Creating the Culture of Success

What makes one company successful, and another fail ? Is it the management, the people, the business plan ? Far too often overlooked is the motivation and the culture of performance. I have had the privilege of working for major multinational companies, and small startups. I have also advised numerous companies in their strategy and capital raising plans. The only consistent factor that I have found between those that succeed and those that struggle is the culture of motivation.

Some of the people you work with are self-starters. They will work hard, whether they are rewarded and recognized for it or not. They are wired in a way that no matter what happens they are going to get things done. Some of the people that work in every organization are the exact opposite. For whatever reason, they don’t want to, or are not able to perform their jobs well. Each of these two groups will generally make up 10-20% of any organization. What I have found, is that the vast majority of the population of any company will perform well, or poorly based entirely on the culture of the company. This may sound obvious, but so many people seem to miss this point. Focusing on the promotion of top talent, and the firing of poor performers, while laudable, ignores the remainder of the staff who make up the majority of the workers, and as such, the majority of the work that is getting done is a potentially fatal mistake for a company to make.

Most companies have a way to recognize successful people. This may be informal, or a formal performance incentive program. This is the fun part, rewarding people that do well. Some companies, notably GE who were pioneers in this area, have gone to great lengths to weed out the poor performers, coming up with elaborate forced ranking systems which cause the lowest percentage of performers to be released. This part isn’t very much fun, but it can be an effective “stick” to add to the “carrot” of bonuses, promotions, stock options and rewards.

There are a couple of things that can make a fundamental difference to the performance of the overall team. There is nothing more effective than taking a poor performer and turning them into a top performer. This can have a monumental impact on the overall morale and motivation of a team. The trick is figuring out who is not performing for reasons that can be fixed. Are they assigned to the wrong job task? Is there a family matter you can give them some time to sort out? Is it just a question of being undermotivated and needing recognition? Not all poor performers are willing or capable to turn things around. Even the best managers can take on only one or two such projects per years as they require a real commitment to understand what is impacting the person and how they can be helped to turn things around. There is also a need to determine who wants to improve, and who just doesn’t care. The first people can be catalysts for fundamental change in the company, the latter need to go.

Another thing that too many companies make mistakes on is tailoring all rewards to results, and not to effort, proactiveness, team work and a positive attitude. Too often results are actually a function of things outside of the employees direct control, and a badly built incentive scheme can be more damaging than not having one at all. Spend the time to ask questions like “what type of work environment and team dynamic do I want to incentivize”, not just what type of results do I want to achieve.

Being honest with your team is also crucial. There is nothing more demotivating than knowing something is wrong with a business, but not getting it straight from the management. Tell your people what the challenges being faced are and solicit their ideas and support on how to face the challenges. There are so many examples of where a company saving idea came from an unexpected source, and even if you don’t get a game changing idea, you will have people that respect you for being honest, and will work harder to help get the company through.

A motivated team can make a company successful in even dreadful market conditions, and a demotivated team can destroy even the best business plan.

In 2008/9, when the oil price dropped unexpectedly and dramatically, I was running an oilfield services company which by any normal metric was bankrupt. Against the wishes of our main investors, I pulled all of the management and a few key employees together for a two day meeting. I laid it out straight. “By any rational financial measure, we are bankrupt. But if we keep our heads down, work hard, and never admit to anyone that we are bankrupt, maybe no one will notice.” The frank discussion and the results of that meeting pulled everyone together into an even tighter knit team. Six months later, our investors came to us and told us that we had outperformed the market so much and they were so impressed with our performance, that they wanted to help us take the company public, and we entered a new phase of growth and prosperity at the company. This was only possible because everyone in that room over the two days believed that as a team, if everyone pulled in the same direction we would get through the crisis.

Reward your top performers, certainly. This is a good way to set the example, but the ultimate goal needs to be to turn the whole company into a culture where everyone wants to contribute, and everyone is motivated to do so. Focus on building a culture where everyone wants to perform and your people will take care of the company’s success.

Warren Levy August 2018