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The Impact of Recession on Culture: And What it Means for Organizations and Leaders

Posted on April 27, 2012 by: Lisa Koss

(A slightly abridged version of this article was recently published in the International Risk Consultants online publication.)

The Great Depression impacted norms and behaviors in almost every corner of the world.  The stock market crash of 1929 led to a series of calamities that dramatically affected personal income, attitudes on savings, international trade, employment, and global finance.  We do not know yet, if there are long-term consequences for our culture coming out of the recent recession.  We can, however, compare these two major global events to extract important lessons for organizations and individuals who are driving change or being driven by changes in their business culture.

Let’s first look at the definition of “culture.”  Anthropologists, sociologists, psychologists and organizationalists use various definitions, but in short, it is:  How we do things around here.  Unlike thinking about culture as a set of values (which may be brought forward from a past generation or simply be aspirational), what we end up actually doing is a more accurate description of culture.  These changes will be seen in our collective actions, and be seen in how our institutions operate.

Although this recession has impacted individual behavior, we have not yet seen the creation of a generation of hyper-cautious savers like those who experienced the 1930’s.  We don’t know if today’s young people will be marked for life with the widespread risk aversion and the same loss of confidence that the next generation would be better off financially.

We do know, however, that any resulting culture change is largely determined by the number of people impacted and how long it lasts.  Today, in Spain unemployment is roughly the same as during the Great Depression at about 25%, and even worse for young people at 45%.  Possible factors that affect a possible culture change for the Spaniards include the long term effects of lost potential, the impact of such large numbers of young people searching for work in other countries, the cultural impact of eventual repatriation of thousands of Spaniards with new and different ideas from around the world, and the cultural impact on the families that have been separated.  To be certain, while the situation is dire in Spain right now, we won’t know the outcome for some time.

The Great Depression was the longest, most widespread, and deepest depression of the 20th century, lasting more than ten years affecting children who grew up and were surrounded by it.  In contrast, — plenty of younger people may not see long-term financial fallout from this recession, but then again, we’re still in it.  Culture change takes time.  We do not know how long the doldrums will last, whether the impact will be felt among all classes and age groups, or how quickly or how much the economy will accelerate in the out years.

The same principles that drive macro-cultural changes (large and thorough influences applied over long periods of time) are also needed for planned change in organizational culture.  Consider the likelihood of success of a CEO we know who recently sent a memo announcing the new culture will be high accountability and effective teamwork.  The CEO proclaiming the new culture does not make it so.  And while we can’t yet know if or how she will achieve it, there will be much work ahead for them if they are serious about this change.

Studies show that culture-change initiatives — like the proclamations of the CEO above — have a poor success rate.  Cultures — in organizations and economies — are durable.  They are durable because they develop over years and take hold in multiple, layered ways.  For organizational change to be implemented and accepted, a sustained, multi-pronged, systematic set of actions is required that is oriented toward new behavior, with human resource infrastructure adapted to support — and even drive — the change.

As players in the global world we can draw lessons from history, too.  The personal strategies outlined here may help those in a rapidly changing work environment adapt, even before larger and slower-developing cultural changes are clear:

  • Expect interruptions, even new kinds of interruptions in everything you do.  Treat them as the norm,  not as exceptions.  It is often false expectations that drive disappointment and anxiety.
  • Be clear on your own strategy and its alignment with your organization.  This clarity will help you set priorities, express yourself, accomplish more, and make it easier to change if an approach is clearly not working.
  • Balance your communication so that you cite what works well twice as often — before and after — as what does not.  For example, “I like the way we communicate fluidly across  different time zones.  We have done very well with this.  I would also like to find a way to include the IT group into our conversations. That way, whatever solution we design will integrate their ideas from the beginning.”
  • Expand your awareness through new people and situations to learn and gain insights.  If you are  uncomfortable working with people from a certain culture, for example, seek those individuals out and deepen your relationships with them.  Or if you are less comfortable with financial data, find a way to regularly expose yourself to the topic.
  • Acknowledge what remains the same.  People like to know what is durable and will not change in the foreseeable future.   For example, during a time of changing business priorities, you might reinforce that the team will continue to      communicate using the same processes, that the team’s role will not change, and that particular values, goals and standards will remain the same.

In addition to these personal strategies, we learn from the long arc of cultural changes past.  Faith that change has always been taking place, reminds us that it is futile to try to control the amount of change coming our way.  We can ready ourselves, however, within our businesses, and our businesses within the world marketplace to respond more adequately and competently to an ever-changing new normal.

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