Do you believe that the success of your business relies more on a promising strategy or on a culture that defines your company?
Before you answer, know that there is mounting evidence that culture trumps strategy. Why is this? Because not enough attention is paid to defining and changing the culture which the strategy dictates. Strategy sets the course ahead and defines the goals to get there. But culture translates the strategic goals into the values and practices needed to implement them successfully. The best strategic direction with poor culture will often result in failure.
How do you define company culture? A practical definition of culture is the sum all the activities within an organization.
But culture is defined by inference. It’s not always written. If a company has certain values and traditions, and makes them visible through words and practices, then it has a culture that can be seen, felt and described by the behavior of its people. It must integrate a variety of norms and behaviors to be consistent and visible.
Walk into any retail store, and you’ll experience the predominant culture. Does someone greet you? Does someone volunteer to help you find what you’re looking for? Is everyone smiling? I think you can get a good sense of the culture by the behavior of the people within the store.
The key person in defining the company culture is the CEO or owner of the business. It’s largely around his or her personality that the vision, values and practices emerge. The owner can also be a stumbling block if there’s reluctance to change. The challenge is to have a culture that can adapt to changes and is responsive to both internal and external pressures.
Bob Leduc, president of aerospace manufacturer Pratt & Whitney, in a recent article in Chief Executive Magazine said, “I’m a firm believer that my job is to define the culture we want, model the culture we want, and nourish the culture we want.” That sounds like he’s defining a culture that’s continuously evolving.
Cultures are not static. They change and evolve as expectations change and evolve. Therein lies a major challenge for both a long-term business owner and large company president: to know when to change as circumstances dictate. Not overcoming habit and complacency about a culture can doom a company. That’s why in large companies, a new CEO has a good chance of changing the culture with new vision, values and behavioral examples to model.
What about a small business? When does it have to change the established culture? When new people aren’t staying beyond six months, when customer service complaints rise, when trusted employees leave, when there’s no clear guidance on how you do the work so everyone is an individual contributor and when the owner who doesn’t think the venture is fun anymore leaves.
So how does cultural change happen when the owner stays? It isn’t easy. It requires stepping back from the day-to-day and taking a close look at the values and behaviors of the current culture. Have your people do the same thing and compare findings. Does mostly everyone agree on what it’s like to be part of the existing culture? Do employees have a chance to make an impact? Do employees feel they have a career path to personal growth over time? If the answers are mostly negative, it suggests the need for change.
But the list of important questions goes on.
Are answers to these questions made through active listening and effective communications? Do employees feel they are emotionally engaged? Positive answers to these questions help all employees feel they are listened to, have impact and are rewarded for the right behavior with frequent encouragement. This means there’s a culture that’s able to critique itself.
To enhance a culture, a new form of performance assessment of each employee may be necessary — one that provides more frequent feedback during a year rather than an annual assessment, that catches people doing well and emphasizes personal development to sustain strength and improve areas of weakness. General Electric has introduced periodic assessments that provide timely insights for performance improvement and to build on strengths. Most managers and employees love it.
A popular word for all of this is “alignment,” from vision through values to personal contribution in meeting goals.
Is your culture visible to anyone visiting? When there is consistency between important management practices and expectations, the culture can evolve easily and be very visible. And then more people want to come in than want to leave.