Why Your Company Culture Matters

In order to become innovative, businesses need strong leaders who are capable of developing a continuously evolving company culture. Laurie O’Donnell, Managing Director of Cornerstone International Group, says that this process begins with the ability to create a positive work environment and lots of courage. This article originally appeared in Eurobiz Magazine

The overall advance of China, a country with 1.3 billion people, in the space of just a few decades is unparalleled in history. The depth of China’s continued ambition to develop and change is illustrated by its 2020 goals:culture matters

  • Double China’s 2010 GDP, to become the largest economy in the world.
  • Double China’s per capita income for both urban and rural residents, increasing the average income of urban citizens to USD 7,000, and the middle-income population to over 600 million.

These are heady objectives. Policy-makers and various government initiatives are driving the country to achieve them, hoping to maintain the momentum required to ensure positive change beyond 2020.

With nationwide goals of sustained growth, organisations are operating in a constantly changing business landscape. Employees as well as organisations are obliged to adapt to dynamic changes and develop the abilities required to achieve the targeted results.

A factor which will become increasingly – and perhaps critically – important is that of company culture. This evolving, participatory process now widely embraced in business strategy is at a very early stage in China and is seen as a challenge to be overcome in achieving the stated goals.

Why does company culture matter?

A company culture is the shared values and practices of a company’s employees. It is the set of shared attitudes, values, goals, and practices that characterises an institution or organisation. It plays a significant role in determining whether an organisation is prepared for sustained growth and the required adaptability.

A company culture should reflect the values and behaviour of everyone in the workforce, and should have a significant impact on the overall success of a business. The desire to create an innovative environment, better suited to producing solutions, can therefore require some fundamental changes to company culture.

Creating a fresh vision for the future is an opportunity for leaders to develop their businesses into innovative, forward thinking and more relevant organisations.
These are some of the values found in world-class organisations:

  • Innovative
  • Engaged Workforce
  • High level of integrity
  • Trust relationships
  • Effective leadership
  • Effective systems and processes
  • Performance-based compensation and reward programmes
  • Customer-focused
  • Effective 360-degree communications
  • Commitment to learning and skill development
  • Emphasis on recruiting and retaining world-class employees
  • Adaptability
  • High standard of accountability

There are multiple benchmarks for change; many social scientists have weighed in on the subject of organisational change for over 50 years. Two leaders in this area, Thomas G. Cummings and Christopher G. Worley, put forward five key points that solidly define companies that are prepared for constant change and evolution:

  • Structures that emphasise teamwork, information sharing and empowerment.
  • Information systems that facilitate rapid acquisition and sharing of complex information to manage knowledge for competitive advantage.
  • Human resources that reinforce new skills and knowledge.
  • Organisational culture that encourages innovation.
  • Leaders that model openness and freedom to try new things while communicating a compelling vision.

Culture change begins at the top of an organisation; it is the CEO that should drive it and embody the values and principles of the desired culture. By default, the actual form that these changes will take will look very different in every society; a universal template for business leaders to follow does not exist.

Leaders have the responsibility to look at their company and choose to lead the evolution forward to a more responsive and innovative workforce. The change should begin with the leader himself/herself—but does the top leadership exemplify the desired values?

How company culture can work

Wegmans Food Markets, located in the USA, has 83 stores with annual revenues of USD 7 billion (2013). It also has a clearly defined culture, which is completely supported by its senior leadership.

They choose not focus on rapid expansion, opening just a few stores each year. Instead, they focus on having well-trained staff. Millions of dollars are spent on training and new stores aren’t opened until all staff members are fully trained and ready to work. The result: the new stores are set up properly and employees live up to a high standard.

An interesting consequence to this strategy is high employee engagement; Wegmans has appeared in Fortune’s annual ‘100 Best Companies to Work For’ list since its inception in 1998, and has ranked among the top 10 for eight consecutive years.

Culture matters because it affects a company’s ability to succeed. The employees at Wegmans enjoy their work, but it is the leadership that transforms this vision of excellence into reality, supported by a large investment in training and development.

The first step toward change is to answer the question: what is your company culture today and what does it need to become? To make this change takes leadership, vision and lots of courage.

The paradox is that organisations invite change when change offers a competitive advantage, yet at the same time resist change when change threatens the organisation’s structure and control systems. Companies often manage their company culture indirectly through their decisions on structure, human resources, financing and other control and managerial considerations.

With a directive leadership history, leaders in China therefore would need real courage to lead change, courage to see reality and also the courage to envisage possibility.

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