Can A CEO Change Corporate Culture?

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Corporate Culture is the pervasive values, beliefs and attitudes that characterise a company and guide its practices.

Can a CEO change Corporate Culture?

When Gustavo Martinez, Global Chairman and CEO of J Walter Thompson, was forced to resign last week after accusations of sexist and racist comments it must have been a sad day for J Walter Thompson. 

1864

JWT as it is known, traces its origins to Carlton and Smith, which started by selling space in religious magazines in 1864.  J Walter Thompson who worked with Carlton and Smith and had served as  a US Marine earlier, ultimately bought the agency in 1877 for 500$.  by 1889, 80% of the space sold in US magazines belonged to J Walter Thompson.

J Walter Thompson sold the agency later because he believed that there was no future in the advertising business.  Considering that only about 16% of WPP's global revenue,  the old man who was often referred to as Commodore because of his penchant for yacht racing may have seen the future of advertising quite well although he may been wrong by roughly about a 150 years!

At the turn of the new millennium JWT decided to bury all their ancestors and along with them J Walter Thompson himself.

So the famous J Walter Thompson that adorned the walls and receptions of the offices around the world was stripped down in favour of a logo with just the letters J, W and T.  Everyone is known to have celebrated the burial of J Walter Thomspon. 

Only the Commodore was determined to make a re-appearance. The famous J Walter Thomspon signature now appears as a watermark behind a cold and new J Walter Thompson. 

Helen Landsdowne Resor ( wife of Stanley Resor one of the CEOs of J Walter Thompson ) is credited with being the first female copywriter in the agency and was responsible for developing its reputation as an agency where bright young women could succeed.

2016

No surprise then that 152 years later Erin Johnson Chief Communications Officer at JWT,  filed a suit against Gustavo Martinez for sexist and racist comments.   The Advertising Age of March 17, said 'The move comes a week after Erin Johnson, chief communications officer at JWT, filed a detailed 28-page lawsuit in New York on March 10 claiming, among other things, that Mr. Martinez made multiple "racist and sexist slurs." The suit details numerous incidents, and names other senior executives at the agency that allegedly witnessed the claims or were told by Ms. Johnson that they happened.'

Martinez the first Hispanic Chief of the Agency ( a native of Argentina who grew up in Spain ) had impeccable credentials. With a Phd in Economics from the University of Barcelona, Martinez had worked in Saatchi and Saatchi, McCann and Ogilvy. ( there are not too many Phd's in the advertising business )   He spoke Spanish, English, Italian and Portuguese fluently, a rare qualification for a global CEO.

Corporate Culture

Corporate Culture  is the pervasive values, beliefs and attitudes that characterise a company and guide its practices. To some extent, a company's internal culture may be articulated in its mission statement or vision statement.

But in J Walter Thomspon the corporate culture has always been understood by absorption rather than by teaching, by a verbal tradition rather than a book. An absorption that takes place by virtue of its history and through its employees. In many ways the culture represents old American values of a 100 year old American company.  Much like a Kellogg, a Kraft, or a Kodak. Or to take the British version of a 100 year old company, very much like Unilever the Anglo-Dutch giant. 

Values

The J Walter Thompson style has always been conservative rather than  modern. Reserved and reticent rather than expressive.  Staid rather than daring.  Quiet rather than aggressive.  Very much what you would expect from a 152 year old American company.  Where people are expected to stay within the norm, rather than break it.  As an agency it has been better at handling old consumer goods business like Kellogg, Ford, Unilever, rather than new age business like a Google, IBM, Apple or Amazon.  Because it is an old agency, it works well with older companies which represent its clients. It is also very good at handling classical fmcg kind of businesses rather than businesses of the new millennium.

For shareholders and owners however sometimes the old company can be boring.  They want a change.  They want to make it young.  They want to make it aggressive. They want to make it new age.

Changing Corporate Culture

Changing  corporate culture is not an easy task.  A company is just a like an organism.  It is almost like the human body.  Trying to change the company through its CEO is like trying to change the human body with a heart transplant. It may work. It may not work.  The body is always stronger than the organ being transplanted.  It has almost the right to reject the transplant, one of the biggest worries that surgeons face  in a transplant surgery. But of course changing the culture through the CEO is your best chance. 

Arunima Haldar Phd,, says 'Its more about co creation of the vision and mission statements and slowly moving towards bringing about a change in the culture through consultation with important stakeholders.'

Choose your CEO carefully

So  as a shareholder or director you have a vision of what you want your company to be. If is it old fashioned you may want it to become modern. If it is low tech you may want it to become high tech.  If it is shy and evasive in the media you may want it to be on the front page all the time.

But corporate culture develops over decades and sometimes as in the case of JWT over 152 years.  It is next to impossible for it to change instantly.  Plan your change over the long term. And take baby steps at a time.  There are not too many cases where the corporate culture has changed overnight because you transplanted a modern, bright, young, aggressive CEO who walked around as if he was constantly on a shot of adrenaline.

Very often just hiring a bright, young CEO may not be adequate.  Equally important is that he fits the culture of the organisation.  This is especially true when a CEO is hired from the outside.  He brings different influences, based on his previous careers with other companies. 

And the key thing to remember is that if one wants to change the culture, make haste slowly.

As John Kotter says in  a Forbes article Key to Changing Organisation Culture  'How does culture change? A powerful person at the top, or a large enough group from anywhere in the organization, decides the old ways are not working, figures out a change vision, starts acting differently, and enlists others to act differently. If the new actions produce better results, if the results are communicated and celebrated, and if they are not killed off by the old culture fighting its rear-guard action, new norms will form and new shared values will grow.'

The Clash of Local Culture

Mr Martinez is Argentinian and grew up in Spain.  Something that WPP should have taken into account while appointing him as CEO. Many of you will know that in the Latin culture people are very expressive and also keen on a physical connection. Body and hand movement is  extremely important as a means of expressing yourself. Many Latinos find it necessary to move their hands in order to communicate effectively. Simple gestures like a hand on the shoulder or a handshake are ways to communicate effectively. Hugs and kisses are normal in everyday interactions. It is normal for Latino men to greet females with a kiss; even if they do not know each other well. Men also hug each other as a sign of affection. In fact, a very common closing for a business letter in Latino correspondence is “un abrazo” or “a hug.” In an Anglo-Saxon culture many of these behaviours and gestures could be mis-interpreted as sexist.

Of course globalisation de-tribalises managers and leaders and I think that a global culture of behaviour is certainly in place.  And people who come from different local cultures must be mindful of  the global culture.

In retrospect many of the things that Mr Martinez is accused of on counts of 'sexist and racism'  may have been said flippantly rather than with criminal intent. (of course have to await the court's decision*). One has never heard of a rapist who said he would rape as a public announcement, although if he did it would be considered inappropriate and threatening behaviour.   Its a pity that he must lose his job, especially in a country where a Presidential candidate seems to be racing ahead in popularity despite his sexist and racist comments.

So the famous quip may indeed be true, that Mad Men have turned to Math Men. And the mythical Don Draper would never have wanted to be in the advertising business in these troubled times.

*Note : Find details of the  28 page Suit filed by Erin Johnson in the Southern District of New York

The author spent 17 years with J Walter Thompson across India, Asia and Africa and is a keen observer of companies and their corporate culture.

Chief Mentor
HGS Interactive,
Pratibha Shukla (Guest) I think the CEO can and should change the corporate culture. To use you analogy, if the heart fails, then the person dies. In a similar way if the CEO presents a particular image, his employees follow in his footsteps.It's the same with a child and his/her parents. The child does what his parents do. A CEO is like the parent in a company and his employees, the children.
28 Mar 2016 Reply
Malini Suresh (Guest) A CEO is supposed to be your leader. When when that leader does things like Gustavo Martinez did, its not just shameful but also demotivating.
28 Mar 2016 Reply

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