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What holds
an organization together and motivates the people within
it to do the right thing rather than the easy thing? The
answer is culture—the values, mindsets and behaviors that
constitute an environment conducive to success.
The
importance of a winning culture was underscored in a
recent Bain & Company survey: 81 percent of executives
agreed that a company without a winning culture was
“doomed to mediocrity.” But what exactly is a winning
culture? It has two defining characteristics:
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A unique
personality and soul based on shared values and heritage.
Toyota’s emphasis on quality and cost efficiency isn’t the
same as Enterprise Rent-A-Car’s focus on customer service.
Yet every employee in these companies would have no
trouble identifying the company’s values and priorities.
§
Cultural
norms and behaviors that translate the organization’s
unique personality and soul into customer-focused actions
and bottom-line results.
We have
observed that companies that create and sustain winning
cultures tend to implement these five key steps:
1. Perform
a culture audit and set new expectations. Understanding
what’s unique about a company’s heritage, what’s strong in
its current culture and what the culture is missing
provides a solid base on which to build a culture-change
effort. To gain this understanding, perform an audit of
the culture.
Have
one-on-one discussions with a broad sample of employees or
conduct an organization-wide survey. A review of “cultural
icons,” such as a vision and values statement or the
insights of a founder that are passed around within a
company, often highlight some of the core elements of the
culture.
When Gail
Kelly, the former CEO of the Sydney, Australia-based St.
George Bank, first arrived at the financial institution in
2002, she found that it had a strong and enduring heritage
of taking care of its customers. What was missing? A
culture audit revealed that managers weren’t accustomed to
being held accountable, they didn’t collaborate
effectively across departments and they were slow to make
decisions. Employees in the branches were uncomfortable
offering additional products to loyal customers or even
asking them for referrals.
For St.
George to boost its financial performance, it needed a
culture in which everyone was accountable for generating
new business.
2. Align
the team. Aligning the management team is one of the most
critical steps in the process of building a winning
culture. Often, a company finds that it needs to move new
managers in and a few managers out to create the necessary
enthusiasm and momentum.
At St.
George, Kelly found that the bank’s management team was
siloed; its members had little incentive to cooperate with
one another and build additional revenue from one
another’s customer relationships. She got rid of the silos
early, setting clear expectations that the bank’s business
leaders would work together. She also found a couple of
high-level cultural saboteurs who had to be moved out of
the organization for a new culture to take hold.
3. Focus
on results and build accountability. Culture is a means to
an end, not an end in itself. The end is your business’s
strategic agenda. To create a culture that supports that
agenda, set targets for the business and be explicit about
how these targets cascade down to individual managers.
At St.
George, this step included tracking customer service and
advocacy at every level. These metrics accounted for at
least 15 percent of each employee’s evaluation, including
Kelly’s.
4. Manage
the drivers of culture. Culture may be a soft concept, but
it is shaped by some hard disciplines, including
organization structure, decision rights, talent management
systems and measures and incentives. For any significant
culture change to occur, these elements must be aligned
with the new direction.
Kelly
acknowledged the need for a supportive infrastructure in
an analogy she used to sell St. George employees on the
need for change. The company’s passion for the business
and its care for its customers was “a fantastically
growing vine,” she told employees. The trouble was, the
bank lacked a firm trellis—the framework of management,
discipline and strategy to keep the vine growing in the
right direction. The key was to build a trellis to help
the vine grow.
5.
Communicate and celebrate. Culture change can be a long
journey. To make sure the organization is on the right
path, leaders need to keep attuned to customers’
perceptions and suggestions. Kelly made a habit of calling
a dozen or so customers each week, holding lunches with
St. George clients and visiting bank branches to shake
hands and hear concerns.
St. George
executives followed suit. Twice a year, 100 of the most
senior managers attend “The Listening Post.” They sit in
the customer-service center, listen to calls where service
representatives handle customers’ problems and afterward
sort through what worked, what didn’t and how to
disseminate best practices.
None of
these wins translated into a new culture overnight, but
the results show that St. George is clearly pointed in a
new direction. Kelly and her team delivered double-digit
earnings growth for four straight years.
Paul
Meehan is a partner with Bain & Company in Hong Kong.
Darrell Rigby is a Bain partner in Boston. Paul Rogers is
a partner with Bain & Company in
London. |
