By Pamela S. Harper
In the course of my meeting with the CEO of a five million dollar company, I asked him to describe characteristics of his company’s culture. His answer: “Oh, I haven’t put one in yet.” While this entrepreneur hadn’t consciously been shaping his company’s culture, it certainly existed. Even if no one realizes it, every business has a culture that’s been evolving since Day One.
It’s no secret that no matter what the state of the economy is, cultural issues have a substantial impact on business success. This includes everything from entering new markets, to mergers and acquisitions, to outsourcing, and even to introducing new technology. However, often times, I find that CEOs and entrepreneurs are blindsided by the impact that their culture has had on strategic commitments they’ve made.
The earlier and more consistently you evaluate your business culture, the more you can evaluate the fit of a strategy or initiative and shape your culture to get more of the business results you need, even in a turbulent economy. Use the following steps as a guide.
Step One: Stay Attuned to Both of Your Cultures
Culture consists of all of the values, beliefs, and practices that exist in your business, and is the primary force shaping key strategic decisions and how things get done.
Think of business culture as your organization’s “personality.” It has as strong an impact on strategy and operations as an individual’s personality has on how he or she uses specific strengths and weaknesses. Your business culture dictates everything from vision and mission, to level of risk tolerance, to purchasing decisions, to how many rings it takes to answer the phone. As such, culture is a huge, even controlling impact on your business success.
Many business leaders tell me about the great effort they’ve put into designing their culture. Yet despite policies, edicts, speeches, and process diagrams they tell me that things still aren’t working the way they want. This may be because they’ve focused on many aspects of what I call the “formal” culture, while many elements of the “informal” culture diligently resist their efforts to implement change.
- Formal culture reflects everything that’s official – such as the mission and values statement, the policy manual, the style of your business cards, the operating procedures, the performance review, the organizational chart, and so on. This is how leadership ideally sees the company.
- Informal culture, in contrast to the formal culture, is not written down, posted on walls, or presented in speeches. It reflects what really happens on a day in and day out basis. From who sits where at lunch to how information is shared to how important decisions get made, the informal culture is just as prominent – even more so – as the formal culture.
Overlooking or underestimating the duality of cultures in even the smallest businesses can cause unexpected problems during implementation. For example, one company decided to enter a new market that required fast turnaround of orders to their customers. While their policies and procedures (formal culture) made it seem that the organization could easily perform at this level, the reality was that the informal culture resisted moving at a faster pace and orders took significantly longer than new customers expected. The moral of the story: when formal and informal cultures clash, the informal culture wins every time.
Regularly evaluating the degree to which your formal and informal cultures are aligned puts you in a better position to more quickly and realistically assess potential opportunities to grow your business.
Step Two: Weigh Cultural Fit with Organizational Performance Needed
As you identify opportunities to grow, it’s essential to first answer a deceptively simple question: “What would my organization specifically need to do to pull this off?” At this point in strategic thinking, the question focuses more on identifying specific organizational competencies (such as the ability to turn orders around in 24 hours) rather than on individual performance. In some cases, this ability is already in place, but in other cases your organization may need to do things differently to perform at the required level.
One of the best ways to identify the specific performance that would be needed is back into the competencies that would be required. For example, “Can we currently turn orders around in 24 hours?” If the answer is “no,” the next question is “What would we need to be able to do in order to perform at that level?” The question keeps getting repeated until you can answer with confidence that your organization already has the specific competency that you need.
After you’ve identified the organizational competencies that would be required to deliver on your objectives, the other issue to consider is the extent of the fit with the organization’s formal and informal cultures. For example, while written procedures on decision-making can change overnight, the values and beliefs reflected in how people really make decisions take much longer to change.
As a rule of thumb, the bigger the change to the informal culture, the more time, energy, and resources it will take to successfully achieve your objectives.
Step Three: Adjust as Necessary to Shape Business Results
Once you’ve decided to tackle a growth opportunity, you’ll need to decide which factors in your formal and informal cultures will help you accelerate progress and which ones will block progress.
For example, an entrepreneurial organization with ambitious plans for growth had a number of formal elements in place that reinforced the value of teamwork, even extending to “teamwork” posters on the walls. However, their informal culture actually rewarded independent decision-making and a “Lone Ranger” mentality by giving praise and career advancement to individuals who stood out.
While the values of action orientation and risk taking were organizational strengths in many respects, the tendency to single out individuals for rewards and recognition provided a strong motivation to horde information and grandstand. In several respects, then, the organization’s informal values and beliefs did not support its formal values and beliefs of information sharing and teamwork.
By asking questions about how they could build cultural reinforcement for the performance their company needed, the leadership may have decided to make adjustments in both their formal and informal cultures. For instance, they might have modified the compensation system so that career advancement was tied more strongly to tangibly demonstrating teamwork than to individual contributions. They may also have looked at ways of leveraging the action oriented, competitive nature of their informal culture by giving praise and creating special celebrations when team goals are met.
When you are clear about the organizational performance you need to reinforce, you can better adjust the practices that reflect these values and beliefs.
If you set out on the path of understanding and working with your business culture, be patient. Shaping entrenched values, beliefs and practices does not happen overnight. However, the effort is well worthwhile. Addressing these issues on a consistent basis will not only minimize problems; it will prevent others form occurring in the first place, and help you maximize both top and bottom line results, regardless of the economy.
About the author: Pamela S. Harper is an internationally known business performance expert, professional speaker, and author of the book Preventing Strategic Gridlock® (Cameo Publications). Since 1992, she has helped companies of all sizes to accelerate progress toward their growth objectives.