A Blueprint for Stemming a Corporate Culture Crisis

In struggling organizations, problems can arise and reinforce one another in a kind of tragic spiral. Among staff and management: silence, denial, blame, contempt, avoidance, turf protection, passivity and powerlessness often emerge and feed on each other.

A clear example of this problem that other CEOs can learn from is the situation at the Department of Veterans Affairs. The VA oversees the Veterans Health Administration and 1,700+ hospitals, clinics and other facilities.

Following recent investigations, it was found that the VA had “significant and chronic system failures,” as well as a “corrosive culture” that continued to weigh it down. These challenges caused delays in patient care, lapses in quality, and even the alleged falsification of records by site managers.

Former P&G CEO Robert McDonald, the newly appointed head of the department, has a tall order: he will need to run into the fire boldly and effect immediate change while, paradoxically engendering trust, energy and optimism. This will require assessing the situation quickly, clearly defining goals and tasks before executing them, assessing the leadership team’s experience and talent, and making necessary leadership changes.

However, before he can address the systemic failures, he must fix the VA’s cultural issues. This requires taking the following five steps:

1. Assess the culture and identify what needs to be reformed. Gather honest, objective information on how employees really feel. Provide amnesty or other means to insulate individuals from repercussions for telling the truth. Resist the temptation to engineer a complete overhaul unless that is truly what is needed. Quality of care, according to patient surveys, is quite good in many areas, which is something to build on.

2. Create a credible story about why things are going to change. People— employees, the media, and the public—need a reason to think that the VA can change. The story must include specifics—how patient wait times, doctor shortages, lack of transparency and other issues will be addressed. McDonald must narrate the story and provide regular and consistent updates on progress.

3. Have a plan for change. Tell the senior team exactly how things will be different, hold them to it, and give them permission to hold you accountable for progress. Establish 100-day targets for change as a first step.

4. Match words to action. McDonald’s story must be supported by progress. Make quick decisions about the senior team and its ability to embrace the new vision. Call out—and possibly let go, or shift down—underperformers. Don’t scapegoat, but hold individuals accountable for their responsibilities and performance. Help people see that change is afoot.

5. Cascade steps 2 through 4. The same steps being taken to change the culture of senior administrators can be implemented at successive levels throughout the organization. Share visions, convey expectations, and hold people accountable from top to bottom. McDonald needs to be highly visible and meet with the rank-and-file members of his organization to bring people on board and keep them there.

The type of spiral the VA is experiencing is hard to stop. But there are interventions that can shift momentum in its favor. By working on the culture first, the company is properly aligned when McDonald begins to work on the systemic changes.



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