The Most Important Thing

Peter Drucker famously said that "Culture eats strategy for breakfast." You can have the best strategy in place and the smartest people on the planet creating organizational strategy for your company but if you do not have the right culture in place, your strategy means nothing! Culture is the most important thing you can focus on because culture affects everything else we do as an organization.

So, what exactly is organizational culture? Simply put, your culture is defined by how your people act and behave on a daily basis regardless of what is written in your policy manual or in the employee handbook. Consider the tale of two companies. Company "A" has, as their core values, Integrity, Respect, Accountability, and Excellence. Company "B" has nearly identical values of Integrity, Respect, Communication, and Excellence. Company "A" is a highly respected manufacturing company that has found its way onto the Forbes "Most Admired Companies" list since their inception in 2015. Company "B", however, was Enron (note the past tense). If the name Enron rings a bell, it should. They were embroiled in one of the biggest controversies of the 20th century. They were an energy company that found a way to break every one of their core values. Their accounting firm doctored their books to make it look like they were turning a generous profit when they were not. This was an attempt to attract investors to their company and it worked like a charm. When the truth came out, those investors lost billions. So much for Integrity. Strike One!

They created rolling energy brown-outs in California so they could artificially drive up the cost of their product. One of their board members reportedly joked during a board meeting, "What's the difference between the Titanic and California? When the Titanic went down, at least they still had their lights on." So much for Respect. Strike Two!

Obviously, Enron kept their stakeholders in the dark as to what was going on. They knew that if it ever got out, they were going to jail. So much for Communication. Strike Three!

And for the fourth value - Excellence? Well, I think the failures in the first three eliminate any chance for that, right?

To Enron, those core values were just words engraved on a plaque in their lobby. They obviously did not live by those values. So why, then, is culture so important? Like I said at the beginning of this article, culture drives everything else we do as an organization. For example, culture drives:

1. Engagement.

Studies show that your organizational culture has a huge impact on employee engagement and engagement has a huge impact on the bottom line profitability of your company. The Corporate Executive Board (CEB) did a study several years ago and found that, for every 1% decline in employee engagement, companies lost about $6.5MM for every $1BB in revenue. You don't have to be a math whiz to see the impact engagement has on profitability. In another study, it was found that companies that have a strong, positive culture score 72% higher in engagement scores than those that do not. Culture drives bottom-line profitability!

2. Recruiting & Retention

If you are a recruiter or have recruiting as part of your job description, you know the difficulty in finding qualified applicants in today's market. Forget qualified, it's hard to find a warm body these days. Open positions go unfilled for months. Restaurants are forced to close their dining room and/or reduce operational hours due to the lack of workforce. Manufacturing facilities are forced to work tons of overtime, which leads to burnout among their current workforce. All things being equal, recruiting is hard. But when your organization has a poor culture and your people become more of a roadblock rather than a billboard for your company, filling openings becomes almost impossible. Your culture heavily impacts your ability to staff your operation. Competitive advantage takes on a whole new meaning in this market. And it's not all about who can pay more or have the best benefits anymore. People will accept less pay for a better culture where the know they will be treated right.

3. Brand

Culture affects the way people view your brand. Like it or not, we live in an era where who we are as an organization is more important for many than what we produce or how good a product we offer. The generations coming up look at things like environmental sustainability and social justice markers. Your culture, now, more than ever, determines your fate as an organization.

So, with culture being so important, how can YOU shape your company's culture to ensure you stay relevant into the future?

1. Set clear expectations about the behavior you expect to see on a daily basis. Post your company's core values everywhere where employees can see them. If they don't know what they are (and trust me, they probably don't), they won't be able to follow them. Talk about them at every meeting and reward those who model the behavior in line with those values.
2. Hold everyone accountable to those expectations, starting with yourself. No exceptions! In a Harvard Business Review article, Steve Gruenert and Todd Whitaker stated that “The culture of any organization is shaped by the worst behavior the leader is willing to tolerate.” I can't tell you how many times I've spoken with leaders who tell me that one of their employees is really a huge jerk and everyone hates them but they are the top sales person so the leader overlooks the bad behavior. This attitude is a culture crusher. Your people see the double standard and will mimic the bad behavior they see in that top sales person, thus destroying any chance of a positive culture.
3. Look in the mirror every day and ask yourself, "What do I want this company to be?" Constant self-examination and re-evaluation is critical if you are going to stay relevant into the future. Your environment is ever-changing and you need to continually look to find new ways of living your values.

Don't leave your company's culture to develop by chance. In the absence of true leadership, employees will seek to implant their own vision of what the culture should be. That could be good or bad but it won't be what you want it to be. Culture is too important to be relagated to happenstance. Take charge today!