Company culture encompasses a set of unwritten rules about ‘how we do things around here’. It often resides in deeply seated beliefs and mindsets that drive behaviours and determine how people approach problems and take decisions.
Many successful CEOs, including Steve Balmer, the former CEO of Microsoft, Tony Hsieh, the Founder and the CEO of zappos.com, Lou Gerstner, the former CEO of IBM and Dharmesh Shah, the co-founder of Hubspot have been known for making culture their priority and for attributing a lot of their success to being able to shape the right culture for their organisation.
According to Deloitte’s recent Global Human Capital Trends, “Culture has become one of the most important business topics of 2016”.
Researchers confirm that an effective culture offers strong competitive advantage and that it can directly and significantly impact company’s bottom line.
The findings are compelling; for example, a Harvard Business Professor, James L. Heskett, discovered that as much as half of the difference in operating profit between organisations can be attributed to effective cultures.
My research, as well as experience working with hundreds of leaders over the past decades indicate that there are certain things successful leaders have in common when it comes to shaping company culture:
They take culture seriously
They know that underestimating the importance of culture can result in missed opportunities at best – and major difficulties in strategy implementation at worst. They are acutely aware of the fact that culture never fails to develop – irrespective of whether it is by design or by chance – and they decide not to leave it to chance! They are not just intentional about shaping the right culture for their company but are vocal and transparent about why they consider it such an important enabler of success.
They uncover and challenge beliefs and assumptions
Beliefs and assumptions that people hold constitute important, albeit less visible, elements of culture. Hidden from view, they greatly impact the way people perceive reality, think about problems, interact with others and take decisions. Great leaders are sensitive to the cues indicating that beliefs and assumptions are at play (for example to comments such as these: ‘this will never work’ or ‘it would be a mistake to involve marketing in this’). In addition, they are able to challenge these beliefs and assumptions in a non-threatening way, thus opening up new possibilities and ways of thinking.
They seek to reduce cultural entropy¹
They know that certain laws of physics can apply to businesses as well – for example, that the outputs generated by an organisation (value-added work) are equal to inputs minus the amount of energy to keep the organisation functioning (entropy). Therefore, effective leaders don’t limit their focus to producing outstanding results. They want to know how their company needs to operate to optimise the input – output ratio. They constantly seek for effective ways to enable employees to produce value-added work. They aim at ‘engineering’ an environment where the amount of energy consumed in doing unnecessary or unproductive work is minimised. In other words, they seek to create a workplace where people can perform at their best without facing unnecessary obstacles.
They initiate the creation of a shared culture vision
They ask questions such as: What kind of culture do we need to fully support our company’s mission, vision and objectives? What will it look and feel like? They seek people’s input by engaging them in conversations on the visible manifestations of the desired culture, such as: artefacts and symbols, systems and processes, the way people will behave, interact with various stakeholders, take decisions and engage with their tasks.
They pick their battles
Leaders who cultivate effective workplace cultures know how to prioritise. While it can be tempting to try to bridge the gap between the current and the desired culture all in one go, they know that spreading themselves too thin is a sure recipe for failure. Instead, they focus on key initiatives and key behaviours that they want people to embrace or change. They identify leverage points – the things that bring maximum results with the minimum amount of effort.
They are role-models
People are wired for connection – they continuously scan their environment for cues on what goes and what doesn’t. As social species we have a tendency to first look to the individual who is the highest in hierarchy. Social compliance and social learning phenomena lead people to copy what they see their leaders do. That’s why effective leaders role-model the behaviours and attitudes that they want to see in others.
They engage and transform the executive team
Great leaders understand the importance of attaining a critical mass for change; they know that it is not enough for them to be the only role model of the new culture. They seek to have their whole executive team on-board, owning the desired culture vision and executing the initiatives to transform culture. Even more importantly, they start cultivating the desired culture in the executive team, knowing that this is the only feasible way to spread the culture into the rest of the organisation.
They ensure there is a robust plan to cultivate and sustain the desired culture
They know that culture, just like any other project or transformation, requires a robust action plan. They get the right people in place and ensure that they put the plan together and act as committed and active sponsors of all the culture transformation initiatives.
They hold people accountable and reward them for shaping culture
Effective leaders know that sustainable behaviour change is difficult. People need to be regularly nudged and held accountable for shaping culture. They make sure that the key players have clear and measurable objectives pertaining to culture and they regularly follow-up on these. They also reward those individuals who consistently contribute to developing the desired culture.
They hire for the organisation they want to create, not the one they have today
Rice professor, Erik Dane, found that the more experienced people are, the more they tend to be stuck in their ways. He quotes studies which show that expert bridge players struggle more than novices in adapting to new rules of bridge and expert accountants perform poorer than novices at applying a new tax law. Great leaders understand that it can be easier to bring in an external hire to lead the change than to ‘grow’ them internally. Moreover, when hiring for all positions, they look for people who already hold the values of the desired culture and have the attitudes and mindsets that will support shaping it. They include the behaviors, attitudes and mindsets of the desired culture in their recruitment criteria, so that new hires become a good fit for what the company needs to become in the future.
Successful leaders are acutely aware of the exceptional importance of shaping organisational culture and don’t leave anything to chance as far as culture is concerned.
What do you do as a leader to shape culture in your organisation or your team? Please share your thoughts in the comments below!
© Agnieszka Bajer, 2016
¹Barrett, Richard “High Performance: It’s All About Entropy” retrieved from https://www.valuescentre.com/sites/default/files/uploads/2011-12-14/High%20Performance%20-%20It%27s%20all%20about%20entropy.pdf
Dane, Erik “Reconsidering the Trade-Off Between Expertise and Flexibility: A Cognitive Entrenchment Perspective”, Academy of Management Review 35 (2010):579-603
Heskett, James L. The Culture Cycle: How to Shape the Unseen Force That Transforms Performance. Upper Saddle River, NJ: FT, 2012.