Improve Performance with Company Values

By June 7, 2017 Blog No Comments
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Improve Performance with Company Values

Every company has a culture. You might call it your “personality” or “DNA,” which is apt because while your processes, strategies and even your products can be duplicated, your culture is unique. Your company culture defines the way you interact with one another, as well as how employees interact with customers, suppliers and other partners. And yet, for many companies, the subject of culture and performance is a bit like the chicken and egg debate – which comes first?

According to Dan Pontefract, Adjunct Professor at the Gustavson School of Business, keynote speaker and author of The Purpose Effect, “An engaged organizational culture results in increased performance levels, not the other way around.”1 In other words, if culture comes first, performance will follow.

He cites research on 95 auto dealerships over the course of six years, which analyzed culture and performance data in each of the dealer’s sales and service departments. The dealerships were scattered across the U.S., and they all carried the same products and used the same performance metrics, but each was owned and operated independently.

The researchers assessed four cultural traits: involvement, consistency, adaptability and mission. They rated customer satisfaction scores based on quarterly surveys, as well as new vehicle sales. In short, the results overwhelmingly showed that culture affected performance, both in the sales and service departments. The dealerships with a more positive, engaging culture had greater customer satisfaction and more vehicle sales.

Many studies support these results, showing that companies with “engaged” cultures have higher share prices, lower employee turnover, more qualified employment applications, less absenteeism, greater employee productivity and better customer satisfaction, which translates into improved overall performance.

Unfortunately, research also shows that a majority of companies, especially in the B2B sector do not consider company culture a high priority. As a result, only 13% of the global workforce feels “highly engaged” and nearly half of the workforce would not recommend their employer to their peers.2

Whose Job Is It?

While leadership is focused on performance, they seem to view culture as the purview of human resources or department managers, if they bother to examine it at all! While an immediate supervisor or the HR team may have impact on some aspects of employee engagement, company culture begins at the top. Specifically, culture stems from your company’s “core values” – a set of three to seven guiding principles, which help you hire, fire, review and recognize people, and allow you to build a culture around them.3

For instance, are you committed to 100% customer satisfaction? Do you value teamwork? Are honesty and integrity integral to your success? Is having fun while you work a priority? These are just a few examples of the core values that a company might embrace.

Business cartoon of a meeting in progress. They have an agreement in principle, but do they all have the same principles?

Gain a Competitive Advantage

In addition to keeping employees rowing in the same direction and improving performance, defining core values and building a great company culture has become essential in today’s transparent world. The way your company does business is extremely visible as employees, customers and suppliers can easily share comments regarding a company’s “personality” on social media. Researching a company online is often the first step a prospective employee or customer does. When you factor in a shortage of skilled workers in many sectors, culture becomes increasingly important. In fact, 87% of organizations cite culture as one of their top challenges and 50% consider it a “very important” problem.4

Given this new transparency, an organization’s culture can become a key competitive advantage – not only by recruiting and retaining top talent and leaving a good impression with customers, but also by attracting great partners. You become the company that everybody wants to do business with. Organizations with a positive corporate culture, engaged employees, and strong leadership are outperforming their peers and will likely beat their competition on a number of fronts going forward.4

So, while we may never solve the chicken-egg conundrum, all evidence suggests that a company with defined core values and an engaged culture improves performance, not the other way around.

1 “If Culture Comes First, Performance Will Follow,” by Dan Pontefract, Forbes, 5/25/2017.
2 “Why Company Culture is So Important!,” by Tony Gareri. Human Capital Trends Report, 2015.
3 “Traction: Get a Grip on Your Business,” by Gino Wickman, BellaBella Books, Dallas, TX, 2011.
“Culture and Engagement: The Naked Organization,” by David Brown, Veronica Melian, Marc Solow, et al., 2015.