I read with interest an article in Accountancy Age last week which focused on the need for businesses to understand and actively work on improving corporate culture.

 

In summary, a report by the FRC found that Company boards must pay more attention to instilling the right corporate culture in order to restore trust in business and deliver long-term sustainable growth, according to the profession’s watchdog.

 

And it also found that improving ‘corporate culture’ is increasingly important because intangible assets such as intellectual property, customer base and brand now account for over 80% of corporate value. An increasing proportion of enterprise value is now made up of intangibles that are not capitalised such as brand, reputation, intellectual property, human capital and culture.”

 

This is certainly not the first time that improving corporate culture has been a headline – but it is the first time that I have seen an attempt at a valuation of culture! And maybe that is exactly what needs to be done to ensure that business leaders focus on it!

 

Peter Drucker famously stated that ‘Culture eats strategy for breakfast’. (Well, allegedly, as no one can actually find the quote anywhere!)

 

I remember being in attendance at a Leadership conference for senior partners of a Professional Services Firm when the ‘Drucker’ quote was revealed on slide one of the keynote speech. I looked around the room and noted the smirks and knowing looks amongst the partners. And the reaction was understandable.

 

Because culture is that warm, fluffy stuff right? It’s not tangible (well not until the Accountancy Age article!), we can’t see it, we struggle to define it and we can’t measure it. But strategy…now you are talking. That’s important. It’s real business. We know all about that….

 

So…how exactly does culture eat strategy?  Well, culture and strategy are absolutely entwined… they are not separate entities. But…

 

• Culture exerts the most powerful influence over behaviour in an organisation
• Strategies can be copied but a firm’s culture is unique. It cannot be duplicated
• And culture is in essence, strategy in practice. If strategy remains in a document then it will obviously fail

 

Ok…so just what is culture?

Quite simply, it is the ‘self sustaining patterns of behaving, feeling, thinking and believing’. Culture is the organisations values in operation. But sadly, the values that are ‘brought to life’ are not always those that have been intentionally created by the business. Although we see many examples of clear and impressive values shouting out from strategically placed posters and banners around offices, positioned at the forefront of websites and flashing in bright colours across screen savers, practiced values across the business can be very, very different.

 

The firm’s values should be statements about what is right and wrong, important or trivial to the organisation. They are the guiding principles for how people in the firm will conduct their business, and there is clear implication that others should adhere to the values as well.

 

But what do these values actually mean to people throughout the business? How should they influence their decision making, the way they deal with clients, the way they run team meetings? If they are just words on the wall then they will remain just words on the wall.

 

We worked with an accounting firm that had invested heavily in internal marketing, videos and conferences to showcase their relaunched company values, which included such powerful statements as ‘freedom to be entrepreneurial’, ‘always innovative’ and ‘passionately supporting of others’. We had been asked to help a team of senior managers that, we were reliably informed, appeared to lack confidence. The evidence of this was that the individuals were continually needing partner reassurance before making decisions and this was costing money by putting unrecoverable time on the clock, or missing opportunities.

 

However, when we got the group together to work on improving corporate culture, we discovered that there was a huge disconnect between the stated values and their ‘reality’ on the shop floor (in other words, the culture of the firm). The individuals were experiencing rigidity and a ‘blame’ environment with a total lack of trust, which had diluted their self-belief and sense of empowerment. So it wasn’t a lack of confidence within the team that was the issue, but more a fear of consequence and possible punishment.

 

We have discovered a similar disconnect between values and reality in the majority of organisations with whom we have worked.

 

Frustrating isn’t it? Because we know that firms are not intentionally creating these cultures. They are very serious about the values. But it just isn’t translating into day-to-day behaviours.

 

Taking values off the wall

Jeff Bezos, the CEO of Amazon has absolute belief in the importance of values. His original shareholder letter from 1997, which states the company’s purpose and values, is still sent out to every investor and employee, every year. Those values are focused almost entirely on customers and longer-term business sustainability, which has caused friction with the ‘short term obsessed’, US investor markets. But Bezos is unflinching in ensuring that the business, and every decision it makes, is led by its values.

 

We believe that the only way to embed values into the day-to-day for everyone in an organisation (and create desired culture) is to make them living and breathing concepts. Through actions not words.

 

And this starts from the top – after all culture is an outgrowth of leadership. People listen, and look, to leadership to demonstrate correct behaviours and lay down the ‘rules’. So it’s not just about what you do, but how you do it.

 

If a firm wants to encourage collaboration across its teams, then it stands little chance of success if senior management is visibly treading all over each other chasing individual objectives. And if organisations are promoting openness and transparency, then regular behind door meetings, hidden financial results and closed promotion processes will stamp all over this.

Values have to be embedded into everything throughout the firm. For example:

 

• Communications – link general updates about new products and services, new business wins and decisions taken by senior teams etc. to core values. For example ‘feedback suggested we were successful in winning this contract because we were able to clearly put ourselves in their shoes, and they loved our team approach’ would clearly emphasise and reaffirm such core values of ‘we always strive to gain a deep understanding of our client’ and ‘we always work together and help each other’
• Performance management, reward and career progression systems need to reflect not just measurable performance against targets (what was achieved), but also how success was achieved against values. So behaviours are just as important as results. By all means reward James for achieving new business targets (as long as he did things the ‘right’ way), but also reward Helen for taking time out to mentor, coach and build a collaborative team environment, as ‘supportive’ is a key value.
• Share case studies and success stories, and consider offering awards based on the right behaviours (and if you want to be really brave, do this even if the right result wasn’t obtained).
• Punish examples of misbehaviour. Always.
• Ensure that internal training courses cover and embed as much of the ‘how to’ as the ‘what’ for new skills. Shift learning to more of reality practice than theory.

 

So, focus on defining your ideal values, make them living and breathing ‘things’, and watch your culture accelerate your organisations performance. And maybe feast on a large breakfast.

 

theGrogroup specialise in helping Professional Service Firms grow business results by optimising: strategy, talent, business performance and business development

If you would like to discuss culture and strategy, and how we can help you achieve success please contact Thelma on 01892 610060.