EO Barcelona

5 Building Blocks For A Great Corporate Culture

by Jörg Lahmann, Certified EOS Implementer

 

Last week I was invited to give a talk on business management at a business association in Zurich. More than 50 entrepreneurs from companies with between five and 200 employees attended. Half an hour into my presentation, the question of how to improve corporate culture came up and aroused so much interest that I felt inspired to write this article.

“Company culture is what the employees say about the company when the boss isn’t there.”

According to ChatGPT, corporate culture refers to “the shared values, attitudes, norms and practices that shape the behaviour and interactions of people within an organisation. It encompasses the collective personality and character of an organisation and influences how employees perceive their work, make decisions and interact with colleagues and customers.”

Company culture is a constant, something that happens every day and is created by everyone in the team. That’s why team building events, for example, are undoubtedly a nice thing to do, but they are not suitable for creating a company culture. Rather on the contrary: when there is a healthy company culture, there will likely be team events.

4 types of corporate cultures

To put it simply, there are four different corporate cultures, as Marc O’Donnell writes in an article in Forbes Magazine:

1.       Command and control

As the name suggests, it is a top-down culture where the boss says what should – and must – be done. Those who don’t comply will be out of the door before they know it. This type of culture can work, especially in smaller organizations. But as soon as a company grows and middle management is needed, it becomes increasingly difficult to find capable people who are willing to put up with this kind of treatment.

2.       Happy together

At the other extreme, there are companies where everyone is nice to each other. People have a good time and appreciate each other. However, unpleasant topics are avoided instead of addressed, which jeopardises the long-term success of the company.

3.       Boring chaos

Then there are companies where nobody tells you what to do, but there are no good vibes either. Everyone sort of works for themselves without really being happy. That’s the “I don’t know, I’m just doing my job here” culture.

4.       Intentionally defined culture

In these types of companies, there is a deliberately defined culture that serves the company and is based on the values and mission of the organisation. Productivity and a good atmosphere go hand in hand.

It is easy to see that the fourth and last is (hopefully) the culture of choice for most entrepreneurs. But unfortunately, the reality often looks different: a laissez-faire (happy together) culture is in place, and when it doesn’t yield the desired results, it turns into command and control.

So how can you create the right corporate culture for your company? A spoiler: it’s not that simple. It requires perseverance and effort, sometimes even decisions that you would prefer to avoid. But it’s worth your while, as it is the only way to unleash the full potential of a company.

The road to the desired corporate culture

There are tons of books on corporate culture and the list of things that can be done is endless.  However, the trick is not to do everything possible but to concentrate on a few things, on the essentials. The greater the focus, the greater the impact. When you do 90% of the essentials, then you can concentrate on the rest of the options, of which there are many. But done the other way around, you will not be able to establish a strong corporate culture.

So, what are the 5 essential pillars of a strong corporate culture?

1.     Define core values

The company’s core values consist of a small number of concepts (ideally between three and seven) that define how the company should work together. I also like to refer to the core values as behavioural patterns. By way of example, these are the five core values of my company: Help first. Respect. Do what you say. Always give your best. Desire to learn.

Whether there are two or 200 people, everyone in the team must fit in with the core values. That’s why there are only three to seven at most – less is more. If you want to know more about how to develop core values, I recommend this article by Patrick Lencioni on HBR or my book (currently available in Spanish and German), La Empresa Motivada.

2.     Clarity about the destination of the journey

Part of a strong corporate culture is also that everyone on board knows where the voyage is headed. Core values are a good starting point for knowing who should be in the boat. But if everyone is rowing in a different direction, constructive cooperation is impossible.

The best tool for gaining this clarity is the VTO, the Vision Traction Organiser. This tool lists eight points, and the company’s leadership team should have clear answers to each point. Then, that vision – or roadmap, if you like – can be shared with the entire team periodically, once a quarter.

3.     Living the core values

Defining the core values is fine and hanging them on the wall is great, but they will only be truly useful if they are also lived. What does this mean?

1.       Hiring: A book on Spotify says: hire for values, train for skills. If, during a hiring process, you find a person with the right skills and knowledge, it is usually very difficult to back out because of inadequate core values. That’s the beginning of the end. If the door is open to everyone, it will be impossible to create a strong corporate culture. That is why successful companies have turned the selection process upside down and filter by values first and then by skills.

2.       Review: At least every six months, the company should proactively screen all employees to identify any individuals who are not acting in accordance with the established values. Subsequent coaching can sometimes help. But if it does not, the possibility of letting people go should also be considered.

3.       Termination: The only way to achieve the desired corporate culture is to take the consequences. Because whatever you tolerate, you will get more of.

4.     Clear responsibilities

Productivity is an essential pillar of a strong corporate culture. If we remove it from the equation, we quickly arrive at the happy together culture.

There are over 4,000 books on Amazon that talk about productivity, so it’s difficult to set the focus. If there is one thing we have learned over the years at EOS (Entrepreneurial Operating System) from advising over 10,000 leadership teams, it is that the Accountability Chart is the foundation of productivity.

Determine who is responsible for what in the company and identify the issues where you do not have the right people in the right positions. Confront one of these issues every quarter and resolve it at the root.

5.     Leadership style

Employees don’t leave the company; they leave their boss. One of the most common reasons for resignation is the superior. And the boss sets the tone in terms of values, communication, and implementation. Depending on the boss, that’s the way the business will go. The fish always starts to rot from the head. Do you need any more clever sayings… 😉

I’m sure there are plenty more about this because it’s the truth!

But very few people are born as good managers or leaders; most, including myself, have no choice but to learn. Give your management the training and coaching they need to develop the right leadership style that fits your corporate culture. Daniel Golemann did an excellent job with his work on the six leadership styles and their effects.

To summarize, the five essentials for a strong corporate culture are:

1.       Clarity on which personalities fit the team

2.       Clarity about where the journey is going

3.       Living the values as a cornerstone of the corporate culture

4.       Clarity about who is responsible for what and having the right people in the right positions

5.       Utilise the appropriate leadership styles

 

Ready, set... go!

In most companies, a conversation about company culture goes like this: “The atmosphere in the team hasn’t been great lately.” “True, I’ve been noticing that too.” “We should organise another event.” “Okay, who’s planning it?” And that seems to solve the issue. Until it comes up again after two months, and then again and again.

Yes, it takes work to create a solid corporate culture. But please don’t let that discourage you, because it is worth it, and it pays off. The return on investment of a motivated team and a strong culture is immense.