Many studies of successful, built-to-last companies have shown that ultimately it is the organization’s culture that determines its ability to outperform competitors over a sustained period. What is corporate culture, who determines it and how can it be improved? CEOs and boards of directors must answer these questions in practice if the company is to attract the loyalty of its people and achieve enduring success. Culture is developed through a constellation of specific programs that collectively are designed to make employees care more about the company’s welfare and operate with follow workers as a cohesive team. These programs must be consistently applied, with alignment between management rhetoric and its practices, or others will perceive the efforts as hypocritical. The benefits of positive morale are evident in many metrics that have financial consequences: less absenteeism, lower turnover, fewer workman’s comp claims, better customer service, improved productivity and reduced likelihood of unionization. Morale should be measured regularly through employee surveys that chart the company’s progress over time.
We can also help a company’s board or CEO evaluate the company’s management team and organizational structure to see if changes would be beneficial. Performance can often be improved by organizational streamlining that clarifies responsibilities, eliminates duplication and shrinks management layers. If departmental frictions have developed, a program to address dysfunctions and improve team building may be in order. A formal system of management by objectives and a bonus plan tied to performance against those “MBOs” are important elements in delivering results. Culture is largely determined by what happens when people get together. Finding reasons to celebrate team success and recognize outstanding individual performances will improve motivation and team building.
As a business manager and CEO, Dick Chandler has been improving organizational morale and management team performance for over 30 years. Hear in his own words the development of his philosophy and approach to this challenge faced by every business owner and CEO:
“I have been a student of corporate culture and a believer in its profound effect on productivity and performance since touring a GM assembly plan in Tarrytown, NY and an IBM computer factory in Poughkeepsie on successive days in 1970. The plant visits were arranged in connection with the White House Conference on Youth, to which I was a delegate. The IBM workforce earned half the hourly rate as GM, yet had twice the job satisfaction, with better product quality and lower employee turnover. It was evident that management rather than money made all the difference.
“At Sara Lee Corporation in 1977, I proved to myself how quickly cultures can be changed when I took over an underperforming division—Abbey Rents (renamed ‘Abbey Medical’), a nationwide chain of 80 retail medical equipment stores—and doubled its growth rate and profits within two years with all the same people. Improved morale and management team cohesion were important contributors to this turnaround.
“In 1987 as CEO of Sunrise Medical, a manufacturer of wheelchairs and other medical devices, I toured Toyota and Panasonic factories in Japan and appreciated first-hand the tremendous impact of their distinctive cultures, that utilized total quality management, lean manufacturing, team based organization, employee suggestions and extensive training. I followed up in the US with visits to Apple, Hewlett Packard, General Electric, Harley-Davidson, John Deere, Milliken and Toyota/Fremont (NUMMI) facilities. This exposure to best manufacturing practices convinced me that the Japanese management ideas transferred easily to the American workforce and setting. I came to believe that a new organizational paradigm was emerging simultaneously at all of these companies, what I call the ‘Energized Corporation.’
“Adapting these ideas to our company in 1988, I launched a Pursuit of Excellence program at Sunrise Medical, at the time a $250 million company with eight factories and 1500 Associates. Under the umbrella of this organizational transformation program, we implemented these important initiatives: corporate mission and values, total quality management, lean manufacturing, self-directed teams, improved customer service, corporate ethics program and Sunrise University for training of management associates. We held regular Associate Sharing Rallies, printed a 32 page booklet explaining the new programs, posted performance metrics on our bulletin boards, introduced a suggestion system, gave Associates wallet cards with our mission and values, and held celebrations with great frequency. Our performance immediately began to improve on all fronts: productivity, quality, asset management, morale, Associate turnover, profitability. We did all this ourselves at minimal expense, developing our own materials using many new ideas but also borrowed from the best practices observed elsewhere.
“Sunrise Medical received considerable recognition for our new corporate culture. We were featured in a Harvard case study (1991), two books–Companies with a Conscience (1992) and Denis Waitley’s Empires of the Mind (1995)–and numerous magazine and newspaper articles (e.g., Nation’s Business cover story, February, 1994). I became a believer in the importance of company culture as a vehicle to improve performance across the board and have been championing these ideas with my own companies, my students and client companies ever since.”
Any organization that has not yet applied these seminal ideas can achieve 10%, 25% and perhaps even 50% improvement in its key performance metrics by transforming its culture. To succeed, however, the changes must be authentic, comprehensive and consistent. They must be sponsored personally by senior management. If these executives don’t lead by example, the words will be viewed as hollow, provoking cynicism rather than commitment. These principles succeed because they build on fundamental truths of human nature: on what motivates us and how we all like to be treated. Working with your management team, we can develop specific programs to invigorate your company’s culture and incorporate these proven, morale enhancing techniques into your company’s DNA.