What is Cultural Debt and Why Deal with it?
Cultural Debt
Culture is an asset in every business. We need to maintain it if we want to reap its full benefits. At times, we create cultural debt. What is cultural debt? Why and how do we create and repay it?
Company versus culture
We’ve seen it all before: working late, long hours, and under stress to achieve a deadline with which we don’t have much affinity. And because of the project’s importance, those in authority try to micro-manage despite our track record of consistent delivery and achievement. Where’s the motivation? Where’s the trust? We see real fear in action, and, under stress, people pin their true colours to the mast. Where does that leave us and our relationship with the company?
Culture is an asset
Culture is undeniably an asset (highly valued or otherwise). In fact, it is a crucial business asset. Enhancing its value is right — it helps us achieve our personal and company purpose better. But we can also borrow against it. The scenario above is an example of this. Cultural debt is when we make a decision that borrows against the culture of the organisation — a promise that is broken.
Generally, this isn’t an issue, and most of us probably expect it to happen once in a while. But what are the consequences if it isn’t addressed?
In a positive culture the asset will be replenished quickly by the experience the team has going forward – the debt will be repaid. Bear in mind that both the company and leaders need to repay it.
Unpaid debt leads to long term issues
When cultural debt becomes longer-term (or structural), additional issues must be identified and addressed. Structural debt could be continuously repeating short-term debt. It could be negatively counter-cultural behaviour (asking people to deviate from the company values, for example) or having a culture that won’t yield the right results (e.g., being highly autocratic where only collaboration will work). Behaviour is the key to this. If we can spot where behaviour is at odds with the culture, we must deal with it.
Often, people rally around so we don’t notice the cultural debt is still outstanding. They hide their feelings and carry on regardless. However, that is not a positive sign because below the surface, resentment has increased and will rise more readily in the future. Actually, what is eroded is trust: trust in the company and trust in those in authority. We need to address this in a proactive way and not assume that it has gone.
Responding to Cultural Debt
So, what should we do as leaders? Be aware of what we’re asking others to do and how we should repay the debt as individuals and the company. Repay in a way that will have a short- and long-term impact. Next time, they’ll know they’re investing rather than being taken advantage of. I don’t mean we should become transactional about this. Indeed, treating this whole situation as a transaction won’t improve the situation. Relationships aren’t built on transactions; they’re built on trust. At the root, culture is all about trust – trusting both the company and those who are part of it to behave in a certain way.
Ensuring culture remains a valued asset requires some clear actions.
- Embrace culture as a real asset that needs nurturing
- Articulate what a great culture for your business means – think about purpose, brand, trust, etc
- Architect the culture so that drives the business purpose, and people can thrive within it, experience it and draw sustenance from it
- Understand how, where and when cultural debt happens and put habits and behaviours in place to restore it
- Communicate to understand that all is well with everyone who inhabits the culture
- Consciously and continuously improve culture to ensure its value is maintained.
A Final Word
In this article, I’ve concentrated on the business and employee relationship. However, cultural debt happens with all stakeholders: customers, investors, regulators, suppliers, and influencers. And this debt should be repaid by the business and the individual. Don’t you wish some of the issues in your business relationships had better closure?