Greg Smith, formerly of Goldman Sachs, recently wrote an op-ed in The New York Times about why he was leaving the company. The piece is an eloquent testament to how a strong culture affects organizations.
Goldman would probably prefer to block out this PR nightmare, but Smith put it out there:
"Culture was always a vital part of Goldman Sachs’s success. It revolved around teamwork, integrity, a spirit of humility, and always doing right by our clients. The culture was the secret sauce that made this place great and allowed us to earn our clients’ trust for 143 years. It wasn’t just about making money; this alone will not sustain a firm for so long. It had something to do with pride and belief in the organization. I am sad to say that I look around today and see virtually no trace of the culture that made me love working for this firm for many years. I no longer have the pride, or the belief."
If Smith feels this way, you can bet that he’s not alone. The employee turnover is costing Goldman millions of dollars every year.
Company culture is defined as the values, attitudes and behaviors that contribute to the unique social and psychological environment of an organization. It's otherwise known as the “way things get done around here.”
Although culture is in vogue right now because of Smith’s account and others, its status as a major player in organizational success goes back decades. In the 1990s, Harvard Business School researchers James Heskett and John Kotter examined the corporate cultures of 200 companies. They assessed how each company’s culture affected its long-term economic performance.
They found that strong corporate cultures that facilitated adaptation to a changing world were associated with better financial results—up to 900 percent appreciation in equity value.
However, building a great culture can be daunting, especially if you haven’t given much thought to it. Here are five steps to make the process a little easier.
1. Define It
Gather your leaders and employees together and start talking. Ask the following questions.
What does this company strive to do above all else?
What core values do employees in this organization share?
How would we describe our model employee?
Why would customers want to buy from us rather than a competitor?
Encourage an open conversation, even if some things are difficult to hear.
2. Shape It
There may be a disconnect between your current culture and what you want it to be. Embrace the gap and foster aspiration: This is an opportunity.
Once you’ve arrived at a consensus, create internal materials that showcase what the new culture is about and use every communication as an opportunity to remind employees. Resist the urge to limit the culture conversation to one exercise.
3. Infuse It
Managers and employees should make sure that the culture is infused into everyday life in the organization. Be sure to reward individual actions that reinforce the culture in a positive way.
Show that you value customers and employees by being receptive to cultural feedback. Protect your change initiatives by insisting that they closely align with the culture, top to bottom.
Zappos, a company that's often cited as having a great culture, does this brilliantly with its annual Culture Book. The book showcases personal statements about what the company means to its employees.
4. Sustain It
Along with frequent communication, the best way to build momentum for your culture is to be consistent. Everyone, from the CEO to the guy who works part-time in the mailroom, should exhibit behavior that supports the culture.
Doug Conant, the former CEO of Campbell Soup Company, was famous for taking a half hour each day to walk the halls in his tennis shoes and chat with employees, demonstrating Campbell’s culture of openness and accessibility.
5. Handle Negativity
Deal with negative behavior that threatens the culture swiftly and completely. If you allow cracks to form in your foundation, you risk becoming another Goldman Sachs.
Alexandra Levit has been a Wall Street Journal syndicated columnist on business and the workplace. She is the author of Blind Spots: The 10 Business Myths You Can’t Afford to Believe on Your New Path to Success. As Money magazine’s Online Career Expert of the Year, she regularly speaks at organizations and conferences on issues that modern employees face.
Learn more in OPEN Forum's Company Culture 2012 series.
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