Culture. It can turn milk into yogurt, sand into a pearl and even a street urchin into a fair lady.
So just how does your firm’s culture affect your organization, your profitability, your success? The simple answer: more than you know.
Culture, like brand, is a word frequently misunderstood. Sometimes it gets discounted as a touchy-feely component of business. But research says the opposite. Culture can be one of the most important drivers for sustainable success.
Studies conducted by a variety of researchers and organizations—among them the renowned leadership researchers Jim Kouzes and Barry Posner—have found a positive culture has a positive impact on employee engagement, which has a positive effect on the bottom line. For example, different studies have shown highly engaged employees try 57% harder, perform 20% better and are 87% less likely to leave. As far back as 1992, studies have linked organizational culture with employee performance.
So yes, a company’s culture—a shared set of values, the glue that binds co-workers together, “the way we do things”— can drive business results.
David Friedman, in his book Fundamentally Different, says culture can empower your employees to perform in sync, like members of a finely tuned rowing team “speeding relentlessly to their goal.” A negative company culture, he writes, can render them a “rowing team where the timing of the oarsmen is out of sync, creating unnecessary choppiness and slowing progress toward the goal.”
Friedman co-founded RSI, a small, family-owned agency he built into what he calls “one of the largest and most successful independently owned employee benefits firms in the country.” From 1993 to 2008, the firm grew an average of 20% a year and had a 98% success rate in hiring, a turnover rate below 10% and a customer satisfaction rate above 97%. In 2008, RSI became part of Arthur J. Gallagher & Co. Friedman attributes RSI’s success to the organizational culture he built.
Building an organizational culture is not easy, he says, but it is doable. It begins with defining your core basics or values or, as Friedman calls them, your fundamentals. In Fundamentally Different, he writes of how he was inspired by The Ritz-Carlton. (Well, who isn’t?) He discovered a secret to their success is the “Ritz-Carlton
Basics.” These are 20 behaviors taught to every staffer and imbedded in the day-to-day work of each Ritz-Carlton employee. The Basic of the Day is reviewed and explained at the start of each shift. Here are three of them:
- Each employee will continuously identify defects throughout the hotel.
- It is the responsibility of each employee to create a work environment of teamwork.
- Smile—we are on stage. Always maintain positive eye contact. Use the proper vocabulary with our guests.
Want to see this in action? The next time you are in a Ritz-Carlton, ask an employee, “What is today’s Basic?” They will be able to tell you. Now that’s culture.
In Fundamentally Different, Friedman shares the 30 Fundamentals that created his company’s culture—from Fundamental No. 1, “Do what’s best for the client,” to Fundamental No. 30, “Be quick to ask and slow to judge.”
There are examples of the types of behaviors that demonstrate the Fundamentals in action. Some seem rooted in common sense (although we know there is nothing common about common sense), such as “Communicate to be Understood.” Some are a bit more obtuse, such as Fundamental No. 18: Listen generously.
At Zappos, the “Happiness Culture” is founded on 10 core values. Southwest Airlines uses unique phraseology (a warrior spirit, a servant’s heart and a fun “luving” attitude) to instill its values and build its “fun” culture.
Simply stating values is only a piece of the equation. “One of the hallmarks of a fabulously successful company is an aligned corporate culture,” Friedman writes. This means there is a high degree of consistency in stated values and people’s behavior. He identifies eight steps needed to institutionalize values: defining, selecting, integrating, making visible, using ritual, coaching, leading by example and creating accountability.
If you’re interested in learning more details about how to build a high-performance culture, check out our webcast at 2 p.m. ET Nov. 17, when Friedman discusses the difference between a “good culture “and a “high-performance culture.”
Don’t forget to bring a Yoplait and grab your string of pearls!