How To Cultivate Success In Real Time: Part 1

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					HOW TO
CULTIVATE SUCCESS
IN REAL TIME
                                             PART
      How to Create and Measure
  High-Performance Company Culture
                                             1


         By Joseph Fung   |   CEO, TribeHR
How to Create and Measure a
High-Performance Company Culture




About TribeHR
TribeHR helps companies achieve greatness by being the world’s first Social
HR Platform: The first to connect people, values, goals and results; The first to
connect employees to managers and teams to each other; The first to create an
HR platform that helps leaders truly engage employees to the mission and
values of the organization, and create engagement by helping celebrate
successes in all parts of the organization. It does this with software that is a joy
to use, delivers insights without the social media noise, and eliminates the
usual drudgery of HR administration—so there’s more time to focus on what’s
important.




Copyright © TribeHR Corp. 2012
Waterloo, ON, Canada and Waltham, MA, USA.
All rights reserved.
First Published September 2012.
http://www.tribehr.com
Contents
                                                                                                                                    3
   About&TribeHR&...................................................................................................................&

The$World$Has$Changed—Has$Your$Business?$.....................................................$5
                                                                                                                         5
   What’s&Culture&Got&To&Do&With&it?&....................................................................................&
                                                                                                                    6
   Ingredients&of&High&Performance&Cultures&........................................................................&
                                                                                                                                       6
      Clear&Vision&....................................................................................................................&
                                                                                                                                    7
      Shared&Values&................................................................................................................&
                                                                                                                                 7
      EndGtoGEnd&Culture&........................................................................................................&
                                                                                                                                    8
      Everyone’s&Job&...............................................................................................................&
                                                                                                                                    9
      Transparency&.................................................................................................................&
                                                                                                                               1
      Communication&...........................................................................................................& 0
                                                                                                                                      1
      Learning&.......................................................................................................................& 1
                                                                                                                     1
   The&Bottom&Line:&the&Value&of&Values&.............................................................................& 2
                                                                                                                                    1
      Adaptability&.................................................................................................................& 2
               .                                                                                                                   1
      Enagement& ..................................................................................................................& 3
                                .                                                                                         1
      Return&on&Investment&(ROI)& ........................................................................................& 4

References$........................................................................................................$18

Endnotes$..........................................................................................................$22
How to Create and Measure a
High-Performance Company Culture

The World Has Changed—Has Your Business?$
Business has changed because our world has changed. Information moves at a break-
neck pace, and accumulates even faster. Competitors morph in response to market
shifts as leaders strive to create business models that can pivot on a dime just to remain
relevant and preserve market share.

Today’s employees are better informed and have higher expectations of their
employers. At the same time, employers desperately need people with commitment,
creativity, resilience and agility to succeed in this whirlwind of change.

In response to these needs, the human resources industry is evolving; growing beyond
its compliance roots to emerge as the primary driver of corporate culture and employee
engagement. Now more than ever before, business success is about finding, engaging,
and keeping the right people.

In this new world of business, there is a single question you need to ask yourself: Is
your business keeping pace?

What’s Culture Got To Do With it?
Whether or not you acknowledge it, your company already has a culture. All
businesses have one, either by design or (more commonly) by default. The challenge
lies in fostering a culture that is truly exceptional. Why? Because companies with
exceptional cultures attract and retain the best employees, nurture strong and lasting
customer relationships, and deliver consistently solid business results.

In Corporate Culture and Performance, authors John P. Kotter and James L. Heskett
share evidence that companies with strong adaptive cultures based on shared values
outperformed other companies by a significant margin. Over an eleven-year period,
companies that emphasized all stakeholders grew four times faster than companies that
did not. These companies also had job creation rates seven times higher, stock prices
that grew 12 times faster, and profit performance that was 750 times higher.

In Built to Last, Jim Collins and Jerry Porras show that over a period of several
decades, companies that consistently focused on building strong corporate cultures
outperformed companies that did not by a factor of six and outperformed the general
stock market by a factor of 15.i

Ironically, the pursuit of these successes often sets the stage for a poor culture, which
in turn undermines any chance of business excellence.

It is an unfortunate truth that the importance of building and maintaining a great
culture often gets lost in a deluge of other business tasks that are perceived to be more
urgent. While driving revenues and controlling costs are important to the success and
growth of a business, when a company’s culture erodes (and it will, if unattended!),
profits and overall performance will soon deteriorate. A weak or uninspired business
culture leads to unsatisfied and despondent employees—disengaged, unhappy people
who do not foster excellence.

In other words, while the lack of an exceptional culture may go unnoticed for some
time, the negative impact of a poor business culture will eventually destroy competitive
advantage and can lead to business decline or failure. Conversely, investing time and
resources into developing a culture of success early in the life of the business will pay
immediate and sustained dividends.

A poor or deteriorating culture is common when the workplace is chaotic, company
values are unclear, employees feel unappreciated, and managers are ineffectual. These
conditions often occur when management focuses solely on bottom line results, rather
than on culture, the basic driver of high performance.

The evidence shows that businesses are stronger, healthier, and more profitable when
leaders and managers pay attention to developing a high performance culture.

Ingredients of High Performance Cultures
Simply saying, “we want an exceptional culture” doesn’t create one; it takes time,
focus, and a few key ingredients. While the specific details of your high-performance
culture will vary depending on your leadership style, company brand, and business
identity, the essentials remain the same.

Clear Vision
High performance culture begins with clarity of vision that springs from clarity of
purpose. Everyone in an organization needs to know what they are striving to achieve
and why. People work best when they believe in the vision of an organization; when
they can make decisions on their own in pursuit of that vision; when they have the
skills, knowledge and training necessary to be successful in their roles; and when they
understand the purpose of their jobs and how they contribute.
As a leader, you know that you must always be driven and passionate about your
“why”, but you can’t be everywhere all the time. You have to rely on each individual
in your organization to effectively represent the company to partners, customers, and
the community. If they cannot explain why the company exists, your vision will not
permeate throughout the organization to create the necessary foundation for the high-
performance culture you need. It is not enough to articulate what the company does
and for whom—you must also clearly explain why the company is in business. You’ll
have to persistently communicate this vision in a way that helps employees at all levels
see how the vision relates to their jobs and enables them to pass the message along to
others.

Shared Values
At its most basic level, business culture springs from the character, beliefs, and
behavior of decision makers. Values, expressed verbally or in writing, that are not
reflected in the actions of company executives and managers will not become part of
the organizational culture. In fact, any contradiction between what is communicated
about company values and what is done by management will generate cynicism and
may result in significant backlash from employees.

To prevent this, as a leader you must examine your own values and address any
inconsistency between what you want your organization to stand for, what you
personally believe, and your day-to-day actions. Having established clear
organizational values and gained a commitment from everyone in a leadership
position to operate by those values, it is essential that you communicate what is
expected from your entire team—and make sure to be the first to lead by example.

In high-performance cultures, core values are shared by everyone in the organization
and are demonstrated daily through the actions and decisions made at every level. This
“lived” value-based foundation becomes the spirit and driving force of the working
culture at a fundamental level. In the most effective organizations, shared values
extend beyond the company to reflect a common perspective with suppliers, partners
and customers.

End-to-End Culture
Companies with high-performance cultures know that combining culture and brand is
a recipe for success. Integrating corporate culture and branding means exposing your
customers and business partners to your internal culture. Do not hide what goes on
behind the scenes, but instead take every opportunity to openly express what it is that
makes your company great.

Just as company values are more than words on the reception room wall, your culture
is more than something you talk about when interviewed by the media. Deliberately or
by default, company culture is expressed in everything your company does, everything
it creates, and every interaction that takes place; it is demonstrated at all levels of your
organization, both internally and externally. From suppliers to customers, from
technical support to accounting, from the CEO to the receptionist: company culture is
everywhere and it pays to make defining and communicating your end-to-end culture
a priority.

Everyone’s Job
If you call GoDaddy’s customer service line you will quickly get a feel for the
company itself. When talking to a customer service representative (CSR), you soon see
the company’s culture shine though. The person on the other end of the line has a
personality, doesn’t sound like an automaton, and generally sounds happy with their
job. All-in-all, when talking to a GoDaddy CSR you get the feeling you are talking to a
helpful friend. They offer exemplary customer service.

You can multiply that positive experience in your organization by making customer
service everyone’s job. When all employees consider themselves to be CSRs, your
customers benefit. But when all employees consider themselves to be CSRs and they
embrace that everyone is someone’s customer, every person in your organization and every
person connected to your organization benefits.

In high-performance cultures, people think about how their jobs affect both internal
and external customers, and they are given latitude to make decisions and solve
problems in alignment with company values. The idea that employees who have no
direct interaction with customers can ignore customer service cannot co-exist with a
culture of success. Leadership must do whatever it takes to erase this idea and replace
it with the belief that customer service is everyone’s job.

Imagine your company’s CEO spending a day working directly with your most junior
employees. This kind of job swapping can be one of the most powerful tools in a high
performance culture. To implement it properly, senior employees (the CEO, COO,
CFO, etc.) temporarily take on the roles of front line employees and vice versa. This
accomplishes three important goals: Management gains direct insight into the daily
experiences of employees; employees see management experiencing their reality; and
employees get first-hand experience of what management does. This creates a very
strong symbiotic relationship and reinforces the recognition of internal customer
relationships.

To be effective at building the perception that customer service is everyone’s job (and
everyone is a customer), job swapping requires commitment. If the CEO is answering
the customer service line, she has to stay there and work a full shift, just like everyone
else, and take standard breaks, just like everyone else. Likewise, employees can’t abuse
the day of “power” they have been granted by going golfing. Within the limits required
by issues of confidentiality, employees filling executive level and upper management
positions should be given the opportunity and authority to deal with real situations.

Zappos.com is ranked as one of the top ten companies to work for and is a leader in
high performance culture. The CEO of Zappos.com, Tony Hsieh, regularly works the
phones and it has inspired his employees. His employees are faithful, happy, and
productive because Tony is one of them (even though he happens to own the place).

        “For%me%as%a%team%member,%knowing%that%my%CEO,%who%is%in%the%media%talking%
        about%our%exceptional%customer%service,%is%one%of%the%people%that%make%it%happen%
        is%huge.”%

                                    –%Corey%Schreiber,%Zappos%Sr.%Representative%        %           %

Tony is not new to business success. At age 24, he sold his first company,
LinkExchange, to Microsoft for $265 million. Zappos.com was started in 1999 and is
now worth more than $1 billion. Tony credits his employees and their acceptance of
customer service as everyone’s job for most of that growth. In turn, his employees feel
they are an integral part of the company’s success and project a positive energy and
mindset that is immediately evident to all customers, internal and external.

Transparency
“Transparent organizations must share information that allows stakeholders to make informed
decisions regarding their relationship with the organization. This is true of all stakeholders,
internal and external. This does not mean that they must share all information, but that
information is substantial and useful to the stakeholders. Transparency also requires
accountability. Transparent organizations are accountable for their actions, words, and decisions,
because these are available for others to see and evaluate.”ii

A 2009 studyiii of the relationship between organizational transparency and employee
trust concluded that the results “…provide strong evidence that trust and transparency
are positively related. As employee perceptions of organizational transparency
increased so did trust… Additionally, the three components of trust (competence,
integrity, and goodwill) and three components of transparency (participation,
substantial information, and accountability) are positively related, while the fourth
transparency component, secrecy, has an inverse relationship with the other
components.”

In other words, “Because I told you to” won’t cut it if you want a truly high performance
culture. For that, you need trust—and trust can’t grow in the dark.
This doesn’t mean that confidential or sensitive competitive information should be
broadcast, or that employees should be made to stress over every obstacle the company
faces. It does mean that employees need to know what impacts them directly and why.
It means that they should have access to as much information as can be shared about
company strategy so they can understand what drives the vision, and contribute in a
meaningful way. It means that informed employees should be encouraged to ask
questions and offer feedback in an open dialogue.

Extending this environment of openness beyond the boundaries of the company also
allows customers and other external stakeholders to make informed decisions about
dealing with you and builds your reputation as a trusted organization.

Communication
Communication has always played a significant role in the workplace in various
forms, including phone calls, meetings, memos, one-on-one conversations, reports,
and more recently, email and text messages. In recent years, the requirement for
communication has expanded, beyond a largely top-down management-driven flow of
information, to become a matrix of vertical and horizontal channels each carrying a
steady, bi-directional stream of data.

Employees at all levels are finding that the ability to communicate effectively plays an
increasing role in their success on the job. This is especially true as our economy relies
more and more on knowledge and service workers and increasingly requires even
production workers to incorporate collaboration and teamwork into their work and to
master complex technologies.
Communication is more than just a tool for getting a job done—it is also a significant
factor in the development of trust and organizational culture. Timely, accurate, and
useful information communicated in an open environment that encourages feedback
and participation supports a culture of success.

Of course, for true communication to happen, the intended message must be received
accurately. A recent blog post by China Gorman discusses MetLife’s 10th Annual
Study of Employee Benefit Trendsiv. The finding that caught her eye was the widening
gap between employer and employee perceptions of company loyalty toward
employees (reproduced above). The study results show that more employers feel a very
strong sense of loyalty to their employees, but these same employees perceive an
opposite trend. To ensure that communication reinforces a culture of success, make it
clear, make it unambiguous, and confirm that it was received as intended, because
perception is reality.

It is also important to note that more is not always better. Increased communication
that is contradictory or inaccurate creates distrust and apathy. On the other hand, if
increased communication consistently demonstrates and reinforces company values, it
is an antidote to apathy and help build trust.

Research into the role of communication in fostering trust and employee involvement
shows "that in the relationships with coworkers and supervisors, it is quality, not
quantity, of information that best predicts trust. In contrast, in the relationship with
top management it is the quantity, rather than quality of information, that is
significant. In all cases, trust was very closely tied to perceptions of organizational
openness, which in turn predicted employee involvement."v

Learning
High performance cultures recognize that “Learning is valuable, continuous, and most
effective when shared, and that every experience is an opportunity to learn” vi. It is
generally agreed that ‘Learning Organizations’:

   •   Provide continuous learning opportunities
   •   Use learning to reach their goals
   •   Link individual performance with organizational performance
   •   Foster inquiry and dialogue (making it safe for people to share openly and take
       risks)
   •   Embrace creative tension as a source of energy and renewal
   •   Are continuously aware of and interact with their environmentvii

One accepted definition of learning organizations states that they are “characterized by
total employee involvement in a process of collaboratively conducted, collectively
accountable change directed towards shared values or principles.”viii In these
organizations, learning begins with an employee’s first onboarding experience and
continues through every stage of his involvement. In a learning organization,
employees look to their leaders for direction, and see a demonstrated commitment to
learning and personal growth in both policies and actions.

The Bottom Line: the Value of Values
When employees, customers, and even suppliers recognize that a company stands for
something, believes in something, and pursues a worthy vision with a passionate sense
of purpose, they all try harder to make it succeed. Employees become focused and
fully engaged in the mission. They adapt to change with astounding nimbleness and
become a continual source of creativity and innovation that fuels growth and value
creation. Adaptability, employee engagement and improved profitability are the true
measures of the value that values bring to your company.&

Adaptability
A company that accepts a default culture often operates much like a Flintstones cartoon
rerun. Fred shows up to work unenthused and begrudgingly stamps his timecard.
Boring work is punctuated only by his daily summons to the boss’s office for the
standard bullying tirade over something that is entirely out of his control. At the end of
the day when the whistle blows, Fred yells “Yabba Dabba Doo!” in celebration as he
escapes one more day of tedium with his paycheck clutched in his hand.

If your business culture is ailing, this likely reflects the typical workday for your
employees. With little to motivate them beyond a paycheck, employees are listless
about their work and give little thought to the company’s success or survival. Worse
still, when employees and managers are just punching time-clocks and saving their
energy and creativity for the weekends, a company becomes rigid and inadaptable.
Changes in products, procedures, and processes, which may be vital to continued
success, are met with feigned enthusiasm at best and more often with resistance or
outright subversion.

That’s why the top companies in the world, such as Boeing Aircraft and Zappos.com,
put substantial resources into maintaining exceptional business cultures. They don’t do
it because it is the chic thing to do; they do it because they recognize the value of a
loyal, committed and adaptable workforce. Every employee, from the CEO down to
the most junior intern, is part of a family committed to seeing the company grow,
which translates into better opportunities for everyone. This commitment shines
through, not only in behavior in the office, but also through interactions with external
parties. Consequently, an exceptional culture translates into greater customer
satisfaction – the cornerstone of successful businesses.
When a business culture is exceptional, employees enjoy going to work. They are there
for more than just a paycheck. They are part of a team that has a common interest, a
common goal. Their coworkers are their friends. They know that if they succeed in
their individual tasks on a regular basis, the company is more likely to succeed overall.
They know that the company’s success will translate into even more positive energy,
as well as perks, bonuses, raises, and recognition. Employees know this, not because it
is written in the staff handbook or posted on the wall; they know it because they
experience it in the way things are done every day, by everyone in the organization.

Culture permeates an organization. When the resident culture is one of success and
high performance, it makes a company extremely adaptable. Employees readily accept
changes that push them outside their comfort zone because they know that stretching
is needed, recognized and rewarded. They know that being adaptable leads to success
for them and the company. They know that they are an integral part of an
organization that excels by taking on new challenges. When all employees feel this
way, the adaptability of the entire company is boundless.

High adaptability is one of the strongest advantages that companies realize from
developing and maintaining exceptional cultures because exceptional business cultures
are the most effective breeding grounds for adaptability and resilience.

Enagement
According to Inc. magazine, disengaged workers cost companies approximately $350
billion dollars a year in the United States. But what exactly is employee engagement?

In 2006, the Conference Board reviewed the extensive volume of research available on
the subject and distilled the following definition: "employee engagement is a
heightened emotional connection that an employee feels for his or her organization,
that influences him or her to exert greater discretionary effort to his or her work"ix.
From the data, the Conference Board identified a number of recurring themes,
representing factors that contribute to or support employee engagement, including;

   •   Trust and integrity: How well managers communicate and 'walk the talk'.
   •   Nature of the job: Is it mentally stimulating day-to-day?
   •   Line of sight between employee performance and company performance: Does
       the employee understand how their work contributes to the company's
       performance?
   •   Career growth opportunities: Are there future opportunities for growth?
   •   Pride about the company: How much self-esteem does the employee feel by
       being associated with their company?
   •   Engaged coworkers/team members: Engagement is contagious.
   •   Employee development: Is the company making an effort to develop the
       employee's skills?
   •   Relationship with one's manager: Does the employee value his or her
       relationship with his or her manager? x

The overlap between these themes and the ingredients of high performance cultures is
immediately evident. Indeed, a culture of success springs directly from deep employee
engagement, which in turn emerges from an environment that fosters trust and the
alignment of vision and values throughout the organization.
&
Although implicit in the themes above, it bears noting that employee engagement is
also driven by recognition and appreciation. And it’s not always money that has the
greatest impact. Often the day-to-day acknowledgement of work well done and
recognition of the value it brings to the organization can mean as much or more.
Encouraging peer recognition of achievements also bolsters employee engagement.
Fully engaged employees are often so committed to the company’s success, they will
even stay with an employer that pays less than the competition.

Committing the time and resources to develop a high performance culture pays
dividends in the form of employee engagement. One last finding from the Conference
Board report that illustrates this fact: Engaged employees bring a 20-28% productivity
and performance advantage to the table.

Return on Investment (ROI)
As the concept of high performance culture gains traction in the business world, there
can be little doubt about the correlation between culture and financial performance.
However, actually quantifying how your culture is affecting revenue, net income,
productivity or stock price can be challenging.

In the absence of internal data, most companies first look for external examples to
begin to determine how a high performance culture might impact their financial
results. One such example is a 2007 proprietary survey of over 115,000 individuals in
231 organizations conducted by McKinsey & Company. This study found strong
correlations between organizational performance culture and financial performance.
The survey found that companies in the top quartile of organizational performance, for
example, were 2.2 times likelier to have above-average EBITDA margins than
companies in the bottom quartile of organizational performance. Comparing results
across nine measures of organizational performance, the study determined that
performing well in at least five of these metrics (i.e. exhibiting a high performance
culture) “provides an 83% chance of beating median EBITDA margin”xi.
Another good source of information is Kotter and Heskett’s book “Corporate Culture
and Performance”, which shows that firms emphasizing input from all managers and
people in leadership positions, regardless of level, performed much better than
companies without those cultural features. Over an 11-year period, firms were
compared across multiple categories with the following results:

                     Figure 1 - The economic and social costs of low performance cultures




              Source: John P. Kotter and James L. Heskett, Corporate Culture and Performance.

Companies that actively fostered performance-enhancing cultures substantially out-
performed those that did not emphasize culture, in every category. According to their
research, companies lacking an exceptional culture (i.e. performance-degrading
cultures) inhibit the adoption of strategic or tactical changes, and generally experience
a negative financial impact. Kotter and Heskett conclude that corporate culture will
likely be a deciding factor for the success or failure of firms in the next decade.

Surprisingly, corporate cultures that inhibit their own long-term financial performance
are not rare. In fact, performance-degrading cultures often develop slowly in the
background, while a company is performing well, and go undetected until well
established. Once the negative culture digs in, like an invasive plant species, it begins
to strangle the organization and is almost impossible to get rid of.

In a March 2012 NY Times op-ed piece, “Why I Am Leaving Goldman Sachs,” Greg
Smith, the former Executive Director of Goldman Sachs’ derivatives business in
Europe, the Middle East and Africa, shares the following impression of the cultural
decline within Goldman Sachs:

        It might sound surprising to a skeptical public, but culture was always a vital part of
        Goldman Sachs’s success. It revolved around teamwork, integrity, a spirit of humility,
       and always doing right by our clients. The culture was the secret sauce that made this
       place great and allowed us to earn our clients’ trust for years. It wasn’t just about
       making money; this alone will not sustain a firm for so long. It had something to do
       with pride and belief in the organization. I am sad to say that I look around today and
       see virtually no trace of the culture that made me love working for this firm for many
       years. I no longer have the pride, or the belief.

Just as high performance cultures enhance financial performance, negative cultures
corrode it. The resulting employee apathy and disengagement makes it almost
impossible to achieve corporate goals, leading to frustration and even desperation
among top-level managers who are responsible for delivering results.

Unfortunately, many managers fail to make the connection between culture and
performance. According to a 2005 survey by the Aspen Institutexii, senior management
at 365 companies in 30 countries answered questions regarding company values. Most
of those surveyed believed that values can influence relations and reputations but did
not see a direct connection between corporate culture and growth. A majority of
survey participants indicated that adaptability, productivity, product quality and
innovation are important to strategy, but they have no real direct effect on revenue and
growth. Essentially, their responses suggest that they believe culture has nothing to do
with the bottom line.

The kicker—a full one-third of those surveyed were chief executives or board
members!

In spite of this disconnect, there is a growing body of evidence that shows a direct and
substantial connection between organizational culture and financial performance,
primarily through improvements in employee effectiveness. And employee
effectiveness depends on culture and the environment in which employees work.
Company leaders and managers would do well to bear in mind the words of Dr. Lloyd
M. Field, PhD, SPHR: “The successful company will also recognize that its human
resources are the only ones that can reason, and that its people should be treated with
the dignity and respect it affords its customers.”xiii

                                             ***

If you are not ready to build a high-performance culture by defining and measuring
your company values, then stay tuned for Part 2 in this series, Why Real-Time
Technology Matters to Human Capital, coming October 22nd.

If you’re ready to unleash the power of your human resources, then get started with
TribeHR for free today.
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organizational climate sets the stage for success

				
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Description: Joseph Fung, CEO of TribeHR, a social HR platform, has published an e-book, “How To Cultivate Success In Real Time.” In the first installment, “How to Create and Measure High-Performance Company Culture,” Fung discusses the ingredients necessary to cultivate high-performance workplace cultures in today’s ever-changing world. Headquartered in Waterloo, ON and Boston, MA, TribeHR is the first truly social human resources management software. Its easy-to-use tools are used by businesses worldwide, allowing companies to focus more on what they do best and less on things that get in the way. TribeHR was founded in 2009 and is funded by Matrix Partners and Relay Ventures. For more information, visit www.tribehr.com.