The most critical factor in business success? Culture.

The most critical factor in business success? Culture.

What’s the condition of your organization’s culture? Every organization has one. From a small business to a multi-national, it’s got a culture. From a team to a department to a division to a region to a country, it’s got a culture.

Usually the culture of a business happens by default – not by design. Culture just evolves as the business’ products and services gain traction in the marketplace. Culture is rarely intentional.

In addition, most leaders pay little attention to business culture. They’ve never been asked to manage the health of their organization’s culture. Typically they don’t know how to do that.

Leaders do what their bosses did. They do what they’re incented to do. As a result, leaders spend more time and energy on their business’ products and services than they do to it’s culture, yet culture drives everything that happens in organizations, good or bad.

There is good news! Interest in business culture is growing steadily. According to Deloitte’s 2016 Global Human Capital Trends report, “few factors contribute more to business success than culture.” Deloitte found that 87 percent of business leaders believe that culture is important. 54 percent believe culture is very important – nine percentage points higher than Deloitte’s 2015 study.

Culture can’t be viewed as “soft” or “irrelevant” any longer. Culture is a real business issue! However, Deloitte’s study found that only 28 percent of business leaders understand their current culture well. Only 19 percent believe they have the “right” culture!

Leaders must make the quality of their business culture as important as the productivity of their organization. In essence, they must make values as important as results.

How can leaders be more intentional about their culture? Two questions need to be on the minds of your team’s or company’s leaders, every day. First, is this the culture we want and are proud of? Second, is our culture purposeful, positive, and productive?

Is this the culture we want and are proud of?

I once worked for a boss that loved competition. Across our small company, everyone was in competition with their colleagues. Every day, every employee’s production metrics were shown. Those that met goals were celebrated. Those that fell short were berated.

The competitive environment drove every plan, decision, and action. It wasn’t for everybody. Some employees loved it. I was so stressed that I left after only a few months.

If I’d have asked this boss the first question – “Is this the culture you want and are proud of?” – he’d have answered with an enthusiastic “YES!” That’s exactly the culture he wanted and the culture he reinforced. (We’ll come back and revisit this interesting company with the second question.)

For many humans, work is not an inspiring, engaging, productive environment. Gallup’s daily engagement dashboard shows only 33% of US workers are highly engaged. Tiny HR’s 2014 culture and engagement report found only 21% of employees feel strongly valued at work.

If leaders want to retain and attract top talent, to serve customers beautifully, to create and deliver desirable products and services, and to generate revenues that more than offset expenses, a bloodthirsty work environment isn’t the way to go!

A purposeful, positive, productive culture is one that leaders and employees are proud of. That work environment is founded on values – values that ensure that everyone is treated with trust, respect, and dignity in every interaction. Everyone – even customers – is treated kindly, every time, in every conversation.

That type of disciplined kindness won’t happen without clear values expectations (defined in behavioral terms) and demonstration of those valued behaviors by everyone, C-suite to hourly staff.

Even if you have formalized values and behaviors, does that mean that everyone is adhering to them, living them, daily? No, it doesn’t. Announcing values and behaviors doesn’t mean everyone embraces them.

Here’s the definition of ethics for a company that’s been in the news recently: “Our ethics are the sum of all the decisions each of us makes every day. If you want to find out how strong a company’s ethics are, don’t listen to what its people say. Watch what they do.”

How well did some Well Fargo’s commercial banking employees adhere to this ethical expectation? US federal regulators found that Wells Fargo employees secretly created over two million unauthorized bank and credit card accounts – using customer funds, without customers knowing it – since 2011.

5300 employees have been fired for the shady behavior. A $185 million fine was levied.

John Stumpf, CEO of Wells Fargo, said that the problem wasn’t due to the bank’s culture – it was the work of a few unethical employees. “The one percent that did it wrong, who we fired, terminated, in no way reflects our culture,” he said.

Yet using Wells Fargo’s own definition of ethics, regulators simply watched what those employees did. And they found unethical behavior – two million examples of it.

Leaders must not assume that everyone “gets” their desired culture. Leaders must model it, observe it, coach it, reinforce it, etc. Every day.

Is our culture purposeful, positive, and productive?

Remember my experience with that very aggressive, competitive company? If I’d have asked my boss there whether the culture was purposeful, positive, and productive, he’d have probably said that it was productive. He would likely have said it was purposeful, since his purpose was to beat budgeted nets each month. If he were honest, he’d have reluctantly admitted it was not positive.

I – and others that left that company – would say no, that culture was not remotely purposeful, positive, or productive.

Purposeful means that the company has a “reason for being” besides making money. A company’s servant purpose specifies who its primary customers are, how it serves those customers effectively, and how it improves those customers’ quality of life.

These are tough questions. By answering these questions – and coming up with a pure servant purpose statement – employees are typically proud of how they serve. And, they want to serve better each day.

Positive means that people are treated with trust, respect, and dignity, in every interaction. Team members feel valued and appreciated for both their efforts and their accomplishments, every day.

Productive means what we think it means. People deliver on performance commitments daily. High quality, even creative products and services are delivered as promised, with a smile.

These three desirable qualities won’t happen naturally. They’ll only happen if leaders examine the quality of their culture regularly – formally and informally. Leaders need to craft a variety of ways to understand what it’s like to work in their organization’s culture, ways like focus groups . . . one-on-one meetings with employees at all levels . . . regular (twice a year) engagement surveys, etc.

I’ve had some executives I coach go “undercover” to learn exactly what it’s like to work in their organization’s front lines.

Using these feedback channels, leaders will learn quickly what things are going well – aligned with their desired culture – and what things are difficult. Only with an honest understanding of relationships, norms, and practices can leaders be confident they’re leading the business so the culture – and their employees – can thrive.

Don’t leave your culture to chance. Ask these two questions. Dig into the answers. Ask again. Dig more deeply. Celebrate aligned behavior and redirect mis-aligned behavior.

Repeat daily.

Questions to ponder: How purposeful and positive and productive is your organization’s culture? Does your work environment promote a disciplined kindness or a competitive “winner take all” approach or something in between?