Every organization has a culture. The type or size of the organization simply doesn’t matter. From the day of its founding until the day of its ultimate demise, every organization has, and will continue to have, its own, unique culture. In the corporate world, understanding what culture is, as well as how it’s created, and how it impacts bottom-line performance, is key to effective executive leadership.
Let’s start with a basic definition of organizational culture:
The culture of an organization is a reflection of the shared values, behaviors, and beliefs of the people who comprise the organization, typically its leadership and employees. Culture determines the way members of the organization interact with one another, as well as how they interact with the organization’s other stakeholders. (Typically, shareholders, customers, suppliers, service providers, partners, and the planet make up a company’s stakeholders.)
Where does culture come from?
Culture is always driven from the top of the organization and flows downhill from there. Toxic leadership will produce a toxic culture, 100% of the time. When the senior-most leaders are dishonest, arrogant, or disrespectful, the people closest to them in the organization will gradually adopt those same behaviors. They, in turn, pass this dysfunction along to all who report to them. It is in this manner that culture spreads down and across the workforce until it has infected the entire organization.
The good news is that a healthy culture spreads exactly the same way. When leadership is honest, compassionate, accountable, and respectful, others invariably follow their lead or are forced out of the organization. Knowing how culture is created gives founders and CEOs the ability to choose what type of culture they want, and then create it simply by acting accordingly. Most CEOs don’t get this. Way too many still believe in the old toxic adage “Do what I say, not what I do”. That doesn’t work when raising children and certainly doesn’t work at the office. People watch what the leaders do. They listen carefully to what the leaders say. And then they act accordingly.
How do you get the culture you want?
Cultures are either mindfully created or are left to create themselves. Left to create itself, an organization’s culture will trend in the direction of the “Lowest Common Denominator”. Anyone with a reasonable understanding of the human condition will tell you that this approach is unlikely to result in anything other than dysfunction. Sad, but true.
On the other hand, when leadership has a clear vision of the culture they want in their organization, they have an opportunity to mindfully create that exact culture. Great leaders do this by choosing their words and their deeds to be 100% consistent with the culture they desire. They model correct behavior for all to see. Not some of the time, but all of the time. They insist on calling themselves out whenever they catch themselves speaking or acting in a manner inconsistent with the culture they want. Let’s face it, even great leaders are human, and as such, they’ll get it wrong some of the time. Not a problem. As long as they genuinely own their mistakes and apologize openly, a healthy culture will continue to thrive.
Absolute consistency is essential to culture.
Once leaders have determined the culture they want in their organization and have aligned their own behavior accordingly, it is essential that they refuse to accept anything less from all who report to them. There can be no exceptions, no sacred cows, It’s simply “follow my lead, or get out”. In this way, every leader, at every level, has a role to play in the creation and maintenance of the organization’s culture.
Why does building a high-performance culture matter?
Understanding the impact that culture has on organizational performance is one of the primary responsibilities of the leader, in most cases the CEO or Managing Director. First-time founders struggle with this as they fail to comprehend the mechanics at work.
Here are 4 reasons why you want to have a high-performance culture. In summary, it goes like this:
Reason #1: A culture of accountability ensures that everyone in the organization is committed to delivering on the agreements they make.
When that happens, excuses and blame disappear, allowing performance to skyrocket.
Reason #2: A culture of honesty, transparency, and respectfulness enables trust to flourish.
Given that the performance of an organization is inextricably linked to the quality of the relationships between the people that comprise the organization, having a high level of trust and mutual respect leads directly to higher levels of performance.
Reason #3: A culture of humility and commitment to the organization’s Purpose, is an energizing force.
When the people in an organization truly understand, and buy into, the importance of the organization’s Purpose, creativity and collaboration become the norm. When the Purpose is not clear or is clearly not bought into, people tend towards self-serving behavior, and performance suffers.
Reason #4: When leaders operate with a servant mindset and are deeply committed to the Purpose of the organization, people naturally and enthusiastically follow them.
When they show more concern for their team members than they do for themselves, loyalty and commitment go through the roof. When that happens, costly turnover is vastly reduced. A key factor worth noting here is the reduction of lost Intellectual Property as key people leave, and never come back. Experienced CEOs know right where to look for the impact of culture on their organization’s Profit and Loss statement. The first place they look is at the relationship between employee satisfaction and unwanted turnover. Very often, the cost of a company’s staff represents one of the most significant items when looking at operating expenses. The inability to attract, retain, and motivate the entire team will always result in significantly higher operating costs and a reduction in overall organizational performance.
In summary, the importance of organizational culture has long been overlooked and under-served in the education of our future leaders. In a majority of businesses in America, the subject of culture is conveniently, but tragically, ignored. Backward-thinking CEOs believe that their own brilliance, coupled with the strength of their product or service, is sufficient for their organization’s success. In many cases they are correct. In 100% of the cases, they’re leaving money on the table. Creating and maintaining a high-performance culture can be a powerful weapon and one that can’t be copied or stolen by the competition.