A former business owner told me a story the other day that may strike a familiar chord with those of you who have experienced a change in management and what it can do to an organization.
Having sold his business several years ago, Roy (not his real name) is in the middle of an employment contract. It's straight salary, with no incentives. Since the sale, the acquiring company has not invested in the business. This has led to customer dissatisfaction and an increase in complaints because of a decrease in quality. Recently, Roy was informed by the new national sales director that henceforth all salespeople were to use a snazzy new software application -- one that manages customer complaints. "You can check off up to 50 complaint categories!" she told him, excitedly. Roy pointed out to the sales director that before the company was sold, there was no need for a system to management complaints, because there were only about five complaints a year out of perhaps 5,000 transactions. Now there are that many in a week. The company seems committed to doing a great job tracking the rise in complaints, but has no plan to address their cause.
Does this sound familiar to anyone?
Another company, a food franchise, has a large turnover of staff. A franchisee who has been in the system for nearly a decade wanted to purchase letterhead. The last time he needed it, he ordered it from the company's intranet. This letterhead was very high-end and beautifully designed, and even in these days of email communication, the franchisee used the letterhead to great advantage for proposals, thank-you notes to clients and other direct mail needs. Somewhere along the line, the franchisor decided there was no need to have printed letterhead and instead substituted a Word template that franchisees would print from their PCs. Low-end, cheap, without any image. When the franchisee inquired why the franchisor had stopped making the beautiful letterhead available, the response from the latest person to occupy the marketing manager chair was, "I didn't know there ever was letterhead."
The common problem in both these companies is the lack of institutional memory. In the first case, people in positions of authority have no clue what customers expect and have grown accustomed to, because new management is so eager to put their own fingerprint on the new operation that they are uninterested in what made the company valuable enough to purchase in the first place. In the second anecdote, the small details that created positive customer experience get lost as new people come on board and top management is so distracted by the usual operational chaos that they forget the details that made the business work so well.
Is there an institutional memory in your business? What are you doing to make sure it doesn't get lost? Please leave a comment.
Spot on, Mitch. I too have been dismayed by the disregard of prior operations and the nearly impossible task of relying on a corporate history when faced with mass layoffs and employee replacements. Another company I worked for early in my career had a corporate policy of hiring cheap and hungry managers for their retail stores. They moved them up the chain, assigning them to bigger and bigger stores, never leaving them in the same place for more than 10-15 months. Once they had reached their max store size, they were let go, and new, younger, less expensive managers were promoted – until they, too, passed some invisible line that made them expendable. It really cut into continuity of the corporate culture, and made everybody take on the more unpleasant features of vultures.
…As opposed to the pleasant features of vultures! I’m not sure what the answer is, Jim. Our traditions as a civilization have a lot to do with stories passing from one generation to another. In the old days (the Eighties and Nineties) when people stayed at companies for a decade and that was not so unusual, there was this passing of the company culture. No more. Now it’s commonplace to see people in jobs for a year or even less, and that’s considered normal! Also, people don’t write stuff down anymore the way they used to — policies, procedures. And too few companies, especially smaller ones, are power users of tools like salesforce.com to help keep the institutional memory alive. Here’s hoping someone solves this problem and makes a gazillion dollars for her efforts!
It is apparent the new management failed to address themselves to the previous managements ways, hadn’t called the concerned for a meeting or got themselves orientated to the methods employed before that helped the company to do well .
Brings to mind an opposite frustrating situation that occurs in nursing homes when they are surveyed. The entire organization strives to meet the standards according to the OBRA law for the year preceeding the survey (which is a surprise date, the facility never knowing when the survey will begin), only to find that on the day of the survey the rules have changed. Seriously, new rules that were previously unpublished anywhere, or I shoud more truthfully say, a new interpretation of an old rule. Much fuss and muddle follows these surveys, including fines and reductions in payments. The game, simply, is to change the rules, keep them secret, spring them on the institution during the survey and reduce payments. A better system would be for the government to send out updates on the new rules. But that is not done. Instread, facilities follow each others expreiences with recent surveys to find out what surveyors are focusing on. Isn’t this a crazy system?
We are fortunate enough to have a small, tight group, most of whom have been with our company for 10+ years (we’ve been around for 15). When we bring in a new hire, we prioritize giving that person the real-life history of the company and ensuring that he/she becomes part of the corporate culture. We’re trying to build a “culture of yes,” in which employees are empowered and trusted…that’s why we instituted unlimited paid leave at the beginning of this year. I think you need to be creative in order to preserve that institutional memory…because it resides inside the actual humans in your organization, as well as the humans you serve!
Rosemary, thanks for the comment. I think it’s great that your company makes it a priority to transfer culture rather than just letting it happen. Bravo! P.S. If you’re so inclined, please check out our new Facebook page (search term About.com Entrepreneurs) and start a discussion on company culture. I’ll comment and see if we can raise some awareness!