Leading Made Simple

Does your organizational culture make you less profitable?

Yes, this is a tacky headline, on purpose…

The core question is this: Does your organizational culture prevent or enhance profitability?

Before you answer this question defensively, consider the fact that the profitability of your company depends on a range of variables. Profit is a result of how well your organization manages and drives these variables.

How do you like the culture of your company? What features do you like and what is it you can’t stand? Is it hard to answer such questions in specific terms?

Most likely, I guess. Most of my clients tend to struggle to answer such inquiries in a factual manner. Yet, it is of crucial importance to understand, evaluate and take steps to enhance a company’s culture constantly.

What is the big deal about organizational culture?

Let me suggest a simple formula to ponder: OE x EL = CR

Organizational Culture * Effective Leadership = Corporate Results

At the end of the day, it is about how well the leadership is able to engage their people towards common goals! This is accomplished through an inspiring vision, strong organizational values, effective leadership, and an engaging organizational culture.Organizational culture

Considering this symbolic formula provides some key levers to essentially drive profitability. In a recent Vistage CEO Confidence Index survey, which captured insights from some 1500 CEOs and business leaders, only 1 in 6 respondents said they were satisfied with the strength of their organizational culture. That is a whopping 16%, and it means 84% of CEOs are NOT satisfied with the culture of their respective organizations! Let that sink in for a moment…

Employee retention, attracting qualified talent, and building a strong culture are sharing at the top of the priorities. The data suggest that many small and midsize firm CEOs will at some point need to reinforce their company culture. The obvious question is how to do that? This brings us to the “effective leadership” issue of the formula and my claim there is the following:

The key to an engaging, rewarding, and result-focused organizational culture is the effectiveness of its leadership.

The lack thereof creates a multitude of challenges in addition to the culture-building aspect. New DDI Research concluded that 57% of employees quit their jobs because of their boss, their direct supervisor! “The research makes a clear case that we should stop using the term ‘soft skills’ to describe what are really critical leadership skills,” said Stephanie Neal, director of DDI’s Center for Analytics and Behavioral Research (CABER). “How leaders manage their emotions and how they make other people feel are the strongest drivers of talent retention. This leadership study gives an inside glimpse into the emotions surrounding frontline leaders to help organizations pinpoint the crucial gaps where people need more support.”

As a leader, you can (and must) make a significant difference in the building, maintaining, and enhancing the organization’s culture. It is also up to you how effective you engage, stimulate, challenge, and lead your people. With that in mind, the leaders on all levels of an organization, from the CEO to the front-line team leader, will be “members” of either category:

A)  The costliest expense of the company

B)  The most lucrative investment of the company

Which one will you be part of?

Leadership is creating results THROUGH people, and it is a profession, like an accountant, lawyer, engineer, etc. It requires an expansive “toolbox” combined with the skills and habits to apply these tools in an effective and efficient manner.

The culture of an organization is exactly what the leadership makes it to be or allows it to become.

The younger demographics constituting most of today’s hiring pool are paying far more attention to the company culture than in the past. It makes it, therefore, more challenging to find and entice high-quality talent to join the organization. Conventional wisdom would suggest that new hires can be a catalyst for a cultural turnaround or enhancement. However, a more proven method is investing in existing talent starting again with the leadership levels.

Here are some proven leadership practices that can help to transform your company’s culture:

Reward & Recognition

Reward and recognition programs mark the performance and behaviors of people. Why reward both performance and behaviors? The cultural impact of only rewarding numbers (like sales or productivity goals) signals to the organization that “how much” matters far more than “how”. The behavioral element is key to culture building!

Developing people

Holistic employee development programs represent an investment that expresses the commitment to improving and expanding each person’s skills and capabilities in support of their personal and professional goals. Fostering professional advancement plans and personal wellness will go a long way to build mutual loyalty. When employees feel valued and appreciated, they are more engaged and generate better results for themselves as well as the organization.

Measuring what’s important

Clear OKRs (Objectives & Key Results) combined with a structured and systematic goal planning process aligns the organization’s performance goals with employee behavior. When goals are SMART and well understood, decisions making will be more effective and results-focused contributing positively to the culture. When culture, business, and talent are aligned, it creates a sustainable competitive advantage for the company.

Effective on-boarding of new hires

The on-boarding process presents an opportunity to share your culture with new employees. Some CEOs tend to get personally involved in sharing their culture with every new hire. It is the perfect time to set clear expectations and make sure every employee feels a part of the culture from day one.

Comprehensive Benefits

Employee benefits emphasize the importance allocated to the health, wellness, and security of employees and their families. As executives and business leaders we like to hear ourselves boasting how much we value our people being the most important asset of the company, but do we really mean it and act on it? Like the regular compensation, benefits offer a measurable factor of comparison between companies and cultures. The right employee benefit programs will enhance retention, engagement, and consequently performance.

Good luck with enhancing the culture of your company, it is a very profitable investment!

If you feel you and/or your organization has untapped potential, let’s talk! Contact us or set up a FREE call with certified business coach Manfred Gollent.

Manfred Gollent

Manfred Gollent is a certified business coach and the founder of QLI International LLC. He works with a variety of clients from Fortune 500 executives to small business entrepreneurs on leadership and strategy development since 2006. Prior to founding QLI International, Manfred has been a turn-around executive in a Fortune 500 company with global operations. During his 30+ years in the corporate world, he led the rebuilding of underperforming subsidiaries in the United States, Europe, and Asia by developing their leadership team and organization, restructuring their market portfolio, operations and efficiency to improve results toward meeting investor’s expectations. Aside from his international corporate career, Manfred has served on company boards in the UK, Belgium, Norway, France, Spain, Italy, Germany, Singapore, Philippines, Hong Kong, Taiwan, Australia, and the United States.