Preparing for Growth - Start with Culture

When transforming a company for growth, always start with Culture. You need to make sure everyone is aligned with the new values, beliefs, expectations, and practices.

I have had a lot of success in my career when I have taken on challenges that were difficult and risky. I have worked with Fortune 10 corporations, family-owned businesses, start-ups, and most everything in-between. Whether the challenge was to grow a company, turn around an under performing department, or implement a global strategy, I never shied away. Neither should you.

Each situation had unique challenges but there was always a common theme – fix the problem so we can grow the company. This post, and subsequent ones that follow, is written for the President/CEO/Owner level of the company as well as those of you looking to gain a more executive perspective. Many CEOs are entrepreneurs and may not have expertise in all areas. The simple fact is that a President/CEO must make decisions and priorities across all aspects of the company. We will discuss practical topics from a company-wide level as well as functional area.

In no way is this meant to be all-inclusive. I would love to hear your thoughts and feedback. I know I will miss things along the way.

Once we are approaching the end of the series of posts, I will let you know and send you a copy of my playbook if you like. These posts are coming from someone that has lived through the challenges with their job on the line, unlike many consultants that can tell you about a hot seat but have never sat in one.

Let’s get started.

What is Culture?

Culture has received a lot of attention lately, and rightfully so. But do you know what it is? I like to define culture as the values, beliefs, expectations, and practices that people share in common. For some companies, it can be a very aggressive culture (i.e. Enron – I know because I was there). For others, it could be a more laid-back culture.

Do you know what the culture is at your company? Does it align with the goals and values of the company?

The culture of a company, whether explicitly defined or not, is demonstrated from the top down. That means the owner/CEO/President/Executive team drives the culture of the company. Their actions must demonstrate the culture they want to permeate throughout the organization. If not, the employees will become very confused and will naturally create their own within their departments. If the leadership team does not portray the values and beliefs they promote, it erodes trust throughout the company.

An example is a company that promotes Christian values but does not treat their employees accordingly. You must be consistent. Let’s say you have a valuable yet verbally abusive employee. If you allow their abusive nature to continue, the employees will no longer believe in the stated values of the company. They will act as they need to survive. It is better to hold everyone accountable to the same values. It provides clarity for the employees.

Don’t get me wrong, not all cultures have to be fun and loving. If you are a private equity company looking to maximize profits at all costs, it is okay to have an aggressive culture. That’s your business model. The key is to ensure that the leadership’s actions match the culture they want to portray. Employees are smart. If you act differently than your stated values, beliefs, and expectations, they will lose respect and trust.

If you are unclear about the existing culture, write down what you think it is. There are tools out there to help identify what employees feel is the culture. Culture Amp is a tool you can use to understand the existing culture of the company.

Right people, right bus

Once you understand the culture you want, you must evaluate every employee and their ability to align with the culture. This can arguably be the most difficult and important part. They have to be on board and you have to enforce the expectations. If they see you waiver, you’ve lost.

There are personality and behavior assessments that can be used for hiring and to review existing employees’ personalities. Once you better understand your employees, you can make educated and strategic moves if necessary.

First Team Approach

The highest performing organizations have alignment and clarity at the executive leadership level. This is key for a high performing executive team. They must view their roles as doing what’s best for the organization first and their functional departments second.

I am a big fan of the “first team approach” as defined in Patrick Lencioni’s book – The Five Dysfunctions of a Team. It is very difficult to accomplish but highly rewarding when you do.

Here’s an example:

Let’s suppose you have a Sales Executive that can close a major deal in Q4 and shatter his/her quota and revenue targets (and gain a sizable commission). The problem is that the organization cannot deliver on a deal that size with a very short notice. What do you do? A dysfunctional team where the members only care about themselves would close the deal and worry about delivery later. This creates a bad situation as a failed delivery could cause an upset customer, bad reputation, cash flow issues, and more.

In the First Team approach, the Sales Executive would work with the COO to structure the deal in such a way that all parties succeed, including the customer. One approach could be to phase in the project. This would cause a sacrifice by the Sales Executive (lower commission), but would ultimately set the company up for success.

The communication, priority setting, and strategizing for what is best for the company will ultimately pay off dividends greater than a dysfunctional team. The members have to believe in each other and trust.

This approach can be leveraged across the organization but must be adopted by the leadership team first.

Psychological Safety

Once you have identified the culture you want to have and an approach for alignment, I highly recommend you incorporate the concept of psychological safety within the organization. Simply put, this is the ability for employees to take interpersonal risk and feel comfortable with bringing up any topic, idea, or concern without repercussion to their self-image, status, or career.

Why is this important? In my experience, your employees have great ideas on how to fix problems and improve things. They are closest to the issues and know what will work or not. If they are uncomfortable discussing due to reprisal, you lose in many ways.

An employee that genuinely cares and knows that you care for them and what they have to say, will move mountains for the company. Psychological safety is paramount for employee engagement and retention. You may not like what you hear from them, but I would rather know the bad before it is too late.

I took over a department one time and had a key employee that was completely disengaged. When I asked him why his attitude was so poor, he refused to tell me. Eventually I was able to get him to explain. He always took the brunt of a salesperson over-selling. He was the one that had to find a way to deliver and got in trouble with the client. When he tried to say something, he always got shut down because the company needed the revenue. He had lost all trust in the company and management. I told him to trust me and we would fix the problem together. To do so, he had to be able to tell me who was the culprit and when it occurs. I went to the Sales Executive and told them it had to stop. The key employee needed to be leveraged to scope the project properly so we could deliver successfully. The Sales Executive and I were in perfect alignment. The key employee saw things turn around immediately. He enjoyed his job once again and became a very loyal employee. He took a risk in telling me about the problem and I made sure we regained his trust.

Psychological safety embedded within the culture can be a key advantage for innovation and employee engagement but it has to be supported by leadership throughout. A violation of trust will eliminate risk taking and you’re left with all management decisions bubbling up to the top. Not good for a company trying to grow.

If you'd like to discuss further, contact me at www.richhallgroup.com/contact