I am a big believer in company culture. Or rather, I should say positive company culture. All companies have a culture, just as all companies have a brand. And, like a great brand, a great company culture can make a big difference in a company’s performance and valuation.
Because of my conviction that a brand is more about what you do than what you say, I would argue that a company’s culture and brand are inseparable. The culture gives form to the brand. The brand gives voice to the culture.
Recent research (see below) concludes that culture does, in fact, have a material impact on a company’s business outcomes, and that the CEO’s style and personality exert a disproportionate influence on culture. This probably comes as no surprise to any of you, but it reinforces the importance of making culture an acknowledged corporate asset, and one that existing leadership should be charged with preserving,
I was fortunate to work for D. A. Davidson for twenty years. When I joined the firm, it was led by Ian Davidson, the son of the founder and a visionary who transformed the company from a sleepy little stock and bond shop on Central Avenue in Great Falls, Montana to the largest regional full-service financial services firm in the West.
With his easy, approachable manner, gregariousness and inclusiveness, Mr. Davidson set the tone for his company’s culture. It was a place where opinions were sought and respected, opportunities for growth and advancement were abundant (particularly as the firm grew), and everyone felt like they were a part of the family even while we were held to high standards of performance. When I left the firm in early 2013, Ian still sent hand-written birthday cards to each of the firm’s nearly 1,100 employees – a practice he maintained for decades.
During the course of my tenure, Mr. Davidson was succeeded by two other CEOs, Vinney Purpura and Bill Johnstone. Each of these talented leaders put his unique stamp on the firm, presiding over growth, diversification and expansion, while preserving the firm’s cultural qualities. To this day, the firm’s culture is considered a critical business attribute, contributing to employee retention, recruiting and operating results. A topic I’ll be addressing in greater detail in another article to be published soon.
While it’s probably obvious that culture is affected by the CEO, it’s also important to note that, for companies interested in protecting their cultures, culture can also be institutionalized – or structured – in ways that help sustain it, even when a new CEO’s personality may not align well with the culture.
Some cultures actually dampen business outcomes. I know because I’ve worked with companies like these too. But, assuming your company’s culture aligns with your business objectives for growth and high performance, here are four actions you and your firm can take to help ensure that your company’s culture survives and thrives…
D.A. Davidson is employee owned. As stakeholders, employees are encouraged to view the company and their contributions from a larger, results-oriented perspective. Employees participate in the company’s growth and success via the firm’s various stock ownership programs.
If your company is private or public, there are a variety of techniques for making your employees stakeholders by making them owners and business partners.
If you’re determined to make your culture last, your employee stakeholders will need more than just a piece of the action. They need to know what you’re doing and why.
The old command and control form of leadership and my-way-or-the-highway proclamations won’t cut it. If you honestly want your people to embrace all the implications of ownership, they have to be included in the discussion. This isn’t some squishy principle designed to make everybody feel good. It’s about accountability. It’s about taking ownership in the success of our company.
Talk openly with your employees about what’s going on – where you’re killing it and where, frankly, you’re losing ground to your competitors and why. You’ll be surprised at how your people will step up to bring fresh ideas and overcome challenges.
Several years ago, I participated with a group of fellow D.A. Davidson employees from different businesses, regions and disciplines in an exercise to better understand the firm’s culture and the qualities and behaviors that made it up.
As a result, we were able for the first time to identify actions and attitudes that did – and did not – align with the culture. With this information in hand, we instituted an annual award, recognizing the employees whose contributions represented the very best of the firm’s culture. Celebrating cultural excellence is now a tradition at the firm.
In a recent article, “A Culture of Personality” by Strategy + Business contributor Matt Palmquist, the author cites research on the topic of leadership and culture conducted by Charles O’Reilly III, Stanford University; David Caldwell, Santa Clara University; Jennifer Chatman and Bernadette Doerr, both of the University of California Berkeley.
In their report, “The Promise and Problems of Organizational Culture: CEO Personality, Culture and Firm Performance”, the researchers set out to test the long argued but empirically unproven theory that “CEO personality affects a firm’s culture and that culture is subsequently related to a broad set of organizational outcomes including a firm’s financial performance (revenue growth, net income, Tobin’s Q), reputation, and employee attitudes.”
The research is compelling and delves deeply into the personality traits of CEOs and the implications for company cultures when those companies are seeking growth, adaptability, meticulous attention to detail, etc.
My point is this: For companies that have made their culture a business asset and strategic imperative, even a CEO whose personality and style might impair the culture would have difficulty completely undoing long observed corporate traditions. Even more important, in an environment where culture is highly valued by leadership, directors and the rank and file, it’s highly unlikely that such a CEO would ever land the job.
For me, this research validates one of my personal convictions – a company’s culture matters. A lot. Companies that have strong cultures driving desirable business outcomes need to be deliberate about preserving and improving their cultures. The firm’s leadership should dedicate themselves to understanding what make their cultures tick and instituting business practices that support the culture’s long-term health and vitality.
In the consumer driven economy of the 21st century, your brand and your business are depending on it.