Monday, 27 July 2015

How can you get your processes to fix your culture?

Last week Toshiba revealed that it had overestimated profits by more than £780m because senior management had been systematically altering their accounts. The scandal led to the resignation of its president and chief executive Hisao Tanaka and several other senior staff. The independent investigation which uncovered the fraud suggested the culture at Toshiba was partly to blame.

Sergiy Palamarchuk /
This culture included employees trying to keep their bosses happy by 'not going against [their] wishes', according to the fraud investigators. Bosses were worried about the impact of the Fukushima nuclear disaster in 2011. So they would set ambitious and even unrealistic targets and, because their employees felt they had to achieve them, would 'carry out inappropriate accounting practices' - cook the books, in other words.

This kind of culture is toxic and some hefty fines are probably not too far away. So how can Toshiba turn its fortunes around and stop any accounting problems from happening again?

Artur Oganov, our consultant, had this to say: 'Your processes can dictate your culture. You should set up and use Key Performance Indicators to work out what is realistic for your employees. These targets must be achievable - there is always room for improvement, of course. But it is very demoralising to employees if they can never achieve their targets. They should feel like they have input into the targets. Your conversations about targets should always go both ways. Japan has a different corporate culture, it's true, but I think they could learn from Western business here.'

1 comment:

  1. Very informative article. I liked it.
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