Is Your Corporate Culture Healthy?

Senior leaders and talent managers are constantly evaluating the effectiveness of their organization’s processes, leadership, workforce and output. When issues arise that impact productivity, resources are allocated to address those issues and get performance back on track. In this way, key leaders are reactive — they spot a problem and address it.

Yet even when things are going well, key leaders can sense that more could be accomplished. They think, “If only employees acted more empowered and addressed items before they became bigger issues …”

A work environment that inspires employee buy-in, empowerment and application of discretionary energy is one with a healthy corporate culture. Effective corporate cultures are built on a foundation of trust and respect. When that foundation is present, employees apply discretionary energy and skills toward desired goals.

Creating a healthy corporate culture requires key leaders to be proactive — intentionally building a work
environment of mutual trust and respect.

For example, Patrice Cayouette was the vice president and plant manager at Bowater Canadian Forest Products’ Gatineau, Quebec, pulp and paper facility. In 1998, the plant implemented a continuous improvement approach that generated benefits, but Cayouette said he knew there was something missing.

“The continuous improvement efforts helped with efficiencies and cost reductions,” Cayouette said. “Our management team agreed that we had to find ways to empower our people — continuous improvement was in their hands.” In 2001, Cayouette worked with the Ken Blanchard Cos. to help the plant’s senior leadership team create a culture of empowerment.

To improve motivation and communication and create a more engaged workforce, Bowater first had to ensure a focus on worthwhile work. That meant employees had to recognize their efforts made the world a better place as they worked toward shared goals, and let values guide all plans, decisions and actions. Employees were encouraged to feel in control of achieving goals via a revamped continuous improvement team process and Situational Leadership II training for all managers. Last, Bowater implemented several steps to cheer each other on, offering praise at meetings, in newsletters and on electronic boards.

Within one year, the Gatineau plant’s corporate culture shifted. Within four years, employees’ efforts generated more than $50 million in cost reductions, health and safety records improved and employee satisfaction rose.

Three Key Indicators of a Healthy Culture
Corporate culture is a driver for organizational excellence or mediocrity, and senior leaders are the primary drivers of company culture. When senior leaders and talent managers proactively manage their desired corporate culture, their organizations benefit. Employees will enjoy their work, customers will appreciate how they’re treated, and the increased profits from both of these things will allow the enterprise to succeed long-term.

Senior leaders and talent managers who are most effective at culture refinement and maintenance understand that their role is broader than just driving financial success. Financial success is important — profits enable the enterprise to survive. However, the most culture-savvy senior leaders and talent managers spend the majority of their time building and maintaining a safe, fun, inspiring work environment. These leaders create a culture that enables the enterprise to thrive.

“I used to see my job as managing processes and results. Now I see my job as managing people’s energy,” said Lee Timmerman, president of Precision Press, a U.S. printing company.

Three of the most reliable metrics that reflect corporate culture health are clear performance expectations, clear values expectations and accountability for both across the organization.

Clear performance expectations help leaders and employees understand their specific targets for the performance period. Every player in the organization needs to have formalized goals in his or her performance plan.

Equally important are goal alignment and cascading goals. All leaders or employees across the organization should be able to articulate what their goals are and how their goals contribute to the accomplishment of team goals, department goals and broader organizational goals for the performance period.

This line of sight clarity helps employees make good decisions when the boss is not present. They know the right thing to do because they’re able to reflect potential plans, decisions and actions against cascading goals.

Accountability for performance falls on the shoulders of senior leaders, talent managers and other leaders throughout an organization. Setting goals is only the beginning of consistent high performance.

At its core, accountability is a consequence management system. Key leaders must be quick to provide positive consequences for performance traction — leaders publicly praising great effort or problem solving by an individual or team — and negative consequences for missed standards — engaging a poor performer one-on-one to learn if the productivity issues are process or system related or if person-related employees should be redirected to get performance back on track.

Clear performance expectations enable leaders to have regular accountability discussions about performance progress with each direct report. In these meetings, leaders and followers review key metrics. The leader praises progress and accomplishment and poses questions about why performance is below standard. Both leave the discussion with a clear understanding of what’s going well and a plan of action to get below-standard performance up to expectations.

Measure Performance Clarity and Accountability
Again, setting standards is only part of the talent manager’s role. Measuring and monitoring performance is the largest part. Besides monitoring key metrics, employee feedback via regular questionnaires sheds light on performance clarity and accountability. Respondents rate statements like these to help leaders gather data about clear performance expectations:
• Each team member has an up-to-date, formal performance plan with specific goals to be achieved.
• Individual team member goals are aligned with team and organizational goals.
• Organizational systems, policies and procedures enable team members to be peak performers.
• Team members are held accountable for goals.

The resulting profile offers actionable data that guides talent managers to make tweaks or shift how the culture operates.

The second indicator, clear values expectations, is not common in organizations today. If performance expectations define what team members are to deliver, values expectations define how team members treat customers, peers and bosses while delivering expected performance.

A healthy culture requires that key leaders proactively manage values expectations and accountability with the same discipline, and similar metrics and feedback, as they do performance expectations and accountability.

Clear values expectations must be in tangible, measurable behaviors to guide desired actions in the workplace. Values expectations require the values word, definition and behaviorally defined examples of what that value looks like in the workplace.

Integrity is a common value desired by many organizations. It means an organization works with peers, customers and prospects openly, honestly and sincerely. When promises are made, they are kept, and when leaders say they or the organization cannot or will not do something, they don’t.

Some of the behaviors linked to high integrity would come from statements such as:
• I clearly define the commitments I make, ensuring my promises are well understood by the person to whom I make those promises.
• I do not lie, stretch the truth or withhold information from a peer, customer or stakeholder.
• If I am unable to keep a commitment, I immediately inform all people who will be impacted.

As with performance accountability, accountability for values is the responsibility of senior leaders, talent managers and leaders throughout an organization. And, as is the case with performance expectations, setting values standards is just the beginning of consistent values alignment. Senior leaders and talent managers must be quick to provide positive consequences for employees who demonstrate valued behaviors and negative consequences for misaligned behaviors.

Clear values expectations enable leaders to assess values alignment with each of their direct reports during regular accountability discussions. In these meetings, leaders and followers review key relationships and the quality of interactions therein. The leader praises values alignment and, if needed, poses questions about any potential misalignment. Both leave the discussion with a clear understanding if the person is doing a great job with demonstrated valued behaviors or with a plan of action to address any values issues.

Measure Values Clarity and Accountability
Assessment helps senior leaders gauge the extent to which their organizational culture demonstrates high performance and values alignment. Respondents rate statements to help talent managers gather data about clear values expectations:
• Our work environment builds trust among team members.
• Team members keep their commitments and promises to each other.
• Declared team values are the foundation for team decisions and actions.
• Team members are held accountable for demonstrating defined valued behaviors.

The resulting assessment profile offers actionable data that guides senior leaders to make necessary tweaks or wholesale shifts in how the culture operates regarding values clarity and accountability.

One of the most impactful outcomes of a high-performance, values aligned culture is that employees are fully present. They don’t go through the motions; they are empowered and willingly apply their discretionary energy to serve customers, peers and stakeholders.

Joel Anderson, president and CEO of Walmart.com, said a culture initiative had significant impact on his retail division. His division encompassed 300 Walmart stores with more than 85,000 associates in seven states, and he said a “culture change process helped our division enjoy a 20 to 25 percent increase in AOS (associate opinion survey) scores, customer experience scores and store profits — all in less than two years.” The division’s profitability growth was tops in North America during the recession.

Evaluate a corporate culture’s health by considering the extent to which the three indicators — clear performance expectations, clear values expectations and accountability for both — are present in the work environment. When those indicators are in place, an organization will enjoy increased employee work passion, customer satisfaction and profits.

S. Chris Edmonds is a senior consultant with the Ken Blanchard Cos. and author or co-author of several books including Leading at a Higher Level. He can be reached at editor@talentmgt.com.