When you are hiring a new person, or promoting one, that individual must have the personal characteristics to help the company achieve its goals. To be successful, the person under consideration must also be a good fit with your organization’s culture. In fact, knowing your culture, being able to describe it, is what enables your evaluation of whether an individual has the “right” qualities to succeed in your business.
When skillfully managed, culture can be a powerful and enduring source of competitive advantage. Can you successfully hire or promote someone without thoroughly understanding your culture? How much of your company’s success is related to your culture? How can its impact be measured?
Corporate culture is defined by the beliefs and behaviors that determine how management and employees collaborate to implement strategy and execute the company’s business transactions. Culture binds the organization together, personifies its competitive advantage and is the hardest element for competitors to copy. It can have a powerful impact on performance – think Apple or Southwest Airlines.
James Heskett of Harvard Business School states that:
“Culture can account for up to half of the difference in operating profit between two organizations in the same business.”
But a Bain & Company survey of over 400 senior executives from large, global organizations found that fewer than one in four believe that culture is a driver of performance at their company. The majority felt that their organization’s culture was largely disconnected from “what it takes to win.”
Why the disconnect? Senior executives tend to perceive that corporate culture is hard to measure and even harder to change. As a result, many choose not to invest in it, despite all the evidence validating culture as a driver of sustained higher performance.
Ask numerous leadership teams what their highest priority business goals are and you will hear responses like “increase revenue by 20 percent” or “reduce operating costs by 15 percent.” Ask the same question about their highest priority cultural goals and you’ll hear a list of values, but few specific behaviors and no numbers.
Research indicates that high-performing cultures, those that consistently produce higher results, are characterized by three abilities:
- The ability to align purpose, vision, strategy, and shared employee behaviors;
- The ability to execute, moving the organization in the agreed direction with minimal resistance;
- The ability to renew, continuously improving and creating value at a pace that exceeds competitors.
Companies that use this definition of culture identify the essential aspects of these abilities, and the right metrics to measure those specifics. They discover that culture can be measured and managed just as rigorously as business performance, and in fact, often drives that performance.
How many of the 3 abilities exist within your organization?
How can you increase the impact of these abilities on your company’s performance?
