The Business Case for Corporate Culture

Photo Credit: Lucky Linda, Flickr Creative Commons

A Workforce That Thinks Like a CEO

What if more of the workforce thought more like a CEO does?

It takes a special culture and value set to make that happen. However, the business impact can be significant. This series demonstrates the link between culture and performance and the direct impact of leaders on both. Bottom line: Is your organization’s culture driving all the business results you need it to?

Some quick mini-assessments will help you identify potential action on low-hanging fruit.

Kumbaya, No. Business Results, Yes.

Culture is about business results, not group hugs. You can have the hugs if you want, as long as you still make the tough decisions and do the hard things to face economic realities. You’ll still plan capital budgets, product mix, service releases, markets, cost of funds and more. However, when it’s time to execute those plans you will not be alone. You’ll have a workforce passionately dedicated to making the necessary actions happen right alongside of you. Here are some examples of what leaders have gained from directly addressing their business culture:

• A manufacturing leader reshaped his business unit’s culture and produced 73 percent of corporate cash on only 17 percent of total revenue.

• A Caterpillar dealer invested in a culture shift and generated a 600 percent ROI in one year.

• A 300-store retail chain had an average turnover rate of 118 percent. One GM created a culture with only 10 percent turnover. The P&L implications were significant, including both obvious and not so obvious.

• After 100 percent turnover in a six-month period, a manufacturing business unit made an extremely simple, ridiculously inexpensive shift in culture. Results included a 300 percent increase in gross margin and a 75 percent reduction in cycle time.

• A Jackson Organization study shows “companies that effectively appreciate employee value [i.e. culture] enjoy a return on equity & assets more than triple that experienced by firms that don’t.”

• A Forbes research article concluded culture can mean “the difference between a 900 percent and a 75 percent appreciation in equity value.”

We’ll look at:

• Corporate culture: what it is, who creates it, who can change it

• Leadership effectiveness and high-performance cultures

• How culture drives behavior, performance and profit

• Two unsustainable extremes of culture

• Four components that create a business “force multiplier”

• The most overlooked key to transformation and change

• How mission, vision and values statements can backfire

• Culture transformation: where to start and three questions leaders should ask

What Corporate Culture Is and Who Creates It

Corporate culture, at its simplest, is the combination of the beliefs, values and behaviors of an organization – a belief system, if you will. This belief system is like the DNA of an organization.

Leaders create the culture and only leaders can change it.

Regardless of any flowery statements in the lobby, this DNA carries the true codes and messages to the individual cells (people) and unmistakably communicates messages about how things really work, what is safe, what is not safe, what gets rewarded and what gets punished. This DNA directly drives the behaviors and performance of the workforce.

Gallup, Inc. and others show an alarming behavior pattern: 70% of employees are not delivering their best performance. That’s a totally preventable hit to business metrics. Often, solutions are relatively simple but get overlooked or ignored.

Culture is created by the behaviors of leaders over time, not their words and not by frontline contributors. Leadership beliefs drive leadership behaviors, which in turn create a belief system in the minds and emotions of the workforce – for good or bad.

Leadership is the single biggest contributor to an organization’s culture.

While fear, intimidation and unhealthy internal competition can be motivators, they’re almost always short-lived and come with some pretty ugly side effects. Ultimately, they can paralyze creativity and innovation. A DNA of integrity, trust and honor enhances self-motivation and employee engagement. Creativity flourishes and innovation, speed and agility become the norm.

The good news is, leaders create the culture (DNA) and only leaders can change it. Culture is directly linked to leadership effectiveness. 

Leadership Effectiveness and High-Performance Cultures

Boss standing on the conference table and yelling

Leadership is the single biggest contributor to an organization’s culture. Leadership is about:

• Creating a compelling picture of what could be

• Winning the hearts and minds of people to want to go there

• Equipping them for the journey

Creating a compelling vision is one part of the equation. Effectively communicating it is quite another and is directly tied to employee engagement levels.

Winning the minds is not enough. You can get obedience by being a boss but an all-in commitment is a matter of the heart and requires a higher level of leadership savvy. There’s a huge difference between interest and commitment to the vision. You can’t afford a merely interested workforce or a half-baked merger resulting from conflicting cultures.

The combined statement of today’s workforce could be, “You may be my boss, but you might never be my leader.” Bosses are valuable but common. Leaders who influence with integrity are rare and achieve far superior results.

“You may be my boss, but you might never be my leader.”

The bad news is that the responsibility for winning hearts falls squarely on the shoulders of leaders. The good news is that since it does, teachable, humble leaders can write their own ticket, and design and create the culture of commitment they want.

Yet even  the workforce that’s all-in, from the heart, could still be unable to execute the vision at the necessary level due to crucial skills lacking in specific roles. All three components of this leadership definition need to be securely in place.

Mini Self-Assessment

1. How would you rate your organization’s leadership on these three components (1 being low and 5 being high)?

2. How would your workforce rate your organization’s leadership?

Leadership Definition: My Perspective Workforce Perspective
Creating a compelling picture of what could be 1 2 3 4 5 1 2 3 4 5
Winning the hearts and minds of people to want to go there 1 2 3 4 5 1 2 3 4 5
Equipping them for the journey 1 2 3 4 5 1 2 3 4 5 

Workforce Expectations of Leaders

Businessman Playing Guitar in Meeting

Why do some people follow some leaders “to hell and back,” yet won’t follow others as far as the bathroom? It’s because of expectations people have of today’s leaders as:

1. Individuals

With few exceptions, today’s workforce requires leaders to have a common set of skills and characteristics before they will passionately follow. These include your communication style, influence and coaching skills, your perceived level of integrity, caring and trustworthiness. Some leaders are great with the technical side of the job but have sub-conscious, self-sabotaging beliefs and behaviors that hinder their individual effectiveness in the people arena. The higher up the leadership ladder you are, the greater the risk that what you say and do — and how you say and do it — might cause some major, unintended consequences.

Of all the possible communication skills, the science and art of questioning coupled with deep-level listening are perhaps the two most important. If you could have only two communication skills, these alone would likely cause you to succeed in about 85 percent of the situations you face in life.

If leaders know how to ask the right question of the right person in the right format at the right time — and know how to listen with not only their ears but their eyes, their gut and with emotional intelligence — they will be much more successful in the personal and professional situations they face. Being a good communicator is not optional in today’s leadership reality.

2. Teams

Strategic planning is necessary; however, an excellent plan never executed itself. Without high-performance teams which have the right skill sets, are aligned from the heart to the mission and communicate effectively, failure to some degree is almost certain.

The expectation is that if you are leaders, you should automatically be a well-functioning team. You will be in sync and send clear, consistent messages everyone can understand and run with. Leadership teams at all levels need strong personal communication skills, meeting and planning skills, team alignment, team interaction and team decision making skills. The expectation that leadership teams have their act together starts at the executive level and runs throughout the organization.

3. Architects and Stewards of Organizational Culture and Performance

Leaders are both the architects and stewards of organizational culture. Does the company’s workforce perceive leaders as truly living examples of the culture and value set? If not, a “crying wolf” syndrome can easily develop. Leaders say they hold certain values, put them in writing and then, if the workforce perceives these same leaders violating those values, they decide their leaders don’t really believe what they claimed to believe. They’re just crying wolf.

Are your leadership teams sending the messages you intend to send? Or are they unintentionally sending mixed messages that drain costly creativity and energy away from producing real work in the real world?

Mini Self-Assessment

1. How well are you and your leadership team(s) meeting expectations in these three categories of skill and characteristics (1 being low and 5 being high)?

2. How would your workforce rank you?

Expectations of Leaders As: My Perspective Workforce Perspective
Individuals 1 2 3 4 5 1 2 3 4 5
Leadership team(s) 1 2 3 4 5 1 2 3 4 5
Stewards of culture and performance 1 2 3 4 5 1 2 3 4 5

Next week, Michael will continue this series with part two, “The Culture Continuum: Two Unsustainable Extremes.”


About the Author

Michael CliftonMichael Clifton is an exceptional business coach, facilitator, speaker and trainer. Throughout more than 30 years, 20 countries and 150 companies, he has solved people issues to improve business performance.

Michael shows executives how to stop chasing symptoms and only tweaking performance around the edges. His practical tools get to root causes, produce real transformation and immediate business results, and change people’s lives. His industry experience includes software, manufacturing, hi-tech, healthcare, retail, electronics, food service, insurance, construction, education, banking, government, financial services and more. His clients include Microsoft, Starbucks, Boeing, Merrill Lynch, Cornel University, Eddie Bauer, The World Bank and many others.

Michael brings a strong dose of compassionate reality to the business table.

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