To continue with this month’s theme of the impact culture has on company growth, I will discuss ways culture can be hurting your profits. Every time there is a group of people a culture is formed. It could be a company, private club, church, or civic group. They all develop a unique culture. Last week we talked about how culture can help you through external challenges, this week, I am going to talk about ways to determine if your culture is hurting your profits.
Culture is Hurting Your Profits
We all know that ultimately you need employees to make and deliver your products and services. It doesn’t matter how great your strategies are, your processes and technology can be world class, but eventually you will have to rely on people to make money. When you have employees, a corporate culture will develop. Your corporate culture is simply the way it’s done at any given company. The trouble with a corporate culture is it is embedded into the fabric of your company, and impacts everything from productivity, employee loyalty, customer satisfaction and PROFITS. Here are some things to look for that can indicate you are in need of a desperate culture shift before you find yourself unable to maintain your competitive edge.
I touched on challenging the status quo earlier this month, but it is so important that I feel it warrants a second discussion. The idea that “this is how we do it here,” can be deadly. I have seen companies try to break this attitude of complacency by hiring outside people to fill in leadership positions. The theory is they will give an outside perspective and improve profits. The struggle is, culture can be so pervasive and the new leader meets so much resistance, the company quickly goes back to business as usual.
Complacency hurts, because when individuals become complacent, they no longer create and innovate. You either grow or die! Innovation and creativity is what gave you a competitive edge and what kept you in business. I can promise you this, if you have a culture of complacency and your competition doesn’t it is just a matter of time before you are losing market share.
Us vs. Them
Us versus Them is one of the most dangerous culture issues I have seen. This can manifest in a few different ways. It could be individual contributor vs. management, management vs. executives, or department vs. department. In the end, it results in excuses and a lack of accountability. People tend to blame outside circumstances or people for any shortcomings. When this gets to the point where there is an us vs them attitude, internal to the company, it breeds distrust.
Unfortunately, when this type of culture occurs it is extremely difficult to overcome. Once a lack of trust is established, there is no quick fix to reestablish trust. This requires new leadership at several levels, perhaps a management restructure, and time. Recognizing when trust is breaking down is the time to address the situation before it goes too far. How often does your organization, evaluate employee engagement and trust? If you are doing it on an annual basis, you probably are not doing it enough.
Who likes to be micromanaged? Rhetorical question, but just in case, NOBODY! Micromanagement is a sign of a weak culture. The reason a manager would micromanage is a lack of trust. They don’t trust their employees to do their jobs, or don’t trust them to make decisions, or they lack confidence in their own ability to lead.
Managers should be empowering members of their team to make decisions. Lead them to make the right decisions, and trust that they will do what is expected. Now this can’t be blind trust, there has to be some level of accountability, and follow up. But if employees do not feel they are empowered to make decisions, they will become resentful. It is always a good practice to push decision making down to the lowest level possible. Don’t believe me? Well it works for the Ritz Carlton!
This Week’s Challenge
Take stock in your company and do an honest evaluation of your culture. Look for signs of complacency, unhealthy rivalries or micromanagement. Each of these can hurting your profits.
If you would like to discuss more ways to help your business grow or if you feel you have a specific problem that needs to be addressed, please reach out to me.