Creating a Corporate Culture
1 September 2005 Paul Menmuir
Paul Menmuir advises organisations to build cultural values into employee evaluation methods and development programmes.
How do you measure something as intangible as a great work environment? What actions signify that your employees are delighting your customers? While it is difficult to measure cultural values, it is not impossible.
A T Kearney's research and interviews with executives at ten global companies, reveals that a large percentage of companies have successfully translated their strategic imperatives into cultural values. A handful have gone a step further by measuring employee behaviour and attitudes to determine whether they align with the company's cultural values.
DEFINING A CULTURE
Among the latter group of companies is a speciality retailer. With 6,000 stores in 25 countries, this retailer is among the largest in the world. In 1999, the chief executive officer of this company launched an effort to measure whether or not employees exhibited the company's cultural values.
The effort began with a search for definitions to identify the behaviours that formed the company's culture. The company conducted focus groups, bringing together senior executives from around the world to participate in brainstorming sessions. Using their personal experiences and knowledge of best practices in their own business units, the executives shared their insights about what actions or behaviours might be considered a concrete demonstration that an employee truly embodies the retailer's cultural values.
For example, one value, 'results oriented', was defined in terms of knowing how to get results and achieve goals. The associated behaviours included:
- Reading situations quickly
- Spending time on what is important and ignoring the trivial
- Eliminating roadblocks and inspiring others to meet goals
- Thinking 'outside the box'
- Challenging the status quo and having the courage to stand up for your convictions, whether anyone else agrees or not
Once executives had established definitions and requisite behaviours in 15 categories – eight core values for employees and seven leadership values for managers – they addressed the question of measurement. How do you measure whether someone is pleasing your customers? Or, in the case of leaders, how do you measure a willingness to take risks? For answers, they turned to their existing human resources management (HRM) tools.
Generally, companies use HRM tools to measure employees' job performance relative to business results. For example, supervisors on the production floor are often measured on their ability to maximise operational efficiency, increase output and decrease costs. They are rewarded for meeting targets and penalised for missing them. And, generally speaking, these people are pretty good at obtaining the desired business results.
But there is more to measuring job performance than business results. Standard performance measurement systems often fail to recognise how jobs get done or how targets are met.
Managers must also be measured on their grasp of the bigger picture. Do they understand the implications of their actions on the organisation as a whole? Consider the situation at a polymers plant when the operations manager, instructed to cut materials costs by 10%, stopped adding a caustic ingredient to the process for making carbon fibre. Within months, the company came under scrutiny by environmental regulators and paid penalties for cyanide 'hits' in its wastewater.
After almost a year of investigation and a near debacle in public-relations, the company discovered that the caustic agent was a vital ingredient in the manufacturing process.
Getting employees and managers to consider both what is done as well as how it is done is a simple matter of outlining exactly what behaviours are expected of people in any given situation. With some fine-tuning, this can be accomplished with your existing HRM tools.
When it comes to measuring cultural values, companies must first outline for employees exactly what it means to be doing their jobs correctly and explain in detail, and in writing, what is expected of them. The desired behaviours must be clearly stated and documented, and be attainable.
Also, employees must not only understand what behaviour is expected of them, they must be comfortable that their supervisors can evaluate them properly on these behaviours. "You can't just throw out a behaviour such as 'the ability to take risks' and measure people on how well they perform," explains one HR professional. "The details have to be clearly defined and those who evaluate employees have to know what they are doing."
Supervisors rate workers according to their own observations: they watch and determine whether their behaviour, as outlined by the company, agrees with the company's corporate values. These observations are then quantified using a behaviourally anchored rating scale.
Some companies use real-life examples to bring the process to life. One hi-tech company uses the example of a stellar employee who calls customers back after a sale to find out if they were satisfied with the service. A retailer talks about a manager who makes customer complaints known throughout the organisation so that future problems can be prevented.
"Sharing true stories about employees who have used good judgment in a given situation or who have successfully resolved a conflict can go a long way towards reinforcing a desired behaviour," according to a HR professional.
A 360° feedback process is another weapon in the HRM arsenal. But this process, in which employees are rated by virtually everyone they come into contact with – subordinates, peers, superiors and even customers – only works if it measures behaviours that truly add value.
360° feedback should never be used as a standalone tool. Nor should it be the only data point in an employee's development plan. The best use of 360° feedback is to help employees understand where they need to improve their behaviour based on feedback from others.
This feedback should be combined with self-evaluation to determine how people view their own performance compared with how it is perceived by others. Both are effective at identifying and addressing gaps. Employees then work with their managers to generate a gap analysis, comparing their individual performance against the core behavioural skills necessary to perform their job. The results are incorporated into the employee's performance appraisal.
Importantly, 360° feedback and self-analysis work best if they are followed up with coaching and reinforcement to change behaviours that do not add value.
Most companies flawlessly execute the performance review process but stumble when it comes to reinforcing the correct behaviours. In A T Kearney's experience, the best behaviour development programmes are those built on a philosophy of 'learn as you go' using techniques found in experiential learning.
This is a process of continuous development in which people take time to capture, record and implement learning in their daily work. The goal is to develop workers who are actively engaged and flexible, and who are able to adapt quickly as business needs change.
A North American tyre retailer coaches all associates on their job performance while they are working. It is a hands-on method, with managers observing behaviour and offering immediate feedback on what is being done well, and what could be done better. "We instruct managers to offer on-the-spot advice about actions and behaviours," says the head of one business unit. "Feedback can range from how to talk to angry customers to how to handle employees who consistently arrive late for work."
Some companies combine hands-on coaching with resource guides and simulation exercises in which workers are placed in various real life situations as a way of assessing their behaviour. For example, managers charged with negotiating union contracts are assessed on their negotiation skills, composure, and how well they soothe angry outbursts.
In these exercises, coaches look for the behavioural skills necessary to perform a job, and continuously reinforce the right behaviours.
BEGIN AT THE BEGINNING
From the beginning, in the interview and selection process, companies should select people who will assimilate well into the company culture. During the interview process, candidates should be evaluated against a list of behaviours tailored to each job description. For example, a key capability for a laboratory supervisor might be 'to develop your people'. In a typical interview, candidates are given an imaginary scenario and asked how they would handle it. One question might be: how would you boost the skills of a lab technician who consistently fails to follow standard laboratory procedures?
By comparison, in an interview to gauge how well a candidate will fit a corporate culture, the questions are designed to ascertain real behaviours in real situations. Rather than asking how a candidate might handle a make believe situation, the interviewer says: tell me about a time when you developed the skills of a lab technician who failed to follow laboratory procedures.
Candidates are then asked to expand on their answers: What was the outcome? What went well? Give me an example of when you were not successful in developing an employee. What went wrong? How did you avoid making the same mistakes in the future?
Past performance in this case really is the best predictor of future performance. The answers should offer insight into the candidate's suitability, both for the position and for the company. By the end of the interview, you should know whether the candidate exhibits the behaviours necessary to perform the job, whether the behaviours align with the company's culture and whether he or she understands why the behaviours are important.
A NEW CULTURE
People can talk about their support for the company's cultural values, but unless they truly embrace these values, they will never become completely ingrained. Measuring whether or not employees exhibit your desired corporate values is not only important, it is less difficult to achieve than most people think. It requires defining cultural values as individual behaviours and then using your existing HRM processes and tools to measure whether or not people exhibit these values.