A survey reported here on Management Issues last week revealed that nine out of 10 executives believe that corporate culture is as important as strategy for business success.
The report, by consultants Bain and Company, surprised me because that seems so obvious, why would it be a headline? (it also implies that 10 per cent of executives thought it wasn't as important which is even more surprising!).
Surely this is like saying nine out of 10 executives believe that breathing out is as important as breathing in! The two are inextricably linked – the one without the other has limited use (to put it mildly!).
The report goes on to say that fewer than 10 per cent of companies currently succeed at building high performance cultures. Now that doesn't surprise me!
One of the main reasons is that they are not sure how to. Culture is often seen as 'soft' or 'touchy feely', whereas in reality it's actually the hardest part of management.
Why? Because it deals with attitudes and behaviours which all seem a bit vague. It's much easier to talk about territories, product life cycles, sales targets, margins and advertising budgets. They're 'real' and 'tangible'.
So how do the best businesses develop a culture that creates competitive advantage? There are no easy answers, but here's a few pointers from the stuff I've seen:
Pointer 1: Understand your current culture
One delegate at a conference I spoke at, came up to me after and explained although he found what I talked about on culture fascinating, he was troubled.
"We don't have a culture at our place," he explained.
"You do," I replied.
"We don't," he assured me.
I suggested that if I spent only a few minutes in his offices, I'd get a feel for it relatively quickly.
"We definitely don't have a culture," he persisted, "no one gives a damn at our place!"
"So that's your culture!" I said.
My definition of culture is 'the way we do things around here'. It's a bit simplistic, I know, but that's my point. Demystifying it is a key starting point. Many businesses don't address it because it's deemed too complicated.
So getting an objective view of your current culture is a useful point to start from. Why not get your people to describe it – pluses and minuses. What about customers too? Ultimately, you'll establish a set of words and phrases that reflect your current culture.
Which aspects are you happy with? Which are you unhappy with? Getting a true picture helps you work out what you need to keep, eliminate and work on. Think baby and bathwater.
Pointer 2: Spell out your 'preferred culture'
In the same way that great leaders shape and communicate a vision, they also spell out a picture of the culture they are striving for. This can often be just a set of guiding principles or values, but the best seem to go further by establishing preferred behaviours that support these values.
This helps provide guidelines for acceptable and unacceptable behaviour – experience shows that this also helps manage performance more effectively. Again, getting ownership of these behaviours is key. It should not just be seen as a management thing.
Remember this is about action, not words. Enron had a set of published values, one of which was integrity! It's not what you say, it's what you do that counts.
It's also about what you reward….
Pointer 3: Value Your Values
Ever had someone in your team who achieves all their goals and hits all their targets, but is basically a real pain because they wind others up, de-motivate colleagues and upset team members?
If you measure individuals on results alone, regardless of their behaviours, then you're asking for trouble.
Successful companies reward the behaviours they want as well as results. A frustrated business leader explained how she was struggling to get her people to think creatively, be innovative and generate ideas.
"What's the reward for generating ideas in your business?" I asked.
She looked puzzled. But talking to her staff it was clear that the reward for coming up with more ideas was more work!
Effective leaders champion their champions. This means encouraging, acknowledging, supporting and rewarding those that promote and act in line with the preferred behaviours.
Equally, however, they challenge their challengers. They deal with those individuals who do not. What happens in your business to those who don't? If the answer is nothing, then expect some people to take the easy option of not bothering.
If you're really serious about this stuff, then you need to build it into your reward strategy, feedback systems, appraisal processes, promotion criteria, recruitment and selection processes (do you currently look for evidence of preferred behaviours in prospective employees?).
Be a role model, make it visible and talk about it at every opportunity. Put it on the agenda at team meetings, board meetings and corporate communications.
Whatever you do, please, please don't just put stylish, arty posters of people rowing together as a team on the wall in your reception and hope that this will promote teamwork. You need to live and breathe it (in and out!).
So, how can you get started in addressing the issue of culture in your organisation? Why not start with these questions to get the ball rolling?
- Which aspects of our current culture are we happy / unhappy with?
- Do we even know what it is?
- What preferred behaviours do we need to create the culture we want?
- What behaviours actually get rewarded round here?
- Which unacceptable behaviours are actually tolerated here?
- How do our company processes promote / hinder our preferred behaviours?
- How do our leaders measure up against each of our preferred behaviours?
Use the answers to identify your next steps.
Developing a culture that creates competitive advantage isn't as important as strategy for business success, It is a strategy for business success! You can't have one without the other, and it's crucial you work on both.
So remember, breathe in and out, in and out...
