Corporate Culture

So Kelly decided that PSS had to become a low-cost supplier, even while maintaining its service levels. He launched some innovative strategic moves, such as setting up a frequent buyers' club. He also had to tell his salespeople and employees that commissions and bonuses would likely take a hit.

Companies rarely make that kind of change easily. Employees grumble. They quit. The work doesn't get done the way it once did. At PSS, the opposite happened. No one was exactly overjoyed--but no one left. The company made the move, experienced a tough year, and rebounded quickly. PSS continued its breakneck growth and is now the national leader in its industry.

The difference? PSS has a share-the-wealth, share-the-information culture of a sort rarely found in American business. Every employee is a shareholder; some have more than a million dollars' worth in their accounts. Every PSS branch meets monthly to review its profit-and-loss statement. But it isn't just the P&L that gets employees' attention. Branches seem to paper a sizable portion of their walls with financial information: What salespeople X, Y, and Z sold yesterday. How much gross margin each of them realized. How the branch is doing, week by week and month by month, against plan. The wallpaper sends a strong message to everybody, every day: There are no secrets here. Nobody will ever try to put one over on you.

In an environment like that, it's impossible for employees to be cynical about the management's motives or actions. When Kelly told the PSS rank and file why a strategic shift was needed and what it would entail, employees believed him. Remember--and this is important to note--he hadn't just opened his books all of a sudden, when the crisis came; he'd had them open all along. He'd earned his employees' trust. He knew that the power of culture comes in part from its consistency. It has to seem as natural as the air employees breathe. That's the way we do things around here.

As a result of PSS's culture, Kelly could ask for--and get--the extraordinary cooperation and commitment needed to make a painful change. And PSS could convert short-term pain into long-term gain.

Different as they are, the cultural artifacts at Amy's, GSD&M, and PSS all belie the stubborn notion that the point of corporate culture is to accommodate employees' wishes--to make employees comfortable at the expense of their employer's competitive health. (Although comfort is occasionally the means to a competitive end: Born Information Services Group, a $36-million information-technology consulting firm in Wayzata, Minn., maintains lakefront vacation homes for employees' use--the better to keep turnover negligible in an industry in which it's the number one problem.) Contrary to the stereotype, high-culture organizations tend to be both tough and practical. The artifacts that animate their cultures emerge not from abstract theory but from clever yet simple responses to a business threat or opportunity.

For example, at Direct Tire and Auto Services, a Greater Boston tire retailer, the tactical desire to make a notoriously low-rent industry more professional inspired the construction of a now-renowned customer waiting room--which reminds employees how different their company is, and how differently they should perform for it, every day. At Pentagram Design, a small, internationally esteemed design firm with offices around the world, the constellation-like organizational chart defines and lastingly reaffirms the company's unique-in-the-industry network of 14 autonomous yet interdependent partners. (Pentagram's resulting competitive advantage: the ability to operate like a big company and a small one at the same time.) And at Zingerman's Delicatessen, in Ann Arbor, Mich., cofounder Ari Weinzweig writes an internal newsletter to spread the company's service-is-everything gospel. Filled with super-service war stories, letters from grateful customers, service contests, and profiles of employees who win service awards, it helps propagate Weinzweig's zeal now that the $9-million company is too big for him to convey his message directly to everyone. "Culture spreads because one hourly person tells the next hourly person," he says. The newsletter places his voice in that conversation among frontline sandwich makers.

More examples of practices that began as simple management moves and evolved into cultural symbols:

The Stump-the-CEO Contest. AGI Inc., a Melrose Park, Ill., designer and printer of nontraditional packaging for cosmetics, compact discs, and multimedia software, has grown to $97 million by outinventing its competitors. Its culture, CEO Richard Block explains, maintains that creative edge by promoting open debate and the combustive rub of ideas--"an environment that is for experimentation and that urges you to take responsibility for a problem instead of working at concealing it." To underscore that principle, Block submits to lively interrogation at a monthly companywide meeting--and rewards his toughest questioner with a prize. The message: Nothing is sacred. Questions are good. We're all--the CEO included--accountable to one another.

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