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3 Principles for Creating a Profitable Company Culture

3 Principles for Creating a Profitable Company Culture

by Jake Herway

Story Highlights

  • A healthy company culture can attract top talent and customers
  • Authenticity should be the first consideration when developing culture
  • An exclusive focus on the aspirational aspects of culture might cost leaders credibility

I work with a client who's had a banner year attracting rare talent to their organization.

They managed to win over a group of rare technical specialists. It's a valuable coup -- not only did this client win the competition's most lucrative technical experts, they got the competition's customers, too.

So I asked some of the new specialists why they came to work for my client. They said one thing -- "for the culture." They believed they could do more and contribute more than anywhere else because of my client's culture.

Let that sink in. This group of high-demand, talented experts jumped ship for my client -- not because of pay, location, status or an extra week of vacation -- but because my client is winning on culture.

And it wasn't luck. It was the result of the company's leaders being smart and determined about building their culture. They invested in the psychology of business, and they're starting to pull ahead of the competition by miles as a result.

Unfortunately, when most leaders start defining and building their culture, they focus first on the culture they aspire to have. What leader doesn't want their employees to aspire to something greater? It's more exciting and, frankly, easier to say who we want to be. So it makes sense that this is where leaders start.

But when they can't deliver on that culture, they wonder where they failed.

Instead of starting with the aspirational, use these three principles to create a culture that will do more than sound good on paper: authenticity, uniqueness and profitability.

An authentic culture helps you deliver on your promises.

Start by giving your employees the chance to define the best of your culture as it is, right now. What is currently working? Identifying the reality of the current culture provides a starting point.

After that, the organization can gauge how realistic a future aspirational culture is. Is it a major departure from what's working now? Is it a minor tweak? Is the aspirational already happening in pockets across the organization and simply needs to be scaled?

An authentic definition of your culture is the only way to scale the culture effectively and to deliver on the promises it makes to candidates, employees and customers. That definition of the authentic culture tells leaders what they need to know about their people to meet them where they are and adjust leadership's approach and communication to accomplish maximum buy-in and success in moving toward an aspirational state.

I have another client that recruited a prized IT expert, even though he was happy in his old job, solely on the experience this IT expert had while working with the company. The authenticity of the culture carried through to the experiences he had as a customer, no matter who he worked with at my client's organization. With every interaction, he had the same experience.

The culture of my client's company resonated perfectly with this IT expert -- so perfectly that he neglected to ask how much my client would be paying him. He joined without ever discussing compensation!

An authentic definition of your culture is the only way to scale the culture effectively and to deliver on the promises it makes to candidates, employees and customers.

Identifying that which is authentic to your culture helps every employee fulfill the brand promise consistently. And what we focus on grows. Defining the best of your authentic culture now validates what is good, creates a willingness to engage in an aspirational state, and focuses your talented people on what's working well, not only what they perceive to be broken.

There's more potential for growth in a strength than in a weakness.

A unique culture helps you build a following.

Culture is unique to each organization, just as every individual is unique in your organization.

The unique aspects of a culture differentiate it. If your culture sounds like, feels like and is experienced like any other, it's not going to have the power to bring in top talent and top customers.

Identifying what is unique to a culture is in large part derived from the organization's purpose. Why does the organization exist? Who is it serving? This purpose and who the purpose is for will lead to a uniquely differentiated and attractive culture.

A client of mine moved an executive into a leadership role in a new region. At first, this leader felt isolated and alone, facing an insurmountable task. After a few candid conversations with employees in the region, he discovered an authentic culture of people wanting to win together. This was very different from this leader's prior experience at headquarters. Once open to the unique culture of the region, he was able to extract the fullest value and benefit from his colleagues. But before he could get the most out of his team, he had to understand the unique culture in that region.

A mistake many companies make in defining a unique workplace culture is being too simple or too complex in their definitions. Cultural labels risk excluding people from connecting with the culture to begin with or being so complex that it ends up saying nothing at all. Cultural definitions need to find the balance between being too simple (risk of exclusion) and too complex (risk of confusion).

For example, a culture that "puts customers first" may have salespeople aligned with that purpose, but operations or back-office employees may have trouble feeling an affiliation. They may not even know which customers this statement refers to. Are we putting our internal customers first or, if we're in a B2B industry, are we putting our immediate customers first or should it be the final retail customer?

Conversely, too complex a statement, like a culture that "continually disseminates functionalized strategic theme areas so that we may endeavor to deliver the bottom line results that our investors expect and deserve" is confusing and won't resonate with many if any at all.

A profitable culture gives people a purpose and a mission (and a paycheck).

Your best culture has to help your business. Your best culture is both a great place to work and profitable. It is a miss for leaders, employees, customers, and communities to have a happy company that isn't growing, isn't making money, and isn't realizing its potential.

Without profit, there is no purpose. Without cash, there is no company. Without money, there is no mission. Your best culture is not only authentic and unique but also one that consistently keeps and creates customers.

It's easy to get off track. We're all attracted to shiny objects, whether they be tech advances or business theories. Some of these things are important and some are fads. Unless the exciting new thing aligns with your purpose and builds the brand to increase profit, that shiny object becomes an obstacle.

As rewarding as culture building can be, it often becomes an overwhelming exercise in busyness instead of productivity. Profit is the objective.

If you're looking for a cultural change, the biggest ROI starts with defining what's unique, authentic and profitable, and investing in that first.

Founded on proven principles of behavioral economics captured in the disciplines of Appreciative Inquiry and positive psychology, this approach can be more quickly and completely adopted. And it is more scalable and useful to the entire organization and its stakeholders.

Why Starting With an Aspirational Culture Isn't the Best Advice

A major leadership misstep is to start by identifying an aspirational culture and pushing it from the top down, without allowing employees a voice in naming the authentic, unique cultural characteristics that are currently profitable.

Aspirational usually doesn't feel authentic or unique to the rest of the organization. If it doesn't align with what comes naturally, people might have trouble finding the aspirational comprehensible or personally relevant.

As a result, culture becomes inert, and leaders lose credibility. Paradoxically, the effort makes culture a stumbling block to performance. And even if the company accomplishes the impossible in pushing the aspirational culture through, it feels out of step.

Unless positioned exceptionally well, the aspirational culture comes across as disingenuous because it isn't the everyday reality of employees.

Leadership needs to understand the authentic, unique culture experienced by employees or risk losing credibility -- and if engagement falls as a result, so will profitability.

Cultures that are smart and deliberate about being authentic, unique and profitable have an extremely rare ability: they can actually see their culture for what it is. Too many companies skip the step of defining their culture as it is today and go right to the fun and exciting work of defining the culture they aspire to have.

Unless positioned exceptionally well, the aspirational culture comes across as disingenuous because it isn't the everyday reality of employees. Just as detrimental, without knowing where a culture is today, a company can't discern how big the gap is between "where we are now" and "where we want to be in the future."

I don't think they're being deceptive or delusional. I think they just don't know how to conceptualize authenticity, uniqueness and how to quantify a profitable culture. They don't know how to build the culture they want because they don't understand the psychology of business.

Another Example of How Culture and Psychology Win in Business

The first article in this series used an example from Airbnb's early days, when the company stopped growing, and its founders searched the data for a solution. It was a doomed effort -- the answer wasn't simply in the numbers, it was in the people they were overlooking.

I used that example because it illustrates a typical, and typically fruitless, business response. We stay in the numbers because they're easy to understand. We overlook people because they're difficult to understand.

But numbers aren't workers. Data aren't the customer. No matter how advanced the tech that obtains it, our data is just a reflection of our people. Companies that use those numbers in service of a humanistic culture -- not as a replacement for it -- get the most performance out of their people and the most profit out of their customers.

Not all companies have the leadership talent -- or the right advice -- to do this. Too many companies are like my client's competition that lost all of their technical experts, or the IT company that lost its best employee.

But companies that can understand the psychology of business? The ones that can identify what's authentic, unique and profitable about their culture? Those are the ones that will win.

Gallup can help you define and create a culture that is authentic, unique and profitable. Learn more by:


Jennifer Robison contributed to this article.

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