When asked "what causes project failure?", the usual suspects such as communication barriers, lack of buy-in, cost, quality and time management issues, and business requirements inaccuracies tend to surface. What might be less well-known, is that corporate culture plays a monumental role in setting the tone for project success or failure.
Understanding corporate culture
Corporate culture encompasses the belief systems, attitudes, behaviors, dynamics, and interactions of internal management and employees with each other, as well as external parties. This culture is intangible and tangible, and can change over time, contingent on various factors including the overall business approach and objectives.
John Coleman, author of Passion & Purpose: Stories from the Best and Brightest Young Business Leaders, sites in the Harvard Business Review "Six Components of Great Corporate Culture".
- Corporate vision, which identifies the underlying reasons for a corporation's existence; identifying its focus and objectives which guides business decisions, and initiatives.
- Corporate values help support the vision by determining the corporate approach and conduct.
- Corporate practices are the "proof" factor, affirming corporate values. The internal practices either help to further solidify corporate values or contradict them.
- People hired by corporations play a critical role in either conducting themselves in ways that fortify the corporate vision, values, and practices or put initiatives at risk.
- Narratives provide the public, clients, vendors and other stakeholders with a compelling story behind the business.
- Place relates to the physical environment, including the geographic location, office structure and layout and all physical attributes that encompass the organizational set-up.
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Exactly how does corporate culture impact project efforts?
Despite a project manager's efforts to keep projects within scope and tend to all other project management aspects, there are times where corporate culture can play a heavy hand in the unintended disruption of project efforts. There is a close link between the strength of a corporate culture and the level of project culture disruption or impact to success ratios.
There are many corporate culture disruption indicators that can signal projects are at an increased risk of failure. Here are just a few.
- Low morale and productivity, despite efficient systems and processes: Dissatisfied employees and consultants are less likely to put in the time and effort required to adequately complete tasks on time and meet required deadlines and deliverables. This has the ability to significantly lengthen timelines and compromise dependencies.
- Extraordinary employee absenteeism and turnover: Employees who show a significant increase in absenteeism create a heavier workload for the remaining project team members. This, in turn, fosters resentment and low morale in others, feeding additional absenteeism and ultimately even higher turnover. This results in increased costs, the risk of diminished work quality, and employee burnout by overextending the remaining resources.
- Increased incidence of conflict and/or severity: Regardless of business activity, conflict will undoubtedly be on the menu at one time or another. Long before projects are even initiated, existing internal conflict may dwell between one or more individuals. If these individuals are involved in the same, parallel or competing projects, this can quickly spread to other team members creating the potential for the perfect project storm.
- Sharp increases in unhealthy employee gossip: Believe it or not, some level of company gossip is not only normal but actually somewhat healthy, assuming there are no casualties. It may sound silly to say, but it is human nature to create some chatter; this indicates that people are interrelating with each other at various levels. The problem arises when unhealthy gossip picks up momentum, as this goes from "normal chatter" to having the potential to cause serious harm to individuals as well as project and company-wide activities.
- Increased client loss: Significant funds and resources are allocated globally each year in an effort to execute company-wide projects. Often projects are undertaken without recognition that fundamental changes may have occurred even prior to, or between the planning, initiating and executing phases. When clients leave, it is usually because a valuable fundamental change has negatively impacted their belief or buy-in to the company or its products and services. Projects that are underway are at risk for failure if the efforts support a client need that has shifted. An exception to this is if the project is in support of an intentional initiative that addresses client loss, or if there is a shift in focus and the project still meets with the overall company-wide strategic direction.
The impact of corporate culture on project success or failure is material, and should not be taken lightly. Ultimately, business owners and C-Suites have an opportunity to create and nurture winning corporate cultures, which increases the chance of successful project outcomes.
Moira Alexander is the Founder of PMWorld 360 Magazine and Lead-Her-Ship Group, and a project management and digital workplace columnist for various publications. Moira has 20+ years in business (IS&T) and project management for small to large businesses in the US and Canada. To find out more about Moira, go to www.pmworld360.com and www.leadhershipgroup.com.