Management Imperative #1: Invest In Culture As A Corporate Asset

Why do companies create capital expenditure approval processes and develop strict cash management procedures? To manage their corporate assets. But executives often spend little time, if any, focusing on another critical asset, their corporate culture. Leadership guru Arthur F. Carmazzi does a great job of describing the value of corporate culture:

The ability to do more than expected does not come from influencing others to do something they are not committed to, but rather to nurture a culture that motivates and even excites individuals to do what is required for the benefit of all.

Think about it: Corporate culture can amplify the value provided by just about every employee. How much is it worth to make employees 1%, 5%, 10%, 25%, or 50% more effective? When you consider this type of impact, it’s clear that corporate culture is, in fact, a real corporate asset. While it doesn’t show up on the balance sheet like other assets, executives need to treat corporate culture like they do other long-term assets.

Here’s how execs can manage their corporate culture assets:

  • Track employee goodwill. When companies buy other companies, they often account for part of the price as “goodwill;” acknowledging that items like brand name and competitive positioning can be long-term assets. Following this approach, companies should track “employee goodwill.” How? By surveying employees and reporting the results like you report the balance sheet; analyzing quarterly snapshots and changes over time. Think about creating a metric from  questions like “How committed are you to helping the company achieve it’s mission and objectives?” “How likely are you to recommend this company as a place to work to your family and friends?”
  • Develop a Voice Of The Employee program. I often write about the importance of a strong Voice of the Customer (VoC) program. Firms need to infuse customer insight throughout all of their activities. Companies should follow the same approach in designing a Voice of the Employee (VoE) program. What are the key elements to a VoC, and therefore also a VoE, program? LIRMing, which means designing processes for Listening, Intepreting, Reacting, and Monitoring. Companies should listen to employees in many different ways; similar to the five levels of a VoC program.
  • Establish a vocabulary around culture. Culture is often seen as a “squishy” topic. To make it more tangible, execs need to use a consistent set of terminology and concepts. Edgar Schein’s research can help, especially his work on the three cognitive levels for organizational culture: 1) attributes that can be seen, felt and heard; 2) items that can be depicted by company slogans, mission statements, and different operational creeds; and 3) tacit assumptions that are unseen and not cognitively identified. In my research on customer-centric culture, I identified the 6 C’s of customer-centric DNA: Clear beliefs, Compelling stories, Consistent trade-offs, Collective celebrations, Constant communications, and Commitment to employees.
  • Actively manage it. Just like with any asset that can gain or lose significant value, companies need to actively manage their corporate culture. This requires execs to spend their time and make investments on it; trying to optimize the ROC (return on culture). In Organization Development and Change, Cummings and Worley provide the following steps for cultural change: Formulate a clear strategic vision, display top-management commitment, model culture change at the highest level, modify the organization to support organizational change, select and socialize newcomers and terminate deviants, and develop ethical and legal sensitivity. 

The bottom line: Don’t squander your corporate culture asset.

P.S. Here’s a link to all 6 New Management Imperatives

About Bruce Temkin, CCXP
I'm an experience (XM) management catalyst; helping organizations improve results by engaging the hearts and minds of their employees, customers, and partners. I enjoy researching and speaking about these topics. I lead the Qualtrics XM Institute, which is the world's best job. We're igniting a global community of XM Professionals who are inspired and empowered to radically improve the human experience. To achieve this goal, my team focuses on thought leadership, training, and community building. My work is driven by a set of fundamental beliefs: 1) Everything starts and ends with human beings, so you need to understand how people think, feel, and behave; 2) XM is a discipline that needs to be woven throughout an organization's entire operating fabric; and 3) Building the XM discipline requires a combination of culture, competency, and technology.

9 Responses to Management Imperative #1: Invest In Culture As A Corporate Asset

  1. Jenney says:

    brilliant quote, I agree completely. The concept is elaberated on at:

  2. Bruce Temkin says:

    Jenney: Thanks for the link.

  3. Your message is absolutely correct in that companies need to define and develop a corporate culture. I try to take it one step further with my clients and develop the corporate cultured geared toward service excellence. Your points are in tune with the very fact that consumers today will make their purchasing decisions based on the intangibles, based on how they FEEL when dealing with a particular person or company. The culture that is developed by companies must stress and exemplify that the customer is at the core of their very existence and success. The smart and successful companies are the ones that are making the customers their partners and truly considering the feedback of the customer. What better market research than your customer themselves?

  4. Bruce Temkin says:

    Kristina: Thanks for the comment. As you say, there are a plethora of decisions that get made based on “intangibles.” Yet companies tend to do nothing to manage those areas. Hopefully we can help affect some change. And your last questions was a great lead-in to the next management imperative on the list: Make listening an enterprisewide skill.

  5. Ken Milloy says:

    Bruce – I’m glad to see this as Imperative #1 – clearly the idea of culture being focused on like other assets in the organization has been recognized by an ever increasing number of leaders as the one area where difference and competitive advantage can in fact be achieved.

    The one element I don’t see addressed explicitly (although it is implied in Cummings and Worley) is the key issue of defining behaviours associated with the desired culture and reinforcing and recognizing them on a continuous basis. One of the most significant barriers to culture change stems from the behaviours, language and so forth of leadership – when they carry on talking about a new culture but don’t make the changes themselves, not much will change. At the same time systems / processes of the ‘old’ culture must also be altered to reflect the new way of doing things. With one client I spent almost 6 months working directly with the leadership team to help them root the “new” into their personal way of operating. Once they could model the new – and feel comfortable in pointing out the old to others…wow, what a difference.

    In our work we have found that the use of stories from throughout the depth of the company can play a very significant role in this. Our program (The Storytellers) has been used in many different industries – ranging from hotels and casinos to product and IT focused orgs. In all cases the alignment and engagement efforts have clearly resulted in the needed conversations at the top of the house taken place exploring “what is the role of our culture and what should it be?” From my perspective, the conversations that resulted have been among the best and most strategic I have ever heard and particpated in. Cheers

    • Bruce Temkin says:

      Ken: Cultural change is definitely tough; requiring execs to define and model new behaviors. I probably could have put more emphasis in this area. So, thanks. I am also a big fan of the power of a good story — both in terms of my own efforts (writing and presenting) as well as in its ability to alter/reinforce cultural norms. That’s why “Compelling Stories” made it as one of my 6 C’s of Customer Centric DNA (for some reason, I’ve been writing a lot of “6s” lately). Here are all of these C‘s: Clear beliefs, Compelling stories, Consistent trade-offs, Collective celebrations, Constant communications, Commitment to employees. Thanks for keeping the dialogue going on this critical topic.

  6. Ken Milloy says:

    I love the ‘6’s’ and have been having a great time exploring your thoughts and ideas….very cool stuff and well worth sharing! K

  7. Pingback: Introducing The 6 New Management Imperatives - CRM Mastery e-Journal - CRM Best Practice and Industry News

  8. Pingback: Manager Newz - Expert Advice for eManagers - » Management Has Become An Outdated Art

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