How to create an organizational culture?

How to create an organizational culture? What makes a great culture? CJ interviews Chris Edmonds on his book “The Culture Engine”.

Source: Except where noted all excerpt and quotes are from: Edmonds, S. C., & Blanchard, K. H. (n.d.). The culture engine: A framework for driving results, inspiring your employees, and transforming your workplace.

What is Organizational Culture?

S.Chris Edmonds, author of “The Culture Engine” likens a corporate culture to an organizational constitution.  Like a constitution, companies need to formalize their organizational rules for citizenship, values, behaviors, and teamwork. These rules not only cover behavior in the office, but also how employees interact with suppliers, vendors, and customers. A good constitution articulates rules of civility, acknowledgements, and validation in ways that are measurable, and tangible.  Once articulated, the constitution helps employees get clear with how an organization decides, behaves, and embodies its purpose, values, strategies, and goals.

What makes a great culture?

According to John Coleman, there are six components that he describes in an article in the HBS.org  on what is required for a great corporate culture.

1. Vision/Purpose:A vision or mission statement gives employees a sense of the ultimate destination or outcome that the entire organization is shooting for.  It gives customers and employees a clear sense of what your company does and what it stands for, and employees a sense of shared purpose. Edmonds believes that the best purpose statement includes a succinct description of what a company does, for whom, and to what end.

Examples:

• Oxfam – “a just world without poverty.”

• Harley-Davidson’s “It’s not the destination, it’s the journey”

• Nike’s “Just do it”

• Apple’s (1980 “To make a contribution to the world by making tools for the mind that advance humankind.”

2. Values: Values provide a guideline on the behaviors and mindsets needed to achieve a vision.  When creating value statements, Edmonds suggests boiling down values to three or five statements so that employees can easily commit them to memory.  Edmonds recommends that the value statements not only define values, but also explain behaviors required (as shown below):

Value: Mutual Respect

Definition: I work with my customers (internally and externally) openly, honestly, sincerely, and ethically.  I follow through on my commitments and expect the same from others.

Behaviors: I trust that everyone has the customers’ and company’s best interests in mind, so I attack problems and processes, not people. I don’t take it personally when someone challenges a process I own. I listen to input and implement changes to improve the process. I do not lie, betray a confidence, stretch the truth, or withhold information from a peer, customer, or stakeholder. If I am unable to keep a commitment or meet a deadline, I immediately inform all people who will be impacted.

Examples of values:

• Google’s values might be best articulated by their famous phrase, “Don’t be evil.” and are articulated with clear definition of these beliefs “ten things we know to be true.”And while many companies find their values revolve around a few simple topics.

• LL Bean: Sell good merchandise at a reasonable profit, treat your customers like human beings, and they will always come back for more (LL’s Golden Rule- quote from Leon Leonwood Bean)

• Zappo’s: Deliver WOW Through Service, Embrace and Drive Change, Create Fun and a Little Weirdness, Be Adventurous, Creative, and Open-Minded, Pursue Growth and Learning, Build Open and Honest Relationships with Communication, Build a Positive Team and Family Spirit, Do More with Less, Be Passionate and Determined, Be Humble

• WD-40: Do the right thing, Accountability and their pledge” I am responsible for taking action, asking questions, getting answers, and making decision. I won’t wait for someone to tell me. If I need to know. I’m responsible for asking. I have no right to be offended that I didn’t get this sooner. If I’m doing something others should know about, I’m responsible for telling them”.

3. Practices:Values and purpose articulate how employees strive to “be” in the office. However, to have a great culture these statements have to be lived every day and demonstrated what employee’s “do” as demonstrated by employee’s decisions, actions, and practices. Edmonds reminds us that workplace inspiration doesn’t happen naturally, but happens through intention with modeling, constant tending, alignment efforts, and celebrating exemplary behavior.

Examples:

• Johnson & Johnson Credo: “must be good citizens — support good works and charities — and bear our fair share of taxes” and “maintain in good order the property that we are privileged to use.” According to Marshall Goldsmith in his book, “Leaders Make Values Visible”, J&J executives have consistently challenged themselves and employees not just to understand the values, but to live them in day-to-day behavior. He states,“When I conducted leadership training for J&J, one of its very top executives spent many hours with every class. The executive’s task was not to talk about compensation or other perks of J&J management; it was to discuss living the company’s values.”

• Enron is an example Marshall Goldsmith uses as why statements alone mean nothing without congruent actions.

• The best example of a strong culture happens in the military. According to Mike Hatfield “it begins with the absolute belief that the “thing” the branch of service is bigger than the individual. This is in turn is linked to a higher purpose, ie Country and for many God. Country is represented by the flag for the military with the respect being paid daily and worn on the sleeve of our uniforms. So that constant subconscious reminder is always there. If you drive on a Marine Corps base you will see the pride (a value) as even the children know to stop and face the flag respectfully for taps. Pride is in the blood of a Marine, of which that culture has been pounded into his/her head from day one.”

4. People: The key to maintaining and keeping a culture is great hiring practices that are not only about hiring great talent, but also hiring for the right “cultural carriers”.  These cultural carriers reinforce the culture that the organization already has.

5. Narrative:Any organization has their own hero’s journey — a unique narrative or story. These stories when identified, shaped, and retold are key to an organizational culture. 

6. Environment: The office environment and how it creates a safe, respectful, and dignified workplace are key to creating your corporate culture.

Examples:

• Pixar has a huge open atriumwhich engineers in an environment where firm members run into each other throughout the day and interact in informal, unplanned ways.

Importance of Organizational Culture

S.Chris Edmonds explains that a strongly defined culture not only give employee’s  a sense of meaning, but also gives them clarity on how an organization decides, behaves, and embodies its purpose, values, strategies, and goals.  A constitution eliminates unspoken assumptions and thereby removes confusion with what a stated value means.  Without a constitution, he explains that employees are often left to deliver what they think has been asked of them, using their best means possible.  Bruce Tulgan, a consultant of Millennials, describes this as an organizational culture by default versus one of  design.

Edmonds shares what he has observed as benefits of creating a strong corporate culture:

• Increased Engagement: 35-40% engagement gains in 12 to 18 months based on morale, satisfaction, and engagement surveys.
• Productivity and Satisfaction Gains: According to Gallup’s 2013 “State of the American Worker” report, engaged workers results in significantly higher productivity, profitability, and customer ratings, less turnover and absenteeism, and fewer safety incidents than their disengaged colleagues.
• Higher Net Income: Kenesa’s 2008 study of 64 organizations offers similar findings with companies with highly engaged employees achieving twice the amount net income of companies whose employees are less than highly engaged.

“But is there a direct correlation between employee investment and the balance sheet? As Prof. James L. Heskett wrote in his latest book The Culture Cycle, effective culture can account for 20-30 percent of the differential in corporate performance when compared with “culturally unremarkable” competitors”. Harvard Business Review: @harvardbiz – https://hbr.org/2011/12/what-great-companies-know-abou

Culture Statement- How do you create one? What does a good one look like?

Now, it’s time to create your organizational constitution, Edmonds offers the following advice on how to kick start your process.

Who should you get involved?

Whether you are manager of a smaller team, a subdivision, or department within a bigger organization, you can move forward with creating an organizational culture. Basically anyone who can create or modify the organization’s incentives, policies, and procedure has the formal authority to guide the team, department, division, or company’s culture and write a constitution. According to Edmonds, he’s seen this work even when parent organizations don’t embrace cultural change.

How long does it take to experience benefits?

Based on Edmond’s decades of experiences working with organizations, he estimates that it takes within 6-12 months of starting a cultural refinement to see tangible benefits, with even greater benefits in 18 months to 3 years.

Organizational Culture Assessment

How do you know what’s broken?

According to S.Chris Edmonds he believes, managers should assess their current situation by talking to different people throughout the organization.  He recommends connecting with players in every function and department. Another tip is to talk to “truth-tellers” who are unafraid of sharing their perception.  Once you talk to employees, then begin to carefully observe how your organization really works by watching how plans and decisions get made and what happens during meetings.

You will be able to identify the gaps between your current culture and the high-performance, values-aligned culture you and your employees aspire to.  How will you know if there is a problem? You’ll see tension-filled interactions such as open conflict and disrespectful disagreement.  You may also see cliques and isolation of employees through verbal abuse, rude emails, gossip, teasing, bullying or inappropriate jokes.

How do you know if you have a “good” corporate culture?

Edmond provides some guidance on what “good” looks like:

Culture Statement/ Organizational Constitution

• Does it articulate how people are treated and how they treat others? Customer? Employees?
• Is there signage or visual communication that show your aspirations?
• Do people know what your organization is trying to accomplish? (purpose, vision)
• Is there a blueprint or organization’s strategy for going to market?
• What are the performance targets for knowing if you are on track to deliver what you promised stakeholders, customers, and employees?
• Has management articulated how employees should balance organizational values and your business goals?

Workplace/Environment

• Does your workplace environment sparkle with loving care or is it dull from wear and tear?
• Does your workplace support getting work done or are there too many distractions?
• What is the pace and energy of your workplace?
• Is the workplace safe?
• Are interactions between employees? Leaders and team members positive and trusting?
• Do workspaces encourage collaboration and connection with appropriate teams?
• Do team members know what they are supposed to do and engaged in doing it daily?
• Are internal and external customers treated in integrity with your aspirations?

Measurements

• How will you measure, monitor, and reward both your business goals and your cultural goals?
• What are performance metrics? How often will you measure them?
• How will you identify ideal behaviors?
• How will you measure a specific employee and how will you know if they are meeting, exceeding, or missing key values?

Managing

• How should high performing members be recognized?
• How do you handle low-performance, and low values player? Are you on a plan to set them free?
• How will you coach, train, and build skills for those who are not hitting values metrics?
• Are you willing to move them to a more appropriate job?
• Are you investing time and energy communicating, modeling and reinforcing your desired culture?
• Are you viewing this as a long-term commitment or just a fad?
• Have you identified your own areas that need improvement?

Developing corporate culture

After you do the hard work to define your organizational vision and values in observable, tangible and measurable ways, the next step and hardest one is living, leading and managing to your stated aspirations. It’s having employees, especially managers, consistently behave, decide and act in a way that is in alignment with the culture you defined.  While there may be innocent and occasional lapses, leadership needs to vigilantly reinforce the culture by role-modeling and reinforcing positive behaviors and perhaps even choosing to let go of even high performers that do not support the culture.

Who needs to drive culture change?

The leader of the organization has to be the main champion of driving the culture forward. The leader’s job is to have other formal leaders of the team embrace these changes as well to ensure they are bought into the process. While you may not have 100 percent engagement from your leadership team initially, there has to be 100% willingness to try.  Other leaders need to be willing to modify their behavior and interactions and to coach their direct reports to align to behaviors and values in their decision, behaviors, and actions.  It’s important that everyone understands that breaking habits formed over years of longer may be a challenge and be open to admit mistakes and honestly share your own “values transformation”.

How do introduce a new corporate culture?

Before formally publishing your purpose, make sure you engage all the employees in your organization to product feedback to your draft statement. When you introduce the change, Edmonds suggest that you address your direct reports main objections “Why culture change and why now? “.  Leaders must explain the benefits of having a values-aligned work environment, the current state of your current culture, and the gaps.  If possible try to get information on employee satisfaction or engagement, absenteeism, turnover, tenure, time to fill positions, productivity, and revenue per employee.

How do embed these values in you policies?

Once your leadership team is enrolled and you’ve solicited feedback, you must share what your expectations are for reinforcing ideas through praising, prodding others who are passively observing, or asking those who don’t follow to leave the company.   Common communication strategies include offering visible signs of the purpose, values, and behaviors via posters. Other ideas include starting meetings with recognizing employees or stories of when values are being demonstrated.  Reviewing metrics as part of regular meeting can also help reinforce the changes you are seeking.

Changing Corporate Culture

Edmonds recommends that if leaders want a culture to evolve that they need to clarify their desired outcomes in behavioral terms, model their desired culture, and hold everyone in the team or the company accountable for living it with every interaction.  He explains that values need to be refined over time.  They will likely evolve as the team or company’s culture evolves.  Behavioral guidelines in the early stages may serve for a year or two, but require tweaks or additions to define your evolving team citizenship requirements.