes strong leadership and equally strong enforcement of behavior, followed by appropriate rewards and punishments and, more than likely, to include public hangings.

Nothing less will work to rebuild reputation.

That mandate, quite simply, starts with the boss. The tone is set at the top. Everyone needs to see it as a personal commitment.

Moreover, there are some critical principles to make it work:

  • Executive isolation is a killer, literally and figuratively. Don't isolate yourself from the every day.
  • People aren't ants but they can look like that from the top floor of the executive officer tower. Get out of the office often. You'll never know reality if you don't.
  • MBWA is an old maxim but forever true. Walk the halls. Shake hands and talk to everyone, absolutely everyone. Don't just rely on reports.
  • Employees prove reputation. Remind everyone that their behavior represents the organization and its values -- the good, the bad and the ugly.
  • Strong cultures look to each employee as a key advocate of ethical and responsible behavior.

Clearly Ms. Barra is now focused on change. She has apologized and, in various ways, acknowledged that there was a "pattern of incompetence and neglect" that won't happen again. We instinctively believe that she is genuine and personally committed.

However, while she sets the tone, others must follow. And GM is a mammoth organization, spreading across the globe. It will be a challenge.

When it comes to the VA, at last week's testimony before Congress, acting head Sloan Gibson focused on money as a key to the solution, at least in the short run. He asked for 10,000 more employees and $17.6 billion in additional funding. Clearly, there can be no doubt that the VA needs many more trained medical staff to provide care and treatment for the increasing number of veterans who are finding that they need care like never before.

Speaking as a former Army helicopter pilot and Vietnam combat veteran, there can be no question that this is the compelling need. It is a crucial first step to get additional medical professionals.

However, without a hard look and cleaning house along the way, nothing will change. Adding people without changing people is never enough.

It will be up to Bob McDonald, former chief executive of Procter & Gamble, both to provide the immediate and desperately needed care and, for enduring success, to rebuild the culture at the VA. The challenge of culture change needs to start just as quickly as meeting the healthcare needs or else the money will only be a temporary fix. Mr. McDonald clearly knows that from his leadership in the private sector.

There are lessons for leadership from GM and the VA.

First, it is that the coming culture change will be a hard-won process. At its core, it takes personal motivation, recognizing that values and behavior are paramount and doing the right thing is critical to in the long-term.

And second, whether in the private or public sector, we are reminded that employees are the real face of the organization. While leadership must set the tone, how employees behave and what they say, privately and publicly, each and every day are critical ... certainly more so at times than that of the boss.