Monday, May 14, 2012

The Unwritten Rules of Best Buy's Corporate Culture

In March of this year, Best Buy CEO, Brian Dunn, told 400 employees to say good-bye to their jobs and closed 50 stores. In April, Dunn said good-bye to Best Buy after an investigation by the board. He was having a relationship with a female employee, an act that was against company policy.

Later, the board learned that Chairman and founder, Richard Schulze, knew about Dunn’s relationship and never reported it to the audit committee. The board subsequently asked Schulze to step down as Chairman of the Board.

From the board’s perspective, Dunn showed very poor judgment by having a relationship against company policy. Therefore, his only choice was to resign. During the time leading up to this, Best Buy missed its revenue targets for the 4th quarter of 2011. The concern was that Dunn might have made other poor decisions that affected the corporation’s performance.

Both Dunn and Schulze’s behavior raise an issue of policy. While every business has written policies, it also has unspoken policies, practiced without conscious effort. Dunn created an unspoken policy: relationships with coworkers are acceptable as long as no one knows.

On the surface, there seems to be no big deal in having a relationship with an employee. Except, the company’s written policy prohibited and acting otherwise undermined the culture of the organization, undercutting the company’s success. For Dunn, this resulted in Best Buy trudging through a revenue lapse.

Since he was breaking company policy, it may have made it very difficult for him to enforce policies in general. It’s like your parents saying don’t smoke as they take another puff from their cigarette. Whatever the leader does, his subordinates will follow.

I wouldn’t be surprised if it lowered people’s tolerance for mistakes on Best Buy's part. Take the Best out of Best Buy they would be goodbye. Undoubtedly the new CEO will have to correct these problems immediately

It is always easy to know what to do after the fact. However, I would like to know what you would have done if you were in either position.

What do you think? I would love to hear what you think. 


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