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Elizabeth Whalen, 05/20/2019
If your firm is focused on building a client base or amplifying revenues, shaping your company's culture may not be top of mind.
That could be a mistake.
Culture may sound a little touchy-feely—an abstract concept that takes a backseat to canvassing for new clients and hiring great staff. But company culture—a set of values, practices and beliefs—guides how everyone at the company thinks and acts. When culture is developed carefully, it leads to motivated employees who work toward common goals.
Company culture tends to rise to the top of our news feeds during tight labor markets, when companies strapped for workers lure prospects with lax dress codes, flextime offerings and group outings. But company culture is about more than perks. You sow the seeds of culture every day through a thousand small actions, whether you realize it or not—in the way you hire, structure meetings and respond to change. Alan Moore, co-founder of XY Planning Network in Bozeman, Montana, compares creating a strong culture to constructing a home: “If you build the foundation wrong the first time, it's really painful to fix it."
In Moore's experience, the culture that emerges incidentally may still work well enough, at least when a firm is small. But culture “matters a lot more the more you grow," he says.
When XY Planning Network began, the original three team members blended together naturally and communicated directly every day. Now that the firm has nearly 50 employees, Moore notes that he needs to be more concerned about communicating why certain cultural elements are in place. For example, the firm doesn't negotiate salaries, a practice that has frustrated some employees. “They would say, 'I want to negotiate salary,' and I would say, 'No, we don't do that here.' Finally, I thought, maybe I should tell people why we don't negotiate salaries," he says.
He shared his key reasons with the XY Planning Network team. First, negotiation means some employees make more because they asked for more, which Moore sees as a driver of the wage-gender gap, and second, he is paying for peak performance. People not performing at that level don't remain with the firm.
The response? “People loved it. They were so appreciative to understand what it takes to get a raise here."
The leader's role
Moore sees culture as the foundation of any advisory firm and recommends leaders think about it as early as possible. In fact, he wishes he had started the process of defining the reasons for how XY Planning Network makes decisions much earlier. Doing so creates a sense of transparency and peace of mind—his employees now understand the rules of the game they're playing.
"Whether you're building a new firm, growing one, or simply managing on an ongoing basis, leaders have the power to improve a firm's performance and growth through culture," says Chad A. Hartnell, assistant professor in the Department of Managerial Sciences at Georgia State University's J. Mack Robinson College of Business in Atlanta. You start by realizing that culture is a malleable thing and there's more than one way to shape it over time.
Hartnell notes that there are three ways to approach your firm's culture. The first is to be a culture conformist—to do everything possible to embody the values of the current culture. This approach might work for a while, but Hartnell likens it to a leader putting on blinders. When market conditions change, firms with culture conformist leaders risk being caught off guard and unprepared to respond.
At the other end of the spectrum is the culture contrarian—someone who wants to toss out the current culture and institute a new one. That's generally unproductive, and Hartnell advises against it. Culture contrarians meet with resistance from employees, largely because they don't understand why the leader wants to change everything, including processes and initiatives that are working well.
According to Hartnell, the best approach is to be a culture contributor—one who influences culture in deliberate ways to enhance the organization's overall effectiveness.
Consider that every business needs both a task focus and a relationship focus. Task focus is all about productivity, results and personal accountability. Relationship focus concentrates on employee involvement, collaboration and commitment to the organization. Cultures naturally emphasize one or the other. The companies with the best financial results, Hartnell has found, have leaders who counterbalance, rather than reinforce, that natural emphasis.
“If your culture is particularly good in terms of employee involvement, then your job is to leverage those elements into productivity … in other words, take on a task focus," he says. “If, on the other hand, you have a culture focused on producing, then your job as a leader is to make sure you lead with a relational style. Seek people's input, ask for their opinions and act on that."
Rein it in
Moore is always on the lookout for ways to improve the culture of his firm, which has helped launch 830 advisory firms since 2014. He says the key is not to try to tackle too much at once. For instance, he often finds ideas in what he's reading, but he's careful about how he implements those ideas. Consider a CEO who reads The Checklist Manifesto and suddenly has the whole company building checklists, for instance. If he goes on to read another, potentially contradictory, book and then makes its suggestions top priority, chaos would ensue.
“While the big ideas are good, chaos is bad. So, I read a book and take the one thing from it that I can apply," Moore says. “I ask, 'What's the one part of this that we can incrementally implement that will draw us closer to our goals and create the culture we want to build?'"
To determine which ideas may work for your firm, Hartnell cautions against chasing fads—such as the latest workplace perks—and recommends challenging your own assumptions and accepting that circumstances change. “Savvy leaders examine what's changing in their environment to understand how what they've done in the past may not work in the future."
Successful culture contributors frequently challenge their assumptions by asking themselves two questions: How do my firm's values and beliefs contribute to our core competencies—that is, what do we do better than our competitors? And what are our cultural deficiencies?
Slow and steady
Once you identify what big ideas will work for your firm, the question becomes how to implement them. Hartnell advises taking the following steps.
First, communicate clearly to your employees about where you want to take the firm and explain why current assumptions are not viable for future firm success. Without that understanding, employees feel uncertain, which can impact their performance. “They're trying to figure out 'What do I do now? How do I do it? Will I still be a good fit?'" Hartnell says.
Next, demonstrate what the desired culture looks like in practice. “The second step is to be intentional about linking your values and beliefs to specific behaviors, policies and practices," he says, citing the Credo at Johnson & Johnson as a great example of this. The Credo statement communicates a “priority of beliefs"—starting with customers (parents and children, plus medical professionals using their products). The company's second priority is employees, and the Credo outlines what that means, including fair wages and work/life balance. Having all of this in print is important, Hartnell says. “If you leave it up to employees to interpret it, they may see things differently than what you do as a leader, and they could see inconsistencies you didn't intend."
Finally, troubleshoot failures and celebrate successes. Identifying a problem's cause will likely reveal assumptions that need challenging. And celebrating successes reinforces what is working.
Hartnell adds that culture change tends to happen slowly. Culture is based on values and beliefs, and people are deeply invested in those. “They don't just adopt a new set instantaneously. If you articulate a new set of values and beliefs, you need to communicate how people will fit within those and benefit from adopting them." When it comes to refining your firm' s culture, patience is more than a virtue — it's a necessity.
Content provided is for educational purposes only and is not intended to be advice for any firm.
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