Company culture is the behavioral environment that drives your company. On the way to building a successful small business, consuming thoughts of product, services, locations, cash flow and customers devour an entrepreneur’s mind. Small business owners do not typically spend much time pondering the merits of developing an effective company culture, but maybe they should.
Whether intentionally created or left to happenstance, company culture surfaces in all organizations, regardless of size. Smart organizations demonstrate that spending time developing an effective company culture pays huge dividends. In his book The Culture Cycle, James L. Heskett, Professor Emeritus of Harvard Business School, claims that when an effective culture is put in place, “its impact on profit can be measured and quantified.” For instance, an effective company culture produces engaged managers and employees with high retention rates. “This in turn,” Heskett notes, “results in lower wage costs for talent; lower recruiting, hiring, and training costs; and higher productivity (fewer lost sales and higher sales per employee).” A low employee turnover rate builds positive customer relationships grounded in consistency. The business benefits from customer loyalty, reduced marketing expense and higher sales.
In a 2013 article on corporate culture in Harvard Business Review, John Coleman writes that there are six components that contribute to creating a great corporate culture. These same components are viable for small businesses:
- Vision: Create a core statement that reflects the values and purpose of the company.
- Values: Build guidelines for behavioral expectations and adherence by employees.
- Practices: Make values visible in company practices at every level.
- People: Recruit based on the fit between the applicants and the core values of the company.
- Narrative: Develop a distinctive story that tells your history and gives credence to your purpose.
- Place: Construct a physical environment that supports company values and purpose.
My favorite example of developing an effective company culture was established by Thomas J. Watson Sr. in 1914. If his name does not sound familiar, have you heard of a company called IBM? Watson joined IBM when it was the Computing-Tabulating-Recording Company (C-T-R), a company built by merging three smaller companies located in New York, Washington, DC and Ohio. Watson had the Herculean task of uniting the company operations, processes and beliefs. Watson came up with a solution that was simple and practical. His motto was THINK.
Watson is quoted as saying, “Knowledge is the result of thought, and thought is the keynote of success in this business or any business.” He challenged IBM employees to think of business solutions and promised they would be heard. Watson thought that there would be a revolving business cycle of ideas, solutions, products, sales and profits if employees were empowered to think. THINK was embossed on walls in offices and factories throughout IBM and became not only a slogan but the essence of company culture at IBM.
I challenge you to take a look at your small business: what is your company’s culture? Have you taken any steps to create a behavioral environment that has your company stamp? Do your employees, vendors and customers know your company’s culture? If you have not paid much attention to developing a culture that works to enhance your small business, it is not too late. Take a few tips from John Coleman and work on realigning the company vision, values, practices, people, narrative and place. Let your company culture work for you and not as an impediment to your success.