February 26, 2014

The 6 Ways to Build a Successful Corporate Culture

When I ask my clients to describe their “corporate culture,” I usually get one of two responses. Either they don’t have any idea, or they use one or two good-sounding general phrases that may or may not actually apply to their firm. Those phrases might be ‘put the client first,’ or ‘work as a team,’ or ‘deliver sound financial advice,’ or ‘be relevant,’ and so on These kinds of responses indicate a lack of understanding of what a “corporate culture” is—and how important it is—which can have a major impact on how an advisory business performs. 

In his May 6, 2013 Harvard Business Review blog, business management author John Coleman explains: “Corporate culture describes and governs the ways a company's owners and employees think, feel and act; the values and practices you want for your company. Whatever shape it takes, your corporate culture plays a big role in determining how well your business will do.” 

To determine their corporate culture, I tell my owner-advisor clients to start by thinking about their ideal life partner (I know, sounds creepy, but it works), and make a list of all the traits he or she would have. That’s how you should describe your corporate culture: by thinking about five or so traits that you want everyone who works in your firm to have. Coleman (and many others) tell us that corporate cultures actually have six parts, so I ask my clients to think about how their “corporate culture traits” could be translated into each of the following:

1) Form a Vision or Mission  
For many advisory firms, delivering high-quality client care is the mission. But whatever your mission is, it’s essential for every employee to know what it is, and to be able to tell you what it is, when asked. In our work, we’ve found that employee productivity and performance go way up when they know exactly what they are supposed to be working toward.

2) Have Personal Values
This is the “how” to the vision’s “what:” the firm’s vision tells the employees “what” they are supposed be doing; its values tell them “how” to do it. Honesty, respect for each other, working as team, striving to get better, or to learn, being innovative, taking risks are all ways that our clients have described how they want their employees to act when they are at work. 

3) Walk the Talk
This is where firm owners and other managers need to walk the talk. It’s one thing to have a firm mission, and some guidelines on how employees should act. But to turn them into your corporate culture, not only do firm owners need to set the example, they have to constantly encourage others to do them too: by constantly reminding folks why you’re all working, encouraging them to act according to your culture, and incentivizing them to do so. Also, the activities of the firm should be designed to promote its culture. For example, if you want people to act as a team, have team meetings, make team decisions and reward people as a team. If firm leaders don’t take the “culture” seriously, the employees won’t either. 

4) Hire the Right People, Get Rid of the Wrong
I can walk into an advisory firm and within five minutes pick out the people who don’t fit its corporate culture. No matter how “cool” our culture is, some people just won’t fit: because they have a different outlook on business or life in general or because they just don’t want to. Either way, chances are they aren’t going to change—and their presence will be poison to your culture.

Hard as it is, one clear way for owners to signal their seriousness about culture is to weed out the employees who don’t fit and, of course, to make every effort to hire people who buy into your culture. 

5) Make Your Physical Space Reflect Your Culture
Coleman also tells us that the way a business’ offices are set up sends a message to everyone who walks in. If you want people to act professionally, have professional looking offices. If you want them to be open, have open spaces. If you want them to deliver a high level of service, give them high quality tools to do their jobs: computers, platforms, resources. If you want them to act like a team, have a team meeting room, with team pictures and team slogans on the walls. You get the idea. 

6) Create a Company Narrative
Finally, to communicate your corporate culture to your employees, your clients, and everyone else, have a company narrative.

I’m sure you’ve heard this a million times: When you talk to someone from Vanguard, it doesn’t take long before they’re tell you about why Jack Bogle started no-load funds, or a Morningstar rep telling you about why Joe Mansueto wanted to deliver impartial mutual fund info, or why Chuck Schwab wanted to buck the brokerage firm model. These stories have power: they tell prospective clients—and employees—why their firm exists and what its mission is.  Your firm has a story too: make it official, and make sure everyone knows it. 

To quantify the effect that a good “corporate culture” can have on a business, Coleman cites Harvard Business School professor emeritus James Heskett, who writes in his book “The Culture Cycle:” “Culture can account for 20% to 30% of corporate performance.” By my quick calculation, that translates into nearly a 40% increase in revenues over five years—a not a bad return for doing something that will also make your firm a place where it’s a lot more fun to work.

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