Longstanding BizTimes Milwaukee readers will recognize the great importance I place on culture.
Simplistically, culture might be described as “the way we do things around here.” Elements of culture that are visible within an organization include purpose, goals, processes, performance measures, corrective mechanisms, language, barriers, power/status, relationships, reward systems, ideology, etc. The extent to which intentional practices are pursued in these and other areas has a lot do with how effective an organization is.
Simon Sinek, in his powerful book, “Start with Why” wrote about the practical implications of paying attention to “the way we do things around here.” In the book, he highlighted three important questions organizations and the people who lead them need to ask and answer: “What?” (What goods, products or services do we provide?), “How?” (What mechanisms or processes do we use to carry out our work?) and “Why?” (What drives us to carry out our work?).
Let me share a story to illustrate the powerful implications of Sinek’s questions. Company A makes widgets (the “what”) by using primarily industry-standard but some proprietary methods (the “how”), in order to make as much money as possible for its shareholders (the “why”). Company B makes widgets (the “what”), by using primarily industry-standard but some proprietary methods (the “how”), in order to make a profit for its shareholders while making positive contributions to the multiple stakeholders with which the organization interacts (the “why”).
For which organization would you rather work? For which organization do you think most people, including new entrants (i.e., young people) to the workforce, who tend to have broader expectations for their employers beyond merely providing them with a paycheck, would rather work?
If you are like most of the audiences of which I have asked this question over the past few years, Company B is your enthusiastic reply. Most people, I have learned, prefer to work for employers that not only are profit-oriented but also are people-oriented.
When leaders and organizations are mindful of culture, they pursue practices such as focusing on the “triple bottom line” (i.e., profit, people and planet), quality of work life (i.e., a values-based approach to organizational practices), multiple stakeholder perspective (i.e., concern for employees and their families, vendors, suppliers, the surrounding community, etc.), servant leadership (i.e., “leader as organizational steward”), etc. Such leaders recognize that such practices send powerful messages about what matters, what is important and what kind of behavior is expected. Over time, such practices build powerful cultures that represent powerful frameworks for facilitating individual, team and organizational effectiveness.
Accumulating research has demonstrated that by focusing on culture, leaders can realize gains relative to a host of organizational variables and key performance indicators, including financial performance, competitive advantage, quality and efficiency, customer satisfaction, employee morale, employee commitment, employee productivity, and employee physical and emotional health.
One concrete example along these lines is the research done by the Ethisphere Institute (www.ethisphere.com) which researches and designates the world’s most ethical organizations. Among other things, this organization has documented that organizations that strive to build ethical cultures realize performance gains at the bottom line. Specifically, they have shown that organizations they have designated as “most ethical” outperform the S&P 500 and the FTSE 100.
Let me conclude with a favorite story of mine. I once interviewed one of my all-time leadership heroes, Dick Pilsner, founder of D&S Dental Laboratory Inc. in Waunakee. During our interview, I asked him to describe his leadership philosophy and he said, “Of course we need to work on numbers, we need accounting, but the financial element doesn’t dictate the choices that we have; the ‘other bottom line’ does. It’s all of the things that some people today might call ‘emotional intelligence,’ all the things that add up to ‘corporate culture’ – attitude, compassion, the spiritual – all those elements that are in the ‘other bottom line’ besides the financial one. What we’re trying to do is build a community here at work.”
Leaders seeking a method by which they can catalyze their organizations are encouraged to delve into Pilsner’s concept of the “other bottom line.” By focusing on the other bottom line, or culture, they just might discover and unleash a powerful formula for affecting the traditional financial bottom line.
Daniel Schroeder, Ph.D., is president and chief executive officer of Brookfield-based Organization Development Consultants Inc. (www.od-consultants.com). He can be reached at (888) 827-1901 or Dan.Schroeder@OD-Consultants.com.