What is Cultural Debt and Why Deal with it?

Company versus culture

We’ve seen it all before. Working late, long hours, under stress to achieve a deadline that we don’t have much affinity with. 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 key business asset. Enhancing its value is right – we achieve our personal and company’s 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 probably most of us expect it to happen once in a while. But what are the consequences if not 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 need to be identified and addressed. Structural debt could be continuously repeating short-term debt. It could be behaviour which is negatively counter-cultural (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 collaborative will work). And behaviour is the key to this. If we can spot where behaviour is at odds with the culture, then we need to deal with it.

Often people rally round 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 it is both us as individuals and the company that should repay the debt. Repay in a way that will have 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, and indeed, treating this whole situation as a transaction won’t improve the situation. Relationships aren’t built on transactions; they’re built on trust. And at the root, culture is all about trust – trusting both the company and those 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 relationship between the business and the employee. But, cultural debt happens with all stakeholders: customers, investors, regulators, suppliers, 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?