The age of companies solely focusing on their share value has gone and replacing it is an increased awareness of the importance of company culture, explains Eric Cornuel, President of the European Foundation for Management Development.
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Company culture is definitely the cement of any organization. I mean, not for profit, for profit. This is very critical and it is central. It’s the backbone of the organization. Unfortunately, in the past years, and I would say in the ‘90s in particular, companies have gone public more and more and the focus has been pretty much oriented on the share value instead of taking care of the culture.
And I think that the evolution of the share value, the importance this has taken, has in a way destroyed part of the company culture because the indicators were, in my opinion, all wrong. You cannot manage a company without having a committed group of people emotionally involved in their job. You can’t work only for money. We all know that. And today the big advantage for managers and employees in general is that there is a big change in the age pyramid. We have many executives retiring and certainly not enough, let’s say, new graduates to fill the posts. So the bargaining power before in the ‘90s and early in the 2000s was on the side of the companies that were, let’s say, running after the shareholder value.
Whereas today with this change, they will be obliged to convince the best ones, the high potentials, not only to come but to stay in the organization. So I think it’s a fundamental change that has been in a way identified by a number of organizations already. And those ones are really working in reinforcing this culture where people can indeed not only work well, but feel good.
There is an approach of, let’s say, recreating a psychosociological environment that is favorable for the staff in general, the model of people changing company all the time, not retaining experience or companies just laying off people because the share price went a little bit down and they needed to correct it for the markets to feel better. I think it’s something of the past and we need to reinforce this element so that companies will grow in a much more harmonious way towards society connected with the evolution of the importance of the share value.
You build companies on solid frameworks and solid frameworks you don’t get with people staying two years. I’m sorry. I mean, I’m convinced of that. You have the ones that are extremely, let’s say, profitable and big like luxury good groups and have a clear indication on the way they deal with their culture, a very strong culture. And people are extremely well taken care of or you will find that as well in companies that are non-listed, in family businesses, because the time horizon of those kinds of companies is very different from a listed one because they are not after the immediate profit.
They are for the, let’s say, to preserve the organization in the very long run. And profit, short-term profit, doesn’t have the same importance as in a listed company, you see. So I think you can put any, you can put L’Oreal, you can put LVMH, Richmont. But of course they are also small companies where it’s very, very alive.
I mean, I had discussions with people managing SMEs of very (high) performing ones. And when you see the care they have for their people and for the company it’s completely different. I mean, in others you are a number. You see the American companies now, the tech companies: 12,000 out, doesn’t matter, 20,000 out. People are becoming a commodity in these companies but as I said with the demographic changes this will have an impact on their behavior because they won’t be able to keep the people.