In Part 1 of this piece on minimizing Cultural Debt in your organization, we explored how some high level best practices for managing your consumer credit score (specifically the FICO score in the U.S.) can readily apply to intentional investment in employee goodwill.
(Unless directly attributed to another source – everything in quotes below is from our friends at FICO.)
Before we pick up that thread, let’s back up for a quick recap on what Cultural Debt is. Cultural Debt is accrued when a perception emerges within an employee base that the organization has broken a promise(s). A Warren Bennis quote helps us appreciate just how high the stakes are here.
“Trust is the lubrication that makes it possible for organizations to work.”
Cultural Debt is anti-trust. Worse than the absence of a lubricant – it’s a wrench jamming the organization’s works. But, unlike an errant tool, Cultural Debt is invisible, so it’s far from easy to find and rectify. And when trust is lost, employees’ desire to go the extra mile ever so quietly falls off a cliff.
And let’s re-state a word of optimism for the brand new startup – the good news there is that your organization begins its journey with a clean slate with zero Cultural Debt. The trick is to keep it that way!
With the stage set, and hopefully somewhat dramatically so, let’s return to Suze Orman’s fave digits. Digging in a little deeper than we did in Part 1, this piece will address how the organizational culture cousins of the two biggest factors in a credit score (combining for a whopping 65% of your FICO number on that curious range from 300-850) can be managed to minimize Cultural Debt.
Payment History
The first factor we’ll address, comprising 35% of a FICO score, is “Payment History” which we’ll frame for our purposes as the quality of promise-keeping to employees. This parallel doesn’t seem like a stretch as the payments made to a lender are also promise-keeping where you’re agreeing to honor a pledge by making repayments per the timing and other terms of, say, a loan or credit card agreement.
“Pay your bills on time”
When it comes to your credit, “Delinquent payments, even if only a few days late, and collections can have a major negative impact on your FICO Scores.” Similarly, when it comes to your team, if the day when any promised item (even something quite minor) was supposed to be delivered comes and goes without the deliverable happening, your team will, unfortunately, begin to question everything.
“If you have missed payments, get current and stay current”
According to FICO, “Older credit problems count for less, so poor credit performance won’t haunt you forever.” With your team, returning to a strong commitment to promise-keeping after a small flub can rebuild goodwill and trust over time. Provided you don’t provide fresh examples of promise-breaking, your team will be willing to give you a second chance.
“Be aware that paying off a collection amount will not remove it from your credit report”
In the world of FICO, this kind of cardinal sin will stay on your report for seven years. In the organizational context, the equivalent sin would be screwing up and then failing to acknowledge it/attempt to fix it until irreparable damage is done to trust. If you do something culture-gutting, like botching the communications around a layoff in a way that leaves people thinking that the leadership doesn’t care about them at all, some of your bank of goodwill will be permanently blown and your culture may never fully recover.
“If you are having trouble making ends meet, contact your creditors or see a legitimate credit counselor”
Per FICO, “This won’t rebuild your credit score immediately, but if you can begin to manage your credit and pay on time, your score should increase over time.” The organizational take-away is that if you’re in over your head and now realize that you’re out of runway to feasibly keep a promise – tell your team sooner rather than later. They’ll appreciate being looped in and just about anything is easier to digest (and forgive) if advance warning is given.
At one organization where I worked, the CEO saw that, for the first time in the company’s history, the bonus pool was going to be funded at well under the usual 100%, and he didn’t relish the task of telling the team. But, within a couple of days when the revenue projections had been triple-checked, tell the team he did one cold early December morn. And while the team wasn’t thrilled, they appreciated the opportunity to factor this into their holiday season spending and avoid running up credit card bills that their slimline bonus checks in February couldn’t cover.
Amounts Owed
The next factor, to which the fine folk at FICO assign a 30% weighting in your score, is what they call, “Amounts Owed.” We’ll frame this one as the quantity of promise-keeping to employees and the spoiler alert here is that less is more. I would argue that while it may be true that it is better to have loved and lost than never to have loved at all, it can be worse for an organization to have promised and fallen short than never to have promised at all.
“Keep balances low on credit cards and other “revolving credit” / Pay off debt rather than moving it around”
As, “high outstanding debt can affect a credit score,” the wiser path is simply to have fewer organizational goodwill plates spinning at any given time.
“Don’t close unused credit cards as a short-term strategy to raise your scores / Don’t open a number of new credit cards that you don’t need, just to increase your available credit”
If you have built up some goodwill in certain quarters, it may be better to stay in touch and keep those relationships alive than to cut ties even if there’s not much to gain from the relationship near term. Make new friends (selectively) but keep the old. One is silver, the other’s gold.
The meta-message here for the organization is that there is no replacement for a simple humble and authentic approach of making the small and select number of promises that you can actually keep. And much as FICO have built in some safeguards to gaming their system, attempting to game the system with respect to your culture, like by asking everyone to say nice things on Glassdoor, will only build a house of cards instead of a rock solid culture that’s built to last.
Less is More
So how might one put all of this into action? How few promises can one get away with making while still standing for something clear, energizing, and differentiated?
If we look at the organizational rubric of the trifecta of Vision, Mission, and Values – all three should certainly be crafted with care, intention, and in collaboration with all key stakeholders. However, as Vision is forward-looking in nature, the team will typically not consider this ambitious why of your organization to reach the bar of a specific promise. Mission has to be more concrete and provide a very succinct description of what your organization does today, e.g. Google’s is, “to organize the world’s information and make it universally accessible and useful.” (Now it makes more sense why they now have a parent company, Alphabet, right? Projects like self-driving cars don’t quite fit within the Google mission.)
Values also, need to be non-aspirational commitments that are already true today which lay out how you achieve your mission and vision. Values create a moral compass for the organization, guide ongoing decision-making, and provide a framework against which actions can be judged.
Values represent promises you cannot afford to break but defining them can also be quite liberating. Uniting your team around a finite set of behavioral standards which are sacrosanct can make a complex dynamic business world easier to navigate. Values can frame expectations for consistent excellence in those few key themes that bring your team of problem-solvers together and bring most problem-solving value to your clients.
Maybe your mission and values are actually the only firm cultural promises you need to make? Perhaps only these hit the gravity bar Theodore Roosevelt set when he said,
“Nobody cares how much you know, until they know how much you care.”
I hope you yielded some actionable insights from this two part mash-up of consumer credit and organizational culture. (see Part 1 here)
May your mission and values, and how you abide by them, be worthy of a FICO score of 850, and of staying Cultural Debt-free!
