By: Daniel P. McNeil
One of the hottest topics in business today is culture. And for good reason. Research suggests the more constructive the culture, the higher the profit margin and the more stable the profit over time. You don’t have to look far to see this in action – Nordstrom, Whole Foods, Starbucks, Southwest Airlines and Costco are all examples of strong vibrant cultures being realized through a healthy bottom line and continued growth.
I was the CEO that paid no attention to culture. It was the soft stuff of weak leaders and I was the highly transactional, results-based commander who set almost unattainable goals for my people. When someone didn’t reach a goal, my demand was that they work harder, work smarter, or organize their time. Worst of all, we lived in an atmosphere devoid of honest, productive feedback. What I failed to understand is that I was building a culture, just a horribly toxic one.
So how do you shift to a high-performing profitable company culture? Get intentional with three simple strategies.
1. First and foremost, there has to be an atmosphere of trust. No culture changes positively without leaders whose actions raise the level of trust in the organization. Create a written agreement of expectations for behavior and attitude at your company. Called a Social Promise, this is about relationships, not job performance. You want to pre-agree on how you are going to treat each other, your customers, and vendors. The agreement also has to specify what you are going to do when someone doesn’t live up to the Promise. This must apply to everyone in the organization even prospective employees.
2. Live your values.
Have genuine and memorable core values that are directional, alive and modeled throughout your company daily. It’s important that departments and individuals are motivated and measured against the way they model the values. Empower people and ensure every department understands what’s expected. Don’t just list values on the website; bring them to life in people, products, spaces, at events, and in communication.
3. Establish responsibility and accountability.
Does each one of your employees affect throughput and profitability in the same manner, or more importantly, at the same rate? If this is true, why are they paid on the same bonus scale, profit sharing plan, or flat hourly rate? Compensate and evaluate your employees appropriately according to their impact on the company reaching its vision. Create specific role-based Key Performance Indicators (KPI) and directly tie the employee’s compensation to them. Watch what happens to throughput and profitability when these are aligned.
A strong vibrant culture embodies a clear set of values that actively guide the way a company operates. Employees are actively and passionately engaged in the business, operating from a sense of confidence, empowerment and trust. Performance-oriented cultures share ideas, take risks, and make mistakes in order to achieve new levels of innovation.
The change in my own company tells the story of creating a culture of profitability. Starting with my personal commitment to our Social Promise, we went from a toxic environment to a high-performing culture. Revenue grew from $2.3MM to $11.8MM in 3 years. All of our KPIs, from profitability to our customer service metrics, skyrocketed. Relationships were renewed, processes were improved, and we never stopped asking how we could do something better.