Does Culture Really Matter? You Bet!
Check out Southwest Airlines. They managed to eek out a profit in 2001 without layoffs, while other airlines downsized and ended the year awash in red ink. And although analysts predict dismal first-quarter results for the airline industry, Southwest is likely once again to fare better than the rest.
Can we attribute their resiliency to their culture alone? Certainly not. Jim Parker, who became Southwest’s new CEO only a few months before September 11th, gets some of the credit. The company’s tradition as a lean, low-fare carrier with aggressive market strategies was also a plus.
Yet there is no doubt in our minds that Southwest’s culture provided a competitive advantage. Their unique culture fueled the high employee commitment required for successful negotiations over pay cuts, other cost-control measures, and their quick return to a full schedule of flights. It continues to earn them customer loyalty.
Southwest isn’t the only company that boasts culture as a competitive advantage. Companies as diverse as GE, Xilinx, Merck, and Charles Schwab consistently outperform their competitors over time because they have high-performance cultures that make their ambitious business strategies possible — humanly possible.
What Does a High-Performance Culture Look Like?
Corporate culture at its most basic level is the “sum of an organization’s behaviors and practices.” When we talk about culture that drives business performance, we don’t mean a great place to work (although it’s often part of the picture). Great places to work have certainly been linked to strong business results (check out www.contentedcows.com for data), but “employer of choice” efforts may fall prey to budget cuts in hard times or not deliver if they’re disconnected from “the business.” (For example, Enron demonstrated how buying employee commitment through perks doesn’t equate to a culture that drives long-term success.)
A high-performance culture that supports your organization’s success — even in hard times — needs to be deliberately shaped with:
- A clear, compelling corporate mission or purpose that informs business decisions, generates customer loyalty, ignites employee passion, and inspires discretionary effort.
- Shared organizational values that guide employee behavior and influence business practices as your organization delivers on its promises to customers, employees, and other stakeholders. Business strategies will shift — your core values should not.
- An environment that encourages individual ownership of the organization’s bottom-line results and its cultural foundation.
What Does It Take?
Communicating and Walking Your “Talk”
Does everyone understand what you stand for as an organization (your purpose), where you’re going (your strategic direction), and your “rules of the road” for getting there (your shared values)? If not, it’s unlikely that employees will be clear enough on what’s expected of them to perform as needed — and they certainly won’t care enough to give 110 percent. If you think you’ve communicated sufficiently, you’re probably wrong! Weave your purpose, values, and business goals into all written and verbal communications over and over. Tell stories that highlight specific examples of your culture at its best. Detailed, sensory-rich stories help employees translate concepts into day-to-day job behaviors.
Values are “lived” in high-performance cultures. Are your leaders modeling yours? Pay particular attention to your middle managers (they score significantly lower than senior execs in our research) on this front. Actions speak louder than words — especially during difficult times. Leaders who walk the talk earn credibility, inspire similar behavior, and help employees find meaning in what they do each day.
Reinforcing Your Culture and Driving Bottom-Line Results with Business Practices
Long-standing business practices often present barriers to high-performance cultures. More than one organization has realized sooner or later that its value of “teamwork” is being undermined by a compensation program that rewards individual achievement or a “silo mentality.” What practices need re-alignment in your organization?
- Customer service or fulfillment procedures?
- Decision-making processes?
- Supplier contracts or purchasing policies?
- Performance management systems, employee orientation, or even office design?
Evaluating and revamping your policies, procedures, and systems isn’t easy. It’s sometimes messy, but it’s worth the trouble. Southwest reinforces their culture in practically everything they do as an organization — from their website to their hiring and promotion practices to their union relations. Xilinx, a highly regarded high-tech company, offers special rewards to failed project teams as a way to encourage risk-taking and reinforce their core value of innovation.
Aligning and Inspiring Employees Ad Infinitum
Changing culture is hard work. It can’t be done in a few months — or even in a few years. Sustaining culture is hard too — as new employees come on board or dire business conditions tempt you to sacrifice culture for performance.
Your leaders need to show the way — but can’t be the sole guardians of a high-performance culture. They need to inspire employee commitment to the organization’s goals and create the kind of environment in which everyone is accountable for your way of being — your competitive advantage.
The Benefits Can Be Yours
A high-performance culture can provide:
- Stability when markets are reeling — so you can act nimbly.
- Alignment of employees’ motivators with the organization’s, maximizing contribution, and encouraging teamwork.
- A Filter to guide employee actions and decisions when you can’t write policies fast enough.
- An Exporter of what your organization stands for to customers and other stakeholders, building loyalty beyond relationships or product quality.
Southwest’s financial performance is evidence, and other companies with high-performance cultures reap real dividends every regular working day.
“Everything else can fall away; the industry and products and circumstances may change; but an abiding culture can serve as the custodian of your dreams for your company team, and for the customers on whose faith you build your house of business. It is an unchanging constant . . .”
— David S. Pottruck and Terry Pearce
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