Constructing Corporate Culture

The Nawaab of Bombay House, Ishaat Hussain, began his talk last Tuesday by telling the Rotarians why he chose to speak on corporate culture. The innumerable corporate misdemeanors globally, and especially locally, in the last two years are a cause for concern and confusion. What is wrong with the corporate world in our status quo? How do we prevent these mishaps? Standing amidst a room full of corporate leaders and professionals, Hussain delved into his forty-five years of experience in the corporate world to crack the case.

“I’m of the firm belief that it is the corporation’s culture which is at the core of [its] well-being and it is only by creating an effective corporate culture that enduring corporate success in a sustained manner can be secured,” said Hussain. Defining culture, Hussain said, “Culture is a corporation’s sheet music to success. It’s not different from an orchestra. You can hire the best trumpet players, oboists, violinists [but] unless they are all playing from the same sheet of music at the right tempo, you will fail. If you have the trumpets playing too loud, the song will not sound right. It is the delicate balance of getting people on the same page.” It is through culture that an organisation seeks alignment to deliver its purpose. He elaborated on the concept of purpose in the company later on in his conversation with the Rotarians as well.

Corporate culture shapes a company through how it treats stakeholders (Hussain reiterated that it wasn’t shareholders, but stakeholders), its definition of ethical behaviour, and the purpose of the company. Quoting a research study conducted amongst leading CEOs in the USA, Hussain said that it is corporate culture that determines the performance and longevity of a company. Corporate culture ranks first among other attributes of success like strategy, innovation, and technology.

Recalling his experience at Tata Steel after liberalisation in 1992, Hussain said the company went through an existential crisis, saddled with old plants and a bloated workforce, because of the entrance of private steel producers in the market. Restructuring the company required downsizing; this was done through social harmony and sensitising the rank and file to the circumstances. This was only possible because the management had high credibility with the workers: Tata Steel is reputed and envied across the world for their caring and sharing culture. The closure of old mills and the need to right-size the organisation was widely accepted and an elaborate investment plan was drawn up and shared with the workforce and stakeholders. Having authored the voluntary retirement scheme himself, Hussain included retraining, out placement, and a fair retirement plan offering Rs. 14 lakh per person, all with the approval of the union leader. Tata Steel went from an eighty thousand employee workforce to just thirty-six thousand – but steel production rose 6-fold.

According to Hussain, the key determinants for a successful company are purpose, leadership, and effective culture. With regard to purpose, Hussain told the Rotarians, “Of course making money is important, but it is equally important how the money is made, how much money you wish to make, and more importantly, what you do with it. Answers to these questions shape the culture of [an] organisation.” For J. R. D. Tata and those who grew in his shadow, profit, albeit necessary, was and is still just an outcome. After a meeting about Tata Steel’s modernisation, instead of asking the standard question about money and expenditure, J. R. D. Tata was more concerned Happy Birthday Rtn. Framroze Mehta! about his company’s effect on the Indian steel industry, the environmental consequences, and the potential of new job opportunities through his endeavours.

Leadership, of course, is a topic copiously written about, often listing the various attributes that make a good leader. However, Hussain believes that, first and foremost, a good leader must be authentic – they should be  able to walk the talk. Leadership is an enormous responsibility and entails making personal sacrifices. As a leader, it becomes one’s “duty to care about everyone they touch,” said Hussain. Leadership means giving your employees a sense of belonging, of feeling wanted. All employees must have a clear purpose and must feel like a part of the workplace family. Most importantly, the leaders’ behaviour must foster trust, create an open culture, and maintain transparency in order to empower people.

Lastly, effective culture requires good governance, a very topical and controversial issue. “In Islam, there is a word for intent, called niyat. Niyat is even more important than action,” noted Hussain in his discussion of good governance.

Ending his talk where he began, Hussain chose today’s subject because of the state of corporate  culture today.There is an urgent need to reform capitalism and make it more responsible and caring, bringing the community to the centre of economic activity rather than churning out the same, mindless chain of more and more profit. This is the exact principle on which the Rotary fraternity was established: “To serve the community and build a caring society.” Hussain ended the lecture by urging the Rotarians to make a change and serve their community at large.