Culture shaping drives top and bottom line results

A lot of great stuff has been written about the value of company culture, for instance here, here, here and here (this last article written by one of my personal heroes, Josh Bersin).

However, fewer people talk about the incredible impact a well-defined and well-instituted culture can have on a company's financial results -- an impact on both the top line (revenues) and the bottom line (net income). Of course, in order to achieve these results, every employee at the company needs to be clear on what the culture is and how they must act as stewards. We need to engage employees deliberately and reinforce frequently.

The Bottom Line: A well-defined company culture helps frame priorities; it aligns people; it speeds time to decisions and makes you more efficient.

Like many companies, Nasdaq is far-flung, with employees in many places around the globe and in nearly every time zone. In such a situation, to quote Peter Drucker, “Only three things happen naturally ... friction, confusion, and underperformance. Everything else requires leadership."

Cognizant of this, we recently refreshed our values, the result of which you can see in the graphic up top. The refreshed values were one part of a larger effort to more deliberately shape our culture. Our goals in this were to help align people to our business strategy and to reinforce a culture that makes Nasdaq a great place to work. When everyone is on the same page, they work together more smoothly, come to solid conclusions more swiftly, and execute more efficiently.

The first value, by design, is "Fuel Client Success." This one principle has really helped focus people's attention on our single top priority: to understand exactly what will make our clients successful, and point all our efforts at that. I have been in many meetings where someone will ask a version of the following:

So is that approach just for our convenience? How will that help the client?

This centers debate on the right topic, and elevates thinking beyond the limitations of the current state and/or internal politics. A laser-like client focus makes efficient use of employee time, and that makes the organization more productive. Not to mention exceeding the client's expectations, which is also generally good for business!

Even for employees whose primary function is internal (e.g., Accounting, IT, Talent), a focus on the needs of the (internal) client helps the organization cut bureaucracy and run better ... and that's good for the bottom line, too.

Another of Nasdaq's refreshed values is "Act Like An Owner." Most employees literally are owners, with company stock as part of their compensation package. But it's only when they think and act like owners of the company that they take initiative, volunteer for things that aren't "their job", and take great care with the company's resources. Recently one of my direct reports said to me:

I know company policy would let me fly business class on that trip, but it's not a long flight and it's during the day. If I flew economy, could we use the savings for something else for our group?

The answer of course was yes -- we can always use 'extra' resources to invest in something else, or just make the savings! But what a great example of acting like an owner.

Another example: our Talent Acquisition team has been acting like an owner and took initiative to improve their processes and gain efficiencies by moving more of the recruiting process online and streamlining approvals. The TA team realized that, while a number of people need to know that we're making a specific hire, they don't all need to be approvers in the system. Fewer approvers means fewer opportunities for the hiring process to get hung up when someone is out of office, and a better candidate experience. Moving more of the process online means you can place required support roles anywhere in the world, gaining efficiencies there, too.

This kind of ownership thinking is happening across the company: volunteering to make things better, finding efficiencies, cutting costs, and saving us time. I haven't yet totalled the cumulative effect of all these grassroots decisions across all of our business units, but I assure you: it's worth a lot. And every dollar we save in cost means an extra dollar of revenue we get to keep, i.e., net income. That's the bottom line.

The Top Line: A well-defined company culture helps you woo customers and earn more of their business.

If you're going to talk about culture in an impactful way with customers, it needs to be genuine and authentic. That's why I believe culture-shaping efforts need to be underway for enough time that you've actually seen internal results. Then, when you speak with customers about why you're a great company to do business with, you have some powerful examples.

Among the several lines of business that comprise Nasdaq, one of them is helping companies capitalize through an initial public offering (IPO). It's no secret that exciting new companies bursting with potential have choices re: whom to partner with in their IPO adventure. Why choose Nasdaq? Among a myriad of reasons, one of them is culture. We include in our pitch some factual information about our values, explaining how Nasdaq truly is a company that Fuels Client Success; how we role model collaboration as we Play As a Team; and how we have a well-deserved reputation as a company that Leads with Integrity.

Over the course of 2019, Nasdaq was the leading U.S. exchange by number of IPOs and proceeds raised, including not only 185 IPOs but also 15 companies that switched over from their former exchange. I do not attribute all this to culture. But I know of specific cases where Nasdaq's values and culture helped attract the IPO, or attracted the switch, because that company felt we had something important in common, and they trusted us.

Given the choice, I propose that

most customers (whether businesses or consumers) prefer to work with a company that stands for something; whose values are clear; where there's something to believe in.

In this way, a well-defined and well-instituted culture is very good for the top line.

How to shape and promote a well-defined culture.

Surely every company would like to reap these bottom-line and top-line benefits. But how do you earn them?

First, you have to know what your organization's culture actually is. I don't mean the official, glossy brochure; I mean what it really feels like to work there. What really matters there? How do you really get things done? If you don't start with reality, all your attempts at culture shaping will be perceived as inauthentic and manipulative, and they will fail.

If you have a skilled Marketing team, consider working together to define your "brand essence", and some powerful descriptors. How would you truthfully describe your culture to new hires? What really makes existing employees stick around? And what is the company's aspirational culture?

If you want to be fancy, you can use this information to define your Employer Value Proposition. But I recommend you simply try to capture your organization's aspirational culture in terms of short, action-oriented phrases that actually tell people what do to, like "Play As a Team." And these cultural imperatives can't be too far from the current reality, or your smart employees just won't buy it. And I suspect most of your employees are smart.

From there, it's important to build a carefully crafted change strategy to shape the culture, moving gradually from the gritty reality of today to the grand aspirations of tomorrow.

• Go get data. Lots of it. An annual engagement survey is not enough! Go get voluntary turnover data and track down the primary reasons why people leave; find out which sales teams are exceeding quota and which ones miss (and why); measure your employer brand in the market; measure your candidate acceptance rate (and specifics on why candidates accept or decline); measure the new hire experience and what they find easy or frustrating; run a survey to find out how easy or hard it is to get things done at your company. This data is your gold mine to determine which aspects of your desired culture are already working (keep them!) and which areas need to be shaped.
• Who will be your senior sponsors? I certainly hope your CEO is one of them. Share your culture roadmap, get their input, and ask for their vocal support in specific ways.
• Can you assemble a cross-functional action coalition? Don't just go for execs; look for high-potential mid-level and junior people who would benefit from wider exposure, and who have a hunger to contribute. You want volunteers (not voluntolds). Get their collective wisdom, and ask how they envision culture-shaping could work in their office, business unit, or geography. And ask for their commitment to take action and be ambassadors!
• Engage, engage, and engage some more. Clearly define the expectations of the "new" or refreshed culture, and get them out there time and again. Ask your senior leaders to include a culture session in every Town Hall. Put articles on your company intranet. Make a logo and ship out posters and stickers and caps and shoelaces with it. Take over the screen saver real estate on company laptops. Train your managers and senior leaders; train your employees. Craft questions you will ask all candidates about how they have demonstrated particular cultural attributes in the past. Make the culture expectations part of the new hire onboarding, part of your recognition program(s) and part of the performance review process. Include your culture in your sales pitch, your annual proxy, and your investor conferences. Put it literally everywhere.
• Get feedback, formally and informally. In my experience, the initial culture-shaping efforts never go perfectly as planned. You will face resistance, and some of it you will deserve because you are not omniscient and there will be missteps. Run an anonymous culture survey and ask about what's working and what's not. Ask employees and managers for success stories and small wins. Ask your cross-functional culture team about how employees are really reacting in their department. Speak with customers, speak with execs, speak with your Board.
• Use that feedback to refine your culture shaping. Take a deep breath, and jump once more into the fray. These culture-shaping efforts are cumulative, and if you are humble and if you listen well, chances are you will accomplish great things.

The greatest gift you can give employees is to help them understand -- as simply as possible -- how to be successful in your organization.

And the more you can align employees to a shared set of values, norms, behaviors, policies, processes and goals, the more easily they will be able to work smoothly together to get important things done. Over time, these efforts at shaping and sharpening culture will deliver massive ROI both in terms of internal efficiencies that help the bottom line, as well as external support for sales that help the top line.

I predict that, if you are successful in this, your organization will thrive for many years to come, even if no one can precisely pinpoint why. But you will know ... and that satisfaction will be your secret gift to yourself.