Insights from Customer Research for PE investments
April 26, 2018

Creating a strong culture

Building a culture that attracts, develops and retains strong talent is a holy grail for many organizations.

But what does that kind of culture look like and how does one build it?

Instilling a strong culture means having a core set of values that the organization believes in and lives by on a daily basis. However, all too often these values get lost between the lines of a lofty mission statement, which itself is confined to a plaque on a wall somewhere in the hallways of the office.

Actions, we all know, speak much louder than words and for a desired culture to reflect across the organization, leaders need to be proactive and authentic in demonstrating the very values that they wish to see cultivated. In the absence of clear behavior from leadership, which is consistent with desired attributes, there can be “cultural silos” within the organization – making it misaligned at best and divisive at worst.

While culture by itself is intangible, we have in our experience found the following values to be consistent among companies where culture is spoken of as a key differentiator:

1. Demonstrate accountability starting at the leadership level

Accountability is a virtue often demanded from others. But in order to instill it in the culture of the organization this value has to demonstrated consistently from the top. When a leader stands up in front of their team, takes ownership of an issue and proactively tries to fix it or seek solutions, it sets a very powerful and positive example for the rest of the team.

If, for instance, an initiative hasn’t delivered, how does the team leader or business unit head react to it? Do they take ownership and work to identify the best solution to correct the situation? Or do they try to disassociate from the issue or seek to assign blame by finger pointing?

Business environments are constantly changing and certain decisions may not yield the desired results. Mistakes will occur and hindsight is always 20/20; but the reaction from the senior-most owner of the initiative upon identifying an issue is important. For team members, knowing that the leader has their back allows them to innovate, identify opportunities and flag issues as they arise, rather than spending time trying to cover up their tracks. In order to create a winning culture, where a spirit of innovation and continuous improvement flourish, the proverbial buck has to stop at the top.

2. But, have zero tolerance for non-negotiables

Having said the above, there has be absolutely zero tolerance for errors relating to integrity and professional conduct. No one is indispensable and the message of a blind eye being turned to these kinds of misdemeanors can have catastrophic impact on the culture, morale and overall reputation of the company. To create a strong, sustainable and positive culture, it’s essential that there are no second chances in these situations.

3. Invest time and energy in hiring the right people

At SCP we see recruiting as an extremely crucial function and spend a significant amount of time as a team in making hiring decisions. While technical skills and prior experience are important and form the first threshold for evaluation of a candidate, we view cultural fit as a critical component. It is imperative that all members of the team are able to work collaboratively and cohesively not only among themselves but also be able to form strong professional partnerships with the portfolio companies and affiliates with whom we partner.

Very often, the term “cultural fit” is used to validate hiring people who think alike; come from similar backgrounds and are likely to agree on most issues. A collaborative atmosphere doesn’t mean not allowing for disagreements. On the contrary, we expect and encourage colleagues to push back and challenge each other – that’s how as an organization we believe we can be collectively stronger. Working collaboratively and cohesively means problem solving with the highest level of integrity and with the intent of succeeding as a team.

In a letter written to shareholders in 1998, Jeff Bezos shared the three-question test used at Amazon for hiring decisions. He said he encouraged all recruiters to consider three questions when evaluating a candidate for a role: (a) Will you admire this person? (b) Will this person raise the average level of effectiveness of the group they’re entering? And (c) Along which dimension might this person be a superstar? This simple but highly effective rubric of questions can serve as a great guide to keep raising the threshold of talent within a company while also ensuring that hiring managers pay attention to the collaboration skills of potential employees.

4. Empower team members

Steve Jobs famously said, “It doesn’t make sense to hire smart people and then tell them what to do; we hire smart people so they can tell us what to do”

Part of building a strong and sustainable culture is creating an environment of empowerment – rather than one of micro-management. Empowered team members voice their opinions, challenge assumptions, and offer different perspectives – all with the goal of continuous improvement. They are also more likely to take on greater ownership as compared to employees who are given a “check list” of things that they need to do in their role.

Leaders in organizations that empower ensure that they listen to colleagues with an open door and an open mind. Some of those new ideas may not always be the right ones for the company, but the responsibility lies with the leaders to explain the rationale to the team; and also back them on ideas that could lead to success for the organization.

5. Focus on continuous learning through real-time feedback

In our experience we have seen that the best leaders don’t shy away from giving feedback; nor do they sugar coat it. Rather, they say it as it is; with the intent of helping the development of others in the team. They encourage continuous learning and inquiry by inspiring others to extend out of their own comfort zones and develop new skills. Furthermore, they recognize the efforts that others are taking to enhance their skills.

Timely, relevant, constructive feedback based on a commitment to help the development of others is extremely important for developing a growth-minded culture, which in turn attracts and retains strong employees.

6. Communicate, communicate and communicate

Do employees across the organization know what the vision and goals for the business are and how their role feeds into the big picture?

If they did, research suggests that they would be more productive. There is a famous story of John F. Kennedy asking a janitor at NASA about his role. Without skipping a beat, the janitor replied, “I’m helping put a man on the moon.” The janitor was not looking at his role in a vacuum; rather he was looking at how it fit within the overall vision of the organization. He was holding himself accountable for the journey to the moon. And his level of engagement was tied not to his own role description but to a much larger mission.

Businesses, where employees are informed and excited about the company’s goals and see how their roles are aligned with the overall vision, have much higher levels of engagement and productivity. And that means that senior leadership must make every effort to communicate and reinforce the overarching vision and goals to every single employee.

Vivek Gambhir, the MD and CEO of Godrej Consumer Products, writes a weekly blog that addresses the values that the organization believes in with specific examples of them being practiced. He shares his own experiences and learnings; and frequently recognizes the positive impact that many with the organization are having on their own and their team’s morale and productivity by following the Godrej value system. This reinforcement and recognition serve as an encouragement for others to do the same.

Culture isn’t static. It is something that needs constant nurturing. It also isn’t something that will happen overnight. But a focused and consistent approach with senior members leading the way by modeling the desired values will set the wheels in motion and create a long-term sustainable advantage.