Does Corporate Culture Pay?

Inc., 18 May 2011

Culture: It's a word that often makes CFOs cringe because of the perception that it's expensive. From my experience, it's far more costly to do business without it. As CEO of The Beryl Cos., which specializes in managing patient interactions for hospitals, I've found that employee engagement through our unique corporate culture is what allowed us to move from a commodity to a business that doesn't need to compete based upon price.

A strong, healthy culture reduces turnover, boosts employee engagement and results in fiercely loyal customers. Having a strong corporate culture is not only a good thing to do, but it also makes good business sense.

We re-invest profits in our people. At Beryl, we call it The Circle of Growth. In fact, the term was coined by our CFO, who was initially skeptical, but became a convert when he realized that culture paid dividends.

Perhaps you think you are ready to transform your workplace culture, but are concerned about being able to justify costs with hard numbers. Consider this: Beryl is four to six times more profitable than our typical competitor and we attribute that to our ability to engage employees.

During recession, cutting out culture and people as "soft" benefits eliminates your strategy to rebound. With customers under similar financial duress, it's the wrong time to allow a customer relationship to become tenuous. Passionate people, focused on customers instead of layoffs, are essential to a company's survival and success.

You can do this by:

• Identifying guiding values, sourced from employees and reiterated as a constant in a sea of change.

• Constructing a clear mission and vision that everyone can own. Paint the big picture and discuss how workers can contribute to success.

• Working together to develop processes and systems that support transparency and encourage sharing opinions and ideas, such as an open-door policy with no fear of retribution.

• Identifying a leader. At Beryl, we have an executive whose title is Queen of Fun and Laughter. She is responsible for helping us to stay true to our unique culture and keep co-workers lives in balance. We also have a group of employees who volunteer as part of the Better Beryl Bureau, a committee that comprises of a cross-section of Beryl co-workers who plan events as well as provide input on policies, change management, rumors, concerns and more.

=======Business Leaders Digest======

Information You Can Use. Knowledge You Can Trust

This summary is taken from Business Leaders Digest monthly(www.busleadersdigest.com)

The objective of BLD is to offer strategic insights, how-to articles, thought leadership pieces and other information to help you become more effective at the workplace.

Summaries from global top 100 business & management magazines, newspapers, websites & reports are published monthly in Business Leaders Digest which can be subscribed at a modest annual subscription of Rs1500 for corporates and Rs.900 for individuals in India or US$50 overseas. To subscribe or receive a sample issue, email at busleadersdigest@gmail.com

Preparing your organization for growth

Companies that address their organizational weaknesses as they implement growth strategies give themselves an advantage.

McKinsey Q, May 2011

Most senior managers pay close attention to the strategic side of growth—the “wheres,” “whens,” and “hows.” Yet many underestimate the importance of organizational factors in translating a growth strategy into reality. This oversight can dampen a company’s growth plans: organizational processes and structures that are well suited to today’s challenges may well buckle under the strain of new demands or make it impossible to meet them. Likewise, key employees may lack the skills needed to cope with the additional complexity that growth brings. This article seeks to illustrate such “pain points” and suggests some approaches for coping with them.

1. Stifling structures

Well-defined organizational structures establish the roles and norms that enable large companies to get things done. Therefore, when growth plans call for doing things that are entirely new—say, expanding into new geographies or adding products—it’s well worth the leadership’s time to examine existing organizational structures to see if they’re flexible enough to support the new initiatives. Sometimes they won’t be.

2. Unscalable processes

Business processes are another area that companies often overlook, to their detriment, when they are growing. It’s important for a company to determine which processes will come under particular stress when it grows.

3. Unprepared people

Growth naturally creates new interactions and processes, expected and unexpected, and often at a fast pace. To manage them, the employees who face the greatest complexity—for example, those in functions or businesses that will see increased activity—must have “ambidextrous” capabilities. These enable people to take initiative beyond the confines of their jobs, to cooperate and build linkages across the organization, and to complete many tasks in parallel.

Companies sometimes forget to think about these capabilities in the units immediately involved in growth and very often don’t do so beyond them.

The specific organizational challenges companies face as they grow will differ according to their growth strategies. By managing organizational complexity early, however, any company can improve the odds that its growth plans will succeed—while making it less difficult than ever to get things done.

=======Business Leaders Digest======

Information You Can Use. Knowledge You Can Trust

This summary is taken from Business Leaders Digest monthly(www.busleadersdigest.com)

The objective of BLD is to offer strategic insights, how-to articles, thought leadership pieces and other information to help you become more effective at the workplace.

Summaries from global top 100 business & management magazines, newspapers, websites & reports are published monthly in Business Leaders Digest which can be subscribed at a modest annual subscription of Rs1500 for corporates and Rs.900 for individuals in India or US$50 overseas. To subscribe or receive a sample issue, email at busleadersdigest@gmail.com

Why Leaders Don’t Learn from Success

Harvard Business review, Mar 2011

Success can breed failure by hindering learning at both the individual and the organizational level. We all know that learning from failure is one of the most important capacities for people and companies to develop. Yet surprisingly, learning from success can present even greater challenges. To illuminate those challenges—and identify approaches for overcoming them—we will draw from our research and from the work of other scholars in the field of behavioral decision making, and focus on three interrelated impediments to learning.

The first is the inclination to make what psychologists call fundamental attribution errors. When we succeed, we’re likely to conclude that our talents and our current model or strategy are the reasons. We also give short shrift to the part that environmental factors and random events may have played.

The second impediment is overconfidence bias: Success increases our self-assurance. Faith in ourselves is a good thing, of course, but too much of it can make us believe we don’t need to change anything.

The third impediment is the failure-to-ask-why syndrome—the tendency not to investigate the causes of good performance systematically. When executives and their teams suffer from this syndrome, they don’t ask the tough questions that would help them expand their knowledge or alter their assumptions about how the world works.

In business, any number of factors may lead to success, independent of the quality of a product or management’s decisions. Yet it is all too common for executives to attribute the success of their organizations to their own insights and managerial skills and ignore or downplay random events or external factors outside their control. Research has proved that this is normal human behavior. Moreover, when examining the bad performance of others, people tend to do the exact opposite.

To avoid the success-breeds-failure trap, you need to understand how experience shapes learning. Learning is, of course, a highly complex cognitive and organizational process, and numerous models have been developed about it in the academic literature. Drawing from those, we present a simplified model that highlights the effect that success and failure have on learning.

We start with the premise that individuals and organizations at any point in time hold certain theories, models, principles, and rules of thumb that guide their actions. Your choices about the people you hire, the projects you fund (or terminate), the features you include in new product designs, and the business strategies you pursue are all influenced by them. Sometimes theories are quite sophisticated and rooted in science or decades of practical experience. But in many other cases, they are pretty informal—and we may not even be aware that they are swaying our decisions. Learning is the process of updating our theories. In some cases personal experience alters them. But members of an organization also learn together. Experience with both winners (the iPod) and losers (the Newton) has caused Apple, as a company, to update its theories of what leads to successful products.

From this perspective, learning is all about understanding why things happen and why some decisions lead to specific outcomes. This understanding does not come automatically. We make a conscious choice to challenge our assumptions and models. And usually, we do so as the result of a failure.

But what about success? Success does not disprove your theory. And if it isn’t broken, why fix it? Consequently, when we succeed, we just focus on applying what we already know to solving problems. We don’t revise our theories or expand our knowledge of how our business works.

Five Ways to Learn

Celebrate success but examine it.

Institute systematic project reviews.

Use the right time horizons.

Recognize that replication is not learning.

If it ain’t broke, experiment.

=======Business Leaders Digest======

Information You Can Use. Knowledge You Can Trust

This summary is taken from Business Leaders Digest monthly(www.busleadersdigest.com)

The objective of BLD is to offer strategic insights, how-to articles, thought leadership pieces and other information to help you become more effective at the workplace.

Summaries from global top 100 business & management magazines, newspapers, websites & reports are published monthly in Business Leaders Digest which can be subscribed at a modest annual subscription of Rs1500 for corporates and Rs.900 for individuals in India or US$50 overseas. To subscribe or receive a sample issue, email at busleadersdigest@gmail.com