Human Capital and Value Creation: Aligning the Team
Each organization has its own unique work culture. A strong foundation of values helps the business thrive in the true sense of the word: all employees are engaged, their superiors value their contributions, and their voices are heard. Company culture in large part determines employees’ involvement and attrition. Employees want to know if and how they make a difference and contribute to the success of the company.
The leadership team’s role begins here, as strategy and culture are the two primary levers for maintaining organizational viability and efficacy.
The strategy enables focus for action and clarity in decision making. It depends on actionable plans to organize people and rewards the achievement of goals. Thus, leadership and strategy formation go hand in hand. However, culture is more elusive, as it is governed by behaviors, social patterns, and varying mindsets. Although business leaders and leadership teams layout detailed, thoughtful plans for the execution of strategy, failure to understand the culture and power dynamics within the organization often thwarts that strategy.
To manage a company’s culture, business owners and leadership teams must know how it works. This will minimize the risks and maximize its value.
Let’s look at few ways you can align company culture toward value creation.
Related: Exit Planning is Value Creation.
HR as a Proactive Culture Consultant
One of the HR department’s critical roles is to act as a culture consultant to the leadership team. The first step toward designing positive employee experiences begins by assessing and understanding the current culture. Once this is done, HR can help design a strategic plan aligned with the company’s goals and values. The next step is to collaborate with the executive team to implement the plan. An ideal scenario for employee development includes training programs for employees, corporate culture guidebooks, and performance management processes like rewards and recognition.
GM’s Rewards and Recognition Program
When GM adopted its rewards and recognition program, they noticed an activation rate of 97 percent, which meant seven out of 10 employees were active in the monthly program. Soon, the leadership team also got involved, with almost 80 percent of managers sending out recognitions monthly. Their program featured as one of the five most improved areas in the employee engagement survey and attracted more than 5,000 positive comments.
Open and Clear Communication
Ideologies, rules, values, principles, and policies form the backbone of company culture; however, they do no good if most employees aren’t aware of them. A positive culture requires awareness and enforcement through effective, transparent communication. Transparent communication promotes bonding among coworkers and leads to an enhanced understanding of their individual roles and responsibilities.
Interactions among employees collaborating over a period of time coalesce into workplace culture. Friendly, respectful, conflict-free interaction builds a positive culture; disagreements and arguments lead to a less favorable work environment. To promote open and transparent communication at the workplace:
- Leadership teams and management must pass on relevant and necessary information to all employees.
- Leadership teams and management should allow employees the opportunity to share their ideas, insights, and feedback openly and without retaliation to develop and to deploy innovative solutions.
- Managers and other superiors should be available for discussion.
- Make morning meetings a daily practice to prioritize tasks and discuss roadblocks as they come up.
- Opinions and ideas from consistent top performers should be considered while devising policies.
What They Did Differently at Netflix
Management at Netflix understood that corporate communication tends to be ridden with extra information and overly long memos. Their new internal communication practices are designed to keep communication short and simple. All their internal communication takes place through brief online memos. The outcome: all the easy-to-answer questions can be asked, answered, and saved for later reference. This practice eased the complexity of organizational communication between board members and management.
Practice Diversity and Inclusion
Diversity and inclusion (D&I) in the workplace means that all employees are accepted, supported, and respected. Such a culture boosts employee morale and performance and enables a safe work environment.
In a diverse and inclusive workplace, employees come from different walks of life and backgrounds. They receive support that helps them improve their performance. The first step towards creating a diverse workforce starts with recruitment. The hiring team from the HR department should accurately identify each candidate’s skills and ability to perform the job, regardless of the candidate’s race, gender, country of origin, religion, and other factors.
Inclusive workplace culture starts with top management and resonates throughout the company. It is the business owner’s responsibility to foster an accepting and inclusive culture. This can be done by educating employees on acceptable workplace behavior and having strict compliance policies for all such initiatives. Having a workplace where all employees are treated equally and are accepted is a must for organizational success.
Best Practices of Johnson & Johnson
The detailed diversity and inclusion vision of J&J focuses on maximizing the global power of D&I, driving superior business results and sustaining competitive advantage. They are accomplishing this through employee resource groups and mentorship programs. One such practice is to use diverse voices in their marketing concept meetings. They are also members of the Unstereotype Alliance to address the gender imbalance in advertising.
Integrate Company Values through Training and Development
When employees are not provided with opportunities to develop their skills further and learn something new, they lose their motivation and start looking for new avenues of growth. According to Gallup, “85% of employees are not engaged in the workplace. … Disengagement may result in feelings of dissatisfaction. It affects employee communication, harming your overall organizational culture. 1 in 3 professionals cites boredom as a key reason to hop jobs.” This is precisely where employee development and training programs help: they keep the employees focused, increase workplace engagement, boost morale, and make them feel valued.
Well-designed and strategized training programs empower employees. When the skills and competencies grow, they need less hand-holding and supervision, so managers can easily standardize workflows, as every person in the team knows their job and what is expected of them.
Amazon’s Pioneering Approach
With more than 245,000 employees worldwide, e-commerce giant Amazon has four crucial guiding principles: customer obsession, passion for invention, commitment to operational excellence, and long-term thinking. The company offers a month-long training program to its employees before hiring them. They also prepay 95 percent of tuition for employees who are keen to take courses in in-demand fields. Their ideology is simple; they want their employees to take ownership from day one, and so they train them to take ownership of their products and other services
Connect Internal Processes with Company Strategy
When company strategy is misunderstood and is not executed well, it often leads to an hour-to-hour crisis management mode of internal processes. Also, when a planned and defined action plan is not consistently implemented across functions, it often leads to product or service performance issues. To counter these issues, companies need to find a way to always stay focused on their business goals, operational purpose, action ideas, and performance metrics.
One way to improve all internal processes is to think objectively from the customer’s point of view on how your business provides a product or service. To do this, you must answer these crucial questions:
- Who is involved in delivering the product or services?
- What and who is involved at each step of this process?
- Are there any changes in the outcome as a result of your action?
When you think backward, you can identify several areas from delivery back to the product or service concept that has the potential for improvement. But simply having a strategy is not enough. If the leadership team does not follow through with the plans, there’s no point in making them.
Story of Toyota’s Humility
When Japanese carmaker Toyota entered the US market in the 1970s, it surprised other US car manufacturers by selling cars at lower prices that US manufacturers could not match. Government tariffs leveled the playing field, making Japanese cars as expensive as domestic cars. To counteract the new tariffs, in the next few years, Toyota established its own production plants in the US. Other car manufactures were not worried about this move, assuming that moving production overseas would result in high production costs for the Japanese. However, that didn’t happen; Toyota continued to manufacture cars locally with significantly lower expenses.
How did they do this? Toyota’s fine-tuned manufacturing processes were highly efficient and lean. They implemented their “continuous improvement” ideology into all aspects of their production lines. They studied their US counterparts for years and merged the advanced US processes with their own strengths to overcome loopholes and fix them permanently. Toyota clearly demonstrated that knowing one’s weaknesses was also the key to success.
Drive Decision Making Down the Organization
Organizational culture is a group phenomenon; it does not exist due to one single person, nor is it the sum total of the group and individual characteristics. When employees possess clarity of purpose, micromanagement binds agility and slows down decision-making. Leadership and managers should focus primarily on the tasks that they themselves perform: setting intention, choosing the right strategies, identifying the right people to do the job, and removing roadblocks.
To drive decision making downward:
- Identify which decisions can be delegated and push them as low as possible in the hierarchy.
- Communicate clearly at all times.
- Make people accountable for their actions and empower them to make decisions without approval.
- Empower teams by eliminating the culture of control and fear.
- Hone both hard and soft skills of their teams.
Netflix’s Unique Ideology
Global video streaming company Netflix was founded in 2009. Its founder and CEO, Reed Hastings, published a 124-slide presentation titled “Netflix Culture: Freedom and Responsibility that has become a startup guide for numerous companies in the Silicon Valley.
The slide deck features Netflix’s nine core company values: communication, judgment, impact, curiosity, innovation, courage, passion, honesty, and selflessness. Each value has four statements starting with “you” to provide more clarity to the employees. With fewer set rules, Netflix believes its high-performing, accountable staff has more freedom to identify opportunities, bounce back faster from past mistakes, and strive toward continuous growth and innovation.
Hastings believes that at Netflix, contrary to the popular idea that culture gets worse as the company grows, they are better off since they have 1,000 thoughtful people working toward problem resolution rather than just 100.
Ideal company culture is visible through shared values and behaviors, establishing norms, and meeting the group’s expectations. It is experienced through employee engagement, employee participation, and motivation. Regardless of a company’s mission and vision statement, it’s the company culture that leads the leadership team and empowers employees as to how to feel, think, and behave toward their work.