Saturday, April 7, 2012

Culture Counts: Why Values are Important in Defining Successful Organizations

Theres a tendency to look at things like values or vision or culture as the soft stuff of management, at least when considered alongside harder elements like finance or production. Im arguing that none of that money or any of those processes makes sense unless you consider the values that explain why we get up every day to produce things in the first place.

Introduction

Some recent mergers and acquisitions have gotten me thinking a lot about organizational culture lately. I find it hard to accept that I can’t find a trace of WaMu in the Chase branch that replaced it. I’m still steamed that Boeing has appropriated the Douglas Aircraft logo my father so proudly wore 50 years ago. I’m sitting now on an airplane that has a Continental tail and a United fuselage, staffed by a CO crew flying out of a UA hub. It’s enough to drive you crazy.

Maybe I’m showing my age, growing nostalgic at the loss of childhood trademarks, but as heretical as it sounds, I believe businesses are about more than making money. I realize that’s what they have to do… profitability is the mission of a business. But businesses are much more than revenue generating engines; they are a home to those who work with them and an experience to their consumers.

I’ve flown a lot of miles on the old Continental and United; indeed, I flew on the fabled Continental gold tails. They were very distinct experiences yet I doubt that either culture will survive the merger and in the end, like their sister carriers, Northwest and TWA, neither is likely to leave a meaningful trace on the consciousness of American travelers.

The new UAL culture will retain something of their parent airlines, but the two distinct original experiences I’ve known from the past will disappear.  And that makes me sad, because what made Continental continental or United united, in the end, were differences that caused flyers to pick one over the other… it wasn’t just fares and routes, it was how a flight attendant greeted you, the snacks you were served, the magazine in the seatback pocket you read.

Life in mass society becomes increasingly homogenous, so much so that it is hard to see much difference in anything, be it airlines, department stores or newspapers (to the degree they still exist.). Even cities have lost the things that made them special, so much so that Baltimore, Seattle or San Diego, which except for differences in geography and weather, are today basically all the same place, with the same Cheesecake Factory, Banana Republic and Courtyard by Marriott.

So let me mount my hobby horse and make the case why corporate culture is critically important and why preserving its values is a worthy goal of executive managers.

Organizations are held together by two things: structure and culture. The structure of an organization is the bone; the culture the sinew that connects it all. You need both, but some managers spend way too much time on the structure, building and maintaining systems and processes, and not enough on the culture, the values that make all that activity meaningful and satisfying.

Both are necessary and you’ll not make a dime in business if you don’t attend to organizational structure. But if you squeeze the cultural values out of an organization you lose the satisfaction of earning that dime much less the reason for pursuing it in the first place.

Ever watch kids play? Theirs is highly purposive behavior and even young children are trying to get something done with each other, but take away the fun of playing and kids lose interest fast.

Work is no different. Every one of us knows we have to do our job to earn money to support our families. We also understand our work enriches shareholders (citizens in the public sector) who employ us in their interest. That’s why we work, but that’s not why we work hard. People need more incentive than financial survival to bring out their best. Add in the value that comes from working and we become motivated.

Watch morale, enthusiasm and joy disappear when you take the cultural values out of the work and leave just a way to make money. Don’t believe me? Take a close look at the expression on the next flight attendant you meet, and then compare it with those flying with Southwest and you’ll see my point.

Two recent events renewed my interest in organizational culture. The first was the acquisition of NAI Global by a large real estate/finance corporation. Their acquisition caused me publicly to wonder how NAI's culture, crafted by the Finn family and shaped by exceptional leaders like Peter Hanson, Mike Mooney and Mike Zugsmith would fare in the future.

The other event came during lunch with Ted Fowler, president and CEO of the nation's largest buffet-grill restaurant chain, Golden Corral. We were eating at one of their new, impressive, "pavilion" stores when Ted noticed two 8-year old girls sitting across from us with their mother. He glanced over at them and commented, "Those two little girls are going to have a great time here today."

Thinking about these two interesting events raises some challenging questions to those of us trying to build strong organizations: how do we assure the values that define a company like NAI Global don't get lost, how do you develop employees whose view of their work is as value driven as Ted's?

Let me explain what I mean by the idea of organizational culture. The concept, borrowed from anthropology, suggests that a business or agency is partly understood by the values, customs, traditions, icons, even stories, it uses to define itself. This culture supplements processes and structure and manages organizational behavior. Indeed, the organization’s values… the real “stuff” of culture to me… can carry normative even moral implications in assessing what people do and how well they do it.

A strategic plan is an important part of any organization’s culture. The preface to most strategic plans, the mission, vision and value statements are (or should be) the most tangible components of that culture.

I stress this point because in a time of process and systems analysis it’s easy to overlook an organization’s culture and its values.

For me, organizational structure explains people’s behavior in much the same way that seating in an airplane explains what passengers can and cannot do. Adding the cultural dimension allows me to understand why people are sitting there and what they take into consideration as they make decisions within that structure. I’m not saying one is more important than the other, only that both need to be considered if you want to understand organizational behavior (and presumably manage it).

Extraordinary leaders are almost always successful because of the powerful, motivating values they endorse and their ability to use those values as criteria for even the most minute and mundane decisions. Indeed, when people talk about management or leadership “style,” that’s just another way of talking about what managers and leaders value.

If values are important in defining the best organizations it follows that anything that threatens or compromises them needs to be handled with care. That’s why the issue of mergers and acquisitions makes me uneasy.

Not all organizations, mind you, but some, maybe some of the best, rely on values to manage their operations. They are great because managers adhere to a set of values and built commitment around them as the primary way to lead their organization, top to bottom.

My initial concerns about the acquisition of NAI Global, had nothing to do with merits of the deal, I don’t know enough about it or the acquiring parties at C-3 to even speculate about its implications. What I do know is the old NAI Global was a special organization and a very good example of one that has prospered because its members held to a set of values that engendered trust, in an industry (commercial real estate brokerage) where trust can be an issue.

Here’s what’s always impressed me about NAI Global. Over 40 years ago Gerry Finn created a network of independent commercial real estate brokerage offices, first in North America (hence the NA), and later across the world (thus the Global). NAI was not a franchise; instead independent members affiliated through contracts with NAI, but were free to operate with considerable autonomy. I once referred to their network as fragile. I didn’t mean that as a criticism, it was a compliment that highlighted the fine job the Finns had done in crafting a successful value-driven network where trust, the most fragile of all values, held it all together.

The astounding part of this is that the independent firms affiliated voluntarily. Sure they signed a contract, but what they did as members of the network arose out of an understanding of the need for collaboration and a commitment to the support of the network (and their fellow members).

I’ve emphasized the word independent, because in the sometimes free-wheeling, gun-slinging environment of commercial real estate it surprised me to find an effective organizational model built on trust and collaboration. NAI Global’s members are some of the best brokers and sharpest business owners in their markets. These are leaders in their communities and operators of top notch firms… you’ll never meet a more entrepreneurial group and they aggressively protect their autonomy. Talk about herding cats… alligators or cheetahs might be a better example. These are not corporate types.

Yet, they worked together quite successfully. Cooperation and collaboration was high and leader-like participation in governance was expected and freely given. Remember, NAI Global was (in majority) a family owned company and most of these affiliates had no ownership in the network. This level of affiliation would be remarkable, in any kind of organization, remarkably so in a family-owned, quasi-franchise.

My regard for NAI and how it managed to strike this careful balance between the wishes of its family owners and the needs of its independent affiliates (who found their own balance between being part of a network and maintaining their local autonomy) may explain my initial concern when the acquisition of NAI was announced.

I must confess to a degree of nostalgia here. I hope the old NAI values of trust and collaboration, mutual support and comradeship persist. But there is no denying that something will be lost. These enterprises are no longer part of a group of firms who swore affiliation to each other and a family… they are now part of a corporation, for better or worse.

And anyone who thinks that being a branch office of a corporation is the same as being an independent affiliate of a voluntary network hasn’t thought about the difference very long. This is a huge change and the values that have grown up around NAI affiliates could be lost unless the owners of the affiliates themselves work to keep them alive. There is no reason to believe that the new owners of NAI understand those values much less even know they exist, or that they should. They have their own values and those will and should be of concern to them. The acquisition is, as it should be, a business decision. It does, however, carry cultural implications.

The story of Ted Fowler’s genuine interest that little girls eating at his restaurant have a good time raises another cultural issue altogether. I don’t think Ted is unique in his concerns for his customers. I suspect most CEOs have a similar gut reaction when they actually see clients in their place of business.

My worry is whether this instinctive, very human reaction to the sight of a customer consuming is felt at all levels of the organization. Knowing Golden Corral I’m not too concerned on that point, the people who greet you at the door and cook food behind the grill seem distinctly attuned to the satisfaction of their guests. I’m less sure about other companies.

The best organizations I’ve been involved with “live” the mission statement. But for many the sad truth is that few outside the organization’s planning team even know their company’s mission and fewer take it into account in their daily activity. In the great organizations it seems like every activity, even those most remote to the mission are all connected to it.

The best example I have of this goes back to work I did with a REIT, Highwoods Properties. As part of their strategic planning process, their CFO (now CEO) Ed Fritsch and I visited each Highwoods office where we tag-teamed a presentation that rolled out the plan to every employee.

We were in the Orlando office where the number of staff was so large and the meeting space so small we had to split attendance into morning and afternoon sessions. That morning I asked, as I did at the end of each presentation, what they were going to do differently after lunch now that they had been apprised of their employer’s new strategic plan. I’d always ask Ed last and this morning, as a prank, he countered by asking what I was going to do differently after lunch. I told him I was going to try to make the small meeting room more comfortable for the next group.

That’s all I said. I didn’t ask anybody to do anything, I just made the comment. When I turned to walk to the door to bid farewell to the participants I watched four Highwoods building maintenance techs, wearing their overalls, rise, pull out some tools, disconnect a board room table top from its stanchions, kneel and remove the legs from their floor brackets. They moved the table aside and rearranged the chairs.

All without a word from me. They had listened earlier when Ed and I talked about the value of helping each other out and when I mentioned the condition of their room, they acted on their own, unbidden or commanded, in a manner consistent with Highwood’s culture. That’s what I’m talking about.

My hope is that I could come into your organization, encounter someone changing the toner in a printer and to be told, when I ask them what they are doing, that they are fulfilling the mission of your firm, association or agency.

Far-fetched? I don’t think so. The almost unconscious reference to values that causes us to do the better thing is found in many other CEOs like Fowler and regular employees like the maintenance guys at Highwoods. But it isn’t there by accident.

One more powerful example.  As you know, I fly a great deal and with my patronage comes the privilege of slightly more comfortable seating on my “home” airline, United.  When you come on board, you recognize us right away, tucked into slightly wider seating between first class and the last exit row, with blanket, pillow, iPad and noise cancelling earphones.

A couple of years ago I was on one of my favorite flights, United 200, the late-afternoon Seattle to Chicago ORD run (gives me all morning to work at home and gets me into the Windy City just in time for a steak at Gene and Georghettis).  United offers a feed of it Air Traffic Control traffic as one of its complimentary audio channels and I and many other frequent flyers stayed tuned to be alerted to weather or equipment delays.

One afternoon I’m on this flight and just as the aircraft pushes back from the gate, the captain comes on with an announcement.  I listen with some trepidation, because I’ve never heard any good news seconds after the pushback.  This time, however, he intones, “Ladies and Gentlemen if you listen to ATC on Channel 9 today you will not here us called, as we would be, United 200.  Today we are ‘Lifeguard United 200.’  We’re carrying a kidney to Chicago for transplant!”

I am convinced that every one sitting around me, a bunch of jaded, airline-weary, United 1Ks and Premiers, sat up a little straighter, maybe even combed back out hair.  We weren’t on just another four hour grind business flight to Chicago, we were on a mission!

All of these stories are true and each says a great deal about what happens when value is interjected into the otherwise hum drum of our daily work lives.  What we do becomes meaningful and the people we do it with are suddenly special.

Whenever I have these experiences, whenever I see people working together with a sense of purpose, I know they are part of an organization that values them and me.  And I know this is no accident.

These values got there because they were expressed, shared and followed by leadership. I’d go so far to say that advancing the organization’s values is what leadership is all about. Values and missions posted on walls or printed on business cards mean little to me. Actions that are clearly motivated by those values do.

So when I get on my soapbox and worry aloud about the loss of values in our organizations it is because I know that culture counts. Those values are what separate great organizations from the also-rans.

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