Importance of Company Culture Not Lost on Some
A company’s corporate culture is so important, especially today, because it “reflects a firm’s identity in the world .. [and] reassures employees and informs prospective employees,” says contributor Selena Maranjian in a recent Motley Fool column. And corporate giants, such as Google and Apple, have broken the old technology company stereotypes of the likes of IBM to launch unique cultures fueled by innovation and values.
But sometimes corporate cultures face challenges. Home Depot’s culture faced such a challenge when a new CEO took office. Then-CEO Bob Nardelli’s military-style management clashed with the company’s values of “taking care of our people,” “doing the right thing” and “respect for all people” during an annual meeting in 2006, says Maranjian. Nardelli’s behavior — which included not answering questions and not taking votes, all in 30 minutes — led to shareholders selling Home Depot stock and a general feeling of dismay among employees. Nardelli left the company the next year with a $210 million severance package to become chief executive of Chrysler. (On April 30, he announced that he would leave the company as soon as the bankruptcy was over.)
That infamous Home Depot annual meeting is a stark counterpoint to billionaire investor Warren Buffett’s recent Berkshire Hathaway meetings, she says, where Buffett and his partner, Charlie Munger, took time to answer questions about a number of topics:
It’s interesting that when asked about his succession plans, Buffett explains that there will likely be a successor who manages his subsidiary companies, and another successor who oversees investments, and a manager who maintains the company’s culture. The importance of company culture is not lost on Buffett.
Buffet, and his friend and company board member billionaire Bill Gates, realize that maintaining a consistent culture is essential, says Maranjian. That’s why Gates has pledged to remain with Berkshire Hathaway for the rest of his life to help preserve its integrity-driven corporate culture. And a strong culture is valuable to those within, and outside, the company. Says Maranjian:
It informs all stakeholders about what to expect. Employees know (or learn) how the company runs and deals with changes and challenges. Customers know what the company stands for and what it offers them. And shareholders know what kind of company they’ve entrusted their financial future to.
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