Culture’s Impact on the Bottom Line

In his book, The Culture Cycle, James L. Heskett wrote that effective culture can account for 20-30% of the differential in performance when compared to “culturally unremarkable” competitors.

Culture has a significant impact on the bottom line.

Burson-Marsteller and the Great Place to Work Institute asked senior executives from 20 of the top 25 “best multinational companies” for 2011 about the value of a positive work environment. Deidre Campbell highlighted the findings in this article on the HBR Blog Network:

• They invest more in their employees: 30% are investing more in work-life programs such as flex-time and health benefit while the other 70% are holding steady. None is cutting back.

• They provide stability: 75% of respondents valued most those programs that communicate brand mission and provide career development opportunities, compared to 15% who valued traditional benefits like health insurance and family leave and 5% who valued onsite benefits such as cafeterias and childcare.

• They value culture: “When asked which elements of workplace commitment most benefit daily operations, companies ranked culture at 80% and recruitment/retention at 70%,” writes Campbell. Competitiveness, customer loyalty, innovation, and productivity each garnered less than 20%.

• They share their story: 70% of respondents said customers are the most important external audience for understanding the company’s commitment to being a great workplace. Investors came in second at 35%. The “great workplace” story is part of these companies’ brands, how they do business, and that’s a story they want to share.

As Campbell concludes, “Being a great workplace is the result of a long-term investment in their employees. As the…

Creating a Customer Culture

It’s always refreshing to hear a company that excels at serving customers describe its approach, especially when that company is in an industry that generally treats its customers like cattle.

Hawaiian Airlines has ranked among the leaders in customer service for years and is routinely ranked first by the US Department of Transportation for on-time performance and fewest cancellations. Charles Nardello oversees aircraft, flight, and customer service operations at Hawaiian Airlines. In a recent article on the HBR Blog Network, he discusses how the airline improved operational performance while maintaining service excellence, citing three things a company must do well “to maintain an unbeatable level of operational excellence: (1) Get very close to their customer; (2) Benchmark against itself on a consistent basis; and, (3) Empower employees to address the unexpected.”

A customer focus permeates Hawaiian Airlines. “For every decision we make, from the most basic to the complex, the customer always comes first—they are the driver of our decision-making and strategic planning,” writes Nardello. A culture that brings the customer perspective to every decision acts far differently than a company where customers are an afterthought or are only considered when addressing customer issues.

Hawaiian Airlines has an independent agency survey customers every month on their experiences with the airline and factors the results into every employee’s bonus pay. “Every employee receives a scorecard rating them on how well they’ve performed in interacting directly with the customer or, in the case of senior executives, on decision-making and strategic planning,” Nardello writes. It’s an approach…

Bringing Your Priorities to Life

According to Doug Conant, former CEO of Campbell Soup, “a leader’s job is to take people from where they are today to where they need to be tomorrow and to do so as quickly as possible and in a way that is sustainable.” Conant’s results at Campbell Soup suggest that his leadership approach is effective: The company was the worst performer of all major global food companies when he arrived as CEO in 2001. In 2009 it outperformed the S&P Food Group and the S&P 500.

Along with Mette Norgaard, Conant has written a book about his leadership philosophy called Touchpoints: Creating Powerful Leadership Connections in the Smallest of Moments. IndustryWeek reviews the book here.

In his book, Conant describes how he turned around Nabisco Food Company, his gig before going to Campbell Soup, “with a philosophy of being tough-minded on the standards and tender-hearted with people.” “Some joked that my approach was a cross between Pollyanna and Don Quixote,” he said, “but I have no apologies. The people were highly engaged and delivering excellent results. We grew earnings at a double-digit rate for five straight years. If that’s a sign of weakness, I’ll take it every time.”

He used the same approach—successfully—at Campbell Soup. The approach focuses on TouchPoints, those moments when two or more people get together to deal with an issue and get something done. As the authors write, “in our experience, these TouchPoints are the real work. They are the moments that bring your strategies and priorities to life, the…

Baldrige Promotes Resilience

No matter what your organization does, it must be resilient to overcome adversity, whether that adversity comes from a recessionary economy, global competition, runaway healthcare costs, or shrinking budgets in education and government. Baldrige Award winners exemplify resiliency through visionary leadership, employee engagement, open communication, and a focus on the future.

George S. Everly, Jr., PhD is associate professor of psychiatry at The Johns Hopkins School of Medicine, executive director of Resiliency Science Institutes, and author of Resilient Leadership: When Failure Is Not an Option. In “Building a Resilient Organizational Culture,” he writes that “just as individuals can learn to develop personal traits of resilience, so too can organizations develop a culture of resilience.” This occurs when key leaders demonstrate four core attributes of optimism, decisiveness, integrity, and open communication. When a few leaders model these behaviors, Everly notes, “we believe they have the ability to change an entire culture of an organization as others replicate the resilient characteristics they have observed.”

The framework for changing the culture addresses four areas:

1. People prosper from success. Create an environment that makes it possible for people to succeed, especially early in their careers, and then increase the difficulty and complexity of tasks.
2. People learn while observing others. Assign new employees to successful work groups so they can experience “vicarious success.”
3. People need encouragement, support, and mentoring. “Research suggests that the single most powerful predictor of human resilience is interpersonal support.”
4. People need basic training in how to manage personal stress. Everly calls this “developing psychological body armor.”

He concludes with examples of resilient organizations…