How to Build a Bulletproof Company Culture
Is your company's culture at the core of what makes your business valuable?
Pat Lencioni's latest book, Getting Naked, is a fable about a business owner who abruptly decides to sell his successful company, Lighthouse Partners, after his daughter is involved in a car accident. Once the new acquirer takes over the business, they discover that Lighthouse is successful because of its unique culture as opposed to a superstar sales team or proprietary methodology.
Lighthouse Partners' culture survives the departure of its founder and endures under new ownership, making the company even more valuable.
I asked Lencioni how business owners can ensure their culture will survive after they're gone. Based on our conversation, here are three steps for creating a durable company culture:
Step 1: Figure out who you are, not who you want to be
Start by understanding your company's core values. For example, at Southwest Airlines, humor is a core value and an essential part of everything the company does. At Nordstrom's, employees love serving people. Even when customers are cranky and unreasonably demanding, Nordstrom's employees embrace the challenge of making them happy. It's who they are.
As you identify your core values, Lencioni cautions business owners to avoid what he calls 'aspirational values,' which are attributes you would like your company to have rather than those it has today.
Lencioni recounted a story of a CEO he was coaching who said one of his company's core values was 'operating with a sense of urgency.' When Lencioni questioned the CEO, he admitted he had selected the core value to light a fire under the collective backside of his complacent management team. The CEO had fallen into the common trap of picking values you want your company to stand for instead of things you already do.
Working with business owners, Lencioni often sees a laundry list of aspirational values on a poster in the lobby:
The list is long and filled with aspirational clichés employees neither remember nor believe.
Lencioni recommends you pick one or two company values that truly represent who you are today, not who you want to be tomorrow.
Step 2: Be picky when hiring and promoting
Once you know who you are as a company, the second step in building a transferable culture is to ensure your entire company embodies those values. Jim Collins, the author of Good to Great and Built to Last talks about 'getting the right people on the bus and in the right seats.' Lencioni agrees, adding, 'At Southwest Airlines, they will not hire anyone—even for their most technical jobs—without a sense of humor.'
Lencioni implores business owners to use their values as hiring, promoting and firing criteria: 'Your goal should be that 100 percent of your people embody the one or two values that make your company truly special.'
Step 3: Stay involved in hiring
'The very last thing the owner should delegate is hiring,' says Lencioni, who believes it is the company founder's most important way to ensure new hires embody the company's culture.
By following these three steps, Lencioni believes, you can turn your company culture into one that is self-healing, can quickly identify people or behavior that does not align with the company's core values, and automatically correct the behavior or rejects the outlier.
Once your company culture starts to self-police, you'll be able to convince an acquirer that your culture formula will endure long after you're gone.
JOHN WARRILLOW | Columnist | Sellability
John Warrillow is the author of Built to Sell: Creating A Business That Can Thrive Without You and the founder of The Sellability Score, a cloud-based software company that helps business owners improve the value of their company.