9: Plan For Culture Maintenance
(EN: This introductory section of this chapter is a hodgepodge, which doesn't seem related to the topic. Scrolling ahead, the author eventually gets around to the point.)
A common stereotype that is used to dismiss culture and values is that they are not practical for large companies - they are "crazy things" that are only possible in small start-ups. But the author has worked with large and established firms, such as Southwest Airlines and Doubletree hotels, that are enormous operations that have been in business for decades - and have still managed to maintain a productive and supportive culture. And given that their culture results in loyal customers and devoted employees, isn't it a bit crazy to dismiss culture as "crazy"?
Leaders of values-driven companies recognize that culture is an ongoing task. You cannot announce your values and expect people to comply, nor can you have a gala event and then walk away. It must be part of ongoing operations, and a priority to be constantly vigilant in preserving and promoting a productive corporate culture.
Competition is ongoing, and a firm that stands still will be left in the dust. Your competitors are constantly seeking ways to improve their customer loyalty, and you must work as hard or harder. The same can be said of human resources: your competitors have an eye on your best people, those who are most responsible for achieving positive results.
Moreover, a values-based culture is not a luxury to be funded when profits are up: they are the defense a company has when times are down. During the recent recession, firms that have a strong culture have not only survived, but grown, winning over the customers and key employees from firms that set aside their values to pursue initiatives that, obviously, turned out to be less important.
It's also important for firms that recognize the need for a culture change to understand that it will not happen overnight - it will take time to develop, and patience to continue to work toward its achievement. Even when there are immediate gains in customer satisfaction, it will take time for them to be reflected in financial performance. Building a values-based customer is a long-term strategy, not a short-term tactic.
It will also take considerable enthusiasm to withstand the opposition by naysayers. They have tradition on their side, and many short-term metrics can be trotted out to convince executives and investors who are greedy for short-term profits that culture isn't worth the investment. Again, it will take time to gather the evidence that values drive performance.
It's also important to take time to identify the right values. While working in a "fun" environment seems like something that every company would want, it doesn't result in significant benefits to a lab that analyzes medical tests. It's likely that accuracy and honesty are far more important than fun in such an environment, and the values should be prioritized accordingly.
There is no shortcut to defining a productive culture, and no template that can be adopted and imitated: you must determine the values that drive your business, as they are different to those values that drive other businesses, even close competitors in the same industry or product category. There is no shortcut to defining the qualities of an A-player, fostering those qualities among your existing employees, and hiring the right kind of people into the organization as you gently shuffle off the misfits.
The author considers Loma Linda University Medical Center to be her star client, and the gold standard for values implementation and maintenance. Their leadership grasped the importance of values right away, got behind the process enthusiastically, and drastically improved their performance as a result. They even created a permanent "mission and culture" department that has an ongoing responsibility to monitor and encourage values within the organization.
Continuous Discipline For Continuous Improvement
Culture is not once-and-done, but requires constant support. The author advocates an annual review of the values blueprint as part of the formal planning process, which begins by evaluating the practices of each department and work group and then rolling them up to higher levels. The team should consider the degree to which the desired values have resulted in specific behavior, and be attentive to instances in which an action was contrary to these values, as well as identifying areas in which different values seem to be emerging.
While evaluating the behavior of employees is important, it is even more critical to take into account executive behavior. The directives that have been given and initiatives undertaken at the level of management indicate the behavior that is being encouraged of employees - it is unfair and unproductive to criticize people for following where they are being led.
In addition to seeking out problems to solve, also seek out achievements that can be celebrated. Positive reinforcement is a highly effective way to reinforce the values the company wishes to instill.
In terms of time, the author asserts that it shouldn't take more than a few weeks to gather the information from departments and workgroups and compare them to the values blueprint.
It's also worthwhile to do this as part of the budgeting process so that any initiatives can be funded. To investigate problems at a time when you have no hope of getting the budget to solve them is practically pointless.
Measure The Impact of Values
Monitoring the degree to which the values you wish to promote have taken hold is "a good first step." The author provides a list of sample items that can be considered, but the metrics should be customized and prioritized to suit your organization:
- Employees have memorized the core values
- Decisions and behaviors reflect the values
- Behavioral interviewing is used in hiring
- Values factor into performance reviews and appraisals
- Team-based interviews are conducted for hiring and promotion
- All new employees are provided orientation to values
- Firing decisions are made based on values
- Recognitions and rewards are based on values
Measure the Implementation of Values
A separate list is provided that considers actions a firm should take to promote values, which is related in that taking these actions should cause the values to spread, but it measures activities rather than outcomes:
- An organizational dashboard has been created and is available (and comprehensible) to all employees
- Each workgroup has dashboard metrics and scorecards
- Each workgroup has assigned a values champion
- A rewards program has been created for individuals whose actions impact the metrics
- There is a system for communicating ideas upward
- There is a regular program of downstream communication related to values
- The values have been translated into behaviors that correlate to financial performance
- Compensation and rewards systems have been tied to dashboard metrics
- There are celebrations for the achievement of dashboard metrics
Values and Compensation
Reward systems are critical to culture development, because you get what you pay for. Said another way, employees work to earn income, and any aspect of their job that impacts their income is made a priority over any aspect that does not - and the things that pay immediate rewards are prioritized over those whose reward is delayed. As such, it is important to gauge actions that impact employee compensation, such as:
- Performance expectations are aligned to values metrics
- Workgroups and individuals are recognized for meeting standards and financially rewarded for exceeding them
- Appraisals include input from peers, subordinates, and the person who is being appraised
- Behavior-based goals are set with the employee's input
- Salary, bonus, and incentive decisions are based on values metrics
- Promotions and career decisions are based on values metrics
- Variable pay plans are based on objective results
- The benefits package is fair and high-quality
- Nontraditional benefits are perceived as rewards rather than entitlements
Executives are Held to Values
An annual review of executive participation and compliance to the values program is particularly important to avoid the perception that there is a double-standard pertaining to values.
- Senior leaders should be active participants in the values team
- Senior leaders should be evaluated by peers and subordinates
- The compensation and rewards of senior leaders are tied to core values
- All messaging from senior leaders communicate and conform to key values
- Senior leaders are held to the same standard of values as front-line employees
- The board holds senior leaders accountable for living the values
Contractors, Consultants, and Vendors
As your values permeate your organization, they must also radiate outwards to the companies you hire to assist you. It is obvious in the case of any third party that has direct contact with your customers (if you outsource technical support, the people who answer the phones are representing your brand to the customers), but it is also implicit for firms that interact with your employees to play by the same rules.
Actual malfeasance or dishonesty is reason enough to reconsider your relationship with a vendor, but less extreme behaviors that are contrary to your values are also worth consideration and negotiation. Their service may be fine and their price fair, but if they are not a match to your culture and values, then they are not a good fit.
(EN: The author doesn't make the connection, but this is entirely similar to the approach to hiring and retaining employees. You should expect them to have the skills and have reasonable salary demands, but they have to be a match for your values. If they are unwilling to live your values, they must be coached to improve or dismissed. If they live your values well, then you should be willing to pay them a premium for doing so.)
As such, an annual review of all third-party suppliers should be implemented in every department to identify those who may be sabotaging your own commitment to values, even inadvertently.
Some factors to consider:
- Do third parties understand your values and associated behaviors?
- Are their own corporate values a match to ours?
- Are they willing to make changes to better align their values?
- Do they consistently demonstrate those behaviors in their interaction with employees and customers?
- Does the economic benefit of working with them outweigh the degree to which their behavior fails to support our values?
- Does the relationship with this vendor decrease our credibility in the eyes of our employees and customers?
Objective and Subjective
Measurements of values can be distilled into numbers for "objective" analysis, but such analysis fails to tell the true story. Qualitative measures, even though they are often denigrated for not being quantifiable or comprehensive, are often more indicative.
Consider the assessment of success stories that emerge from the behavior of front-line employees. A quantitative measurement is a mere count of the number of stories that are told, which does not consider the actual impact or degree to which the values are represented in a given incident. Also, merely counting the stories measures loquaciousness rather than the actual degree to which they exemplify employee behavior across the entire organization. Having many employees who brag frequently about doing things that support the values in an oblique way is less valuable than having a smaller number who speak up less frequently about more significant actions.
It's also important to ask open-ended questions o employees and customers to identify things that you have failed to consider in your metrics. Improving the ratings is good, but you should be constantly vigilant to whether you are rating the right things.
The author suggests that it is not uncommon for her clients to make significant revisions to their values blueprint after the first year - revision is the norm. A values blueprint that is "set in stone" is often one that is not practiced. It should be a living document and needs to be regularly challenged against your reality.
Strategic Leadership Development and Succession Planning
The people who lead a company are critical in developing its culture. People will follow their directives, but more importantly they will emulate the behavior of leaders, regardless of their words. As such, it is important to the future of a company to develop its leaders, well in advance of their appointment to leadership positions, and to make decisions on filling leadership positions with people who hold the right values.
The values held by leadership also serve to attract like-minded people to the firm. According to "a group of Harvard researchers," there is a strong correlation between the values that a company holds and those of the candidates they attract (as well as the external stakeholders' perceptions of the business and employees' support of the firm's initiatives).
It is therefore important to go beyond disseminating a values statement and expecting leaders to figure out how to execute upon it: leaders must be trained in the values, and receive follow-up training to periodically reinforce it and ensure they remain committed.
The author lists some factors to consider:
- How closely does an individual's personal values align with those of the firm? It is possible for a leader to encourage others to adopt values he does not personally espouse, but he will not be enthusiastic about doing so and will seek to change or circumvent them.
- Classroom training is not enough. It is very easy to dismiss ideas as theoretical in a formal training situation and go right back to doing the same as before. Leaders must be coached in the field - reviewing their decisions and correlating them to values has a stronger influence on awareness and behavior.
- Emphasize people skills. Managers who have risen due to their technical expertise or financial acumen often lack skills in dealing with people - communicating and interacting with them in a genuine way.
- Encourage integrity. Leaders behavior should match their words, they should treat people with respect, they should practice common sense, they should not be afraid to admit that they don't know something, etc.
- Train for Values. Leadership development should not merely include values training, but be based on it: every aspect of training must reinforce rather than contradict the core values. Leaders also need raining in communicating the values and coaching employees on values.
- Encourage transparency. Business leaders have a tendency to withhold information, whether they are attempting to disempower others or merely do not regard disclosure as necessary; but the more that employees know, the more they are able to support the organization.
- Require succession planning. Every executive, manager, and supervisor should have identified one or more employees who can succeed them. This will make the leader a more conscious mentor to that person specifically and their staff in general. Leaders fear that grooming a successor makes them unnecessary - they should be given the perspective that it makes the company able to promote them.
The Story of Successful Culture Change
The author reiterates some of the main values of values-based leadership: it simplifies decision making, helps to hire and promote the best people, gives meaning to otherwise mundane work, gives customer a sense of brand and a reason to be loyal, and drives the performance of the organization.
From a perspective of motivation and morale, values give people a sense of purpose, and make the difference between a mundane and unrewarding job into one in which people are excited to work, have the sense they are accomplish great things, and are rewarded for their success. This applies not only to the low-level employees, but to manages and executives.
Brief mention is made of the kinds of stories that are told about values-driven firms, as a segue to suggest that the pursuit of values is a story in itself: the conflict against the status quo, the struggle to succeed, culminating in a new sense of what it means to work.
It's very easy not to undertake it, to let work become mundane, meaningless, and unrewarding - but considering that we give so much of ourselves to our professions, it's worth the effort to make our work into something meaningful. Reports and spreadsheets that show the financial performance and progress toward production goals are dry and uninspiring, but the sense of accomplishment that comes of achieving and maintaining values-based goals is invigorating - and when it's done well, productivity and profit follow