Today’s highly competitive and global marketplace requires companies to be nimble and focused on achieving high level of Operational Excellence. This is true for companies of all sizes and critically important for companies growing through Mergers and Acquisitions. Many wonder what separates great companies from companies from others and in most cases it is company culture ….. Strategic Leaders must engineer the culture through effective Change Management as strategy execution is driven by people!
Research shows that companies with well engineered company cultures are able to achieve 2 to 3X improvement in top line sales, profitability (EBITDA), have high employee retention & morale.
Company Culture
In short it is your companies identity. Its your current “standard work” which may not be standard or being followed either. Company culture is more than just people and their actions. Leaders must focus on People, Processes and Tools which make up the culture. Successful strategies such as accelerated Business Development, Operational Excellence, and others require engineering of company culture for them to be rapidly adopted and be sustainable.
Engineering Company Culture
Here are the basic steps Leaders must take to ensure successful development of desired cultural transformation.
- Acknowledging that current company culture not only has direct influence on your business but is able to be read through major KPI’s including but not limited to impact on end customers
- Next step is to perform a detailed assessment. Understanding what type of culture currently exists, what are the primary gaps and the reasons for changing it
- Most company cultures fall into 4 basic categories. Here is a great read from Kim S. Cameron and Robert E. Quinn’s. OCAI does a fantastic job of describing these very well, the following content is from their website
- Clan Culture: This working environment is a friendly one. People have a lot in common, and it’s similar to a large family. The leaders or the executives are seen as mentors or maybe even as father figures. The organization is held together by loyalty and tradition. There is great involvement. The organization emphasizes long-term Human Resource development and bonds colleagues by morals. Success is defined within the framework of addressing the needs of the clients and caring for the people. The organization promotes teamwork, participation, and consensus.
- Leader Type: facilitator, mentor, team builder
Value Drivers: Commitment, communication, development
Theory of Effectiveness: Human Resource development and participation are effective
Quality Improvement Strategy: Empowerment, team building, employee involvement, Human Resource development, open communication - Adhocracy Culture: This is a dynamic and creative working environment. Employees take risks. Leaders are seen as innovators and risk takers. Experiments and innovation are the bonding materials within the organization. Prominence is emphasized. The long-term goal is to grow and create new resources. The availability of new products or services is seen as success. The organization promotes individual initiative and freedom.
- Leader Type: Innovator, entrepreneur, visionary
Value Drivers: Innovative outputs, transformation, agility
Theory of Effectiveness: Innovativeness, vision and new resources are effective
Quality Improvement Strategy: Surprise and delight, creating new standards, anticipating needs, continuous improvement, finding creative solutions - Market Culture: This is a results-based organization that emphasizes finishing work and getting things done. People are competitive and focused on goals. Leaders are hard drivers, producers, and rivals at the same time. They are tough and have high expectations. The emphasis on winning keeps the organization together. Reputation and success are the most important. Long-term focus is on rival activities and reaching goals. Market penetration and stock are the definitions of success. Competitive prices and market leadership are important. The organizational style is based on competition.
- Leader Type: Hard driver, competitor, producer
Value Drivers: Market share, goal achievement, profitability
Theory of Effectiveness: Aggressively competing and customer focus are effective
Quality Improvement Strategy: Measuring client preferences, improving productivity, creating external partnerships, enhancing competiveness, involving customers and suppliers - Hierarchy Culture: This is a formalized and structured work environment. Procedures decide what people do. Leaders are proud of their efficiency-based coordination and organization. Keeping the organization functioning smoothly is most crucial. Formal rules and policy keep the organization together. The long-term goals are stability and results, paired with efficient and smooth execution of tasks. Trustful delivery, smooth planning, and low costs define success. The personnel management has to guarantee work and predictability.
- Leader Type: Coordinator, monitor, organizer
Value Drivers: Efficiency, timeliness, consistency, and uniformity
Theory of Effectiveness: Control and efficiency with capable processes are effective
Quality Improvement Strategy: Error detection, measurement, process control, systematic problem solving, quality tools
Next step is to identify which desired culture types is best aligned with companies vision, mission and values.
Last step is where is heavy lifting begins, implementing the cultural change. Effective Change Management strategies must be utilized to ensure high employee morale and engagement.
The Culture Gene is another one of my favorite reads which highlights six powerful tools that leaders have available to them “to teach their organizations how to perceive, think, feel, and behave based on their own conscious and unconscious convictions.” In Edgar Schein’s terms, these mechanisms “are visible artifacts of the emerging culture that directly create what would typically be called the ‘climate’ of the organization.”
Strategic Leaders can follow the following roadmap to ensure effective Change Management:
How you appraise, reward and recognize:
You can demonstrate to your team – and deepen your own understanding of – what you as a leader most value through the way you approach performance appraisals, rewards and recognition. Every behavior that you reward or penalize will reinforce and more deeply embed what you value and prioritize, so approach this with clarity and be intentional. A powerful way of ensuring that the company values and desired behaviors are understood and adopted is through creating appraisal, reward, and recognition systems, which deliberately align with these values and behaviors.
Lead from the front and remember the trickle-down effect: if you do not practice what you preach, the message you are sending will be inconsistent. Make sure that the way you and your leadership team show up, lead and work is consistent with the appraisal, reward, and recognition system you put in place.
How you hire, promote, and manage poor performance
How you select and hire new members of the team provides a powerful insight into whether you are embodying and really living the company’s values or not. Each new hire will inevitably be assessed by your team – often quickly. They will know instinctively whether you’ve hired someone who aligns with the company’s values or not. Every choice you make around promoting or firing either dilutes or reinforces the company values. The approach you take to layoffs or redundancies also reveals a lot – to you and your team – about your most deeply held values and the role and importance of your people to the company.
What you consistently pay attention to, measure and control?
The areas that receive systematic attention over the longer term – the things you recognize or even simply notice and acknowledge – reflect what you prioritize, value and aim to reinforce the company’s culture. If you measure something it’s important to you and the team will respond to that measurement by delivering against it. By the same token, if you don’t measure something it’s hard to deliver against it and your team notice.
How you invest or allocate funds in the business? The way budgets are created will reflect your beliefs of what the company’s competencies are and what its appetite for risk is (as well as your own, of course!). These underlying beliefs and narratives are also demonstrated in the goals you and the team set and the strategies you put in place to achieve them.
How you coach, teach and educate?
What you teach, educate, coach and train your people on matters. The company values are transmitted through what you share, promote and embed through education.
How you teach, coach and educate – the medium or methodology you use – also matters. Bear in mind that rehearsed or staged communication is often less effective than informal messaging when it comes to communicating the company values.
The timing matters, too. Think through when the most suitable and opportune time is to provide each particular kind of education to your team. When you educate, coach and teach says a lot about the value you and the company place on developing your people. The timing and context will emphasize certain values over others – do you squeeze workshops into a lunch break during a particularly busy period in the company? Do you make people get coaching in their own time? Do you take people away from their work and do an offsite? Each choice will reflect and emphasize certain values over others.
How you react to failure, emergencies, critical issues, and other company crises?
Your leadership style
The way you respond to critical incidents, issues, failures, unpredictable changes and emergencies will reveal a lot about your underlying values, attitude and perspective. If you behavior changes in stressful situations your team will notice.
Adversity can be an opportunity to more deeply embed a work ethic, desired attitude and sense of unity in the team. Crises, whether real or perceived, heighten anxiety and people’s emotional involvement. Without deliberate, thoughtful leadership, entire teams and companies can go into survival fight-flight-freeze mode. Yet challenging circumstances bring with them an increased intensity of learning, because human beings naturally want to reduce anxiety, and will learn quickly to do that which reduces their anxiety. It is possible to harness this willingness to learn in crisis situations and create a stronger, more unified and cohesive team.
The author, Ketan Deshpande, principal consultant at Ambit Inc., lives in Minnesota and writes about a variety of topics in his blog such as global economy, market and industry trends, successful strategies for businesses, and others. Leveraging his global strategic leadership experience from the manufacturing industry to offer insights in to how businesses can meet the sustainable growth and profitability goals.
Ketan Deshpande is also passionate about sustainability and renewable energy; he curates and shares latest updates in his blog posts. Recently the Southern Minnesota Municipal Power Agency(SMMPA) of Litchfield, Minnesota, endorsed Ketan Deshpande for an energy conservation project.
Excellent work, so important for leaders to play the right role.