The Importance of Company Culture

Mar 06, 2006

Not many architects I’ve known, and even fewer engineers and scientists, appreciate the importance of company culture. How can I say this? Because they are still trying to manage their companies by creating rules and policies for everything from time sheets to quality control, and if they understood company culture, they’d realize that their approach never works. Big companies— and I mean REALLY BIG companies like Wal-Mart— are as successful as they are because they use their culture to guide the daily behavior of their millions of employees. They could not do it all with rules and regulations. The Wal-Mart “way of life” tells their people how to act in situations that no one could ever have predicted. Admittedly, Wal-Mart doesn’t always get the best press out there. Their top management is very conscious of that. They need good PR. When the 9/11 planes crashed in New York, one of their warehouse managers immediately loaded a truck with medical supplies, drinks, and more and sent it down to the World Trade Center site. No delay. No corporate approvals required. The manager of the warehouse just did it. Their corporate culture approved of the manager’s actions. And the end result is Wal-Mart looked darn good. They couldn’t have bought such favorable press at any price. The culture of any company is the net result of the stories told and passed down from one generation of employees to another. Back to Wal-Mart— when Sam Walton traveled, he always stayed in cheap motels and double-bunked with other employees. What kind of a message did that send out to everyone, both inside and outside of Ü the company, when those stories were told? Be cheap, don’t waste money even if you could obviously afford to (like Sam!). Being cheap is what Wal-Mart is all about. Keep prices down by shaving every unnecessary cent. A/E/P and environmental firms, especially larger ones with far-flung and distributed office locations and workers, need to use their cultures to guide their people’s behavior if the managers want to maintain their sanity and see their companies being successful over the long haul. Who gets rewarded and who gets punished is a big part of the company culture. So what do you measure and what are your reward systems? The best companies have very few metrics they track and talk about, and these are only for matters that are within the managers’ control. Then they pay people (individuals or groups— groups if they want to emphasize team behavior) based on how they do relative to these measures. Simple, clear, and easy to understand. The majority of firms in our business do the exact opposite. They measure and report way too many statistics, convoluting and confusing what’s most critical. Then they pay people based on very complex algorithms, including education, registration, seniority, ownership, and more, and, in the worst cases, extend the terms of payment years out into the future. No wonder everyone seems to have a different idea of what the priorities are for the company when this is what goes on! If firms in our business want to cash in on the benefits of having an extremely clear and understood company culture, we need to change. We’ve got to be a lot more consistent in how we do things at the top and not change our strategies every two years at the stockholders’ retreat. We can’t read a new business book and employ the management “flavor of the week.” We’ve got to simplify the numbers and the resulting pay schemes. We’ve got to get our top leaders spending more time one-on-one with employees and clients. We’ve got to be much more conscious of our individual behavior because every incident could become the basis for a story told years later. And we’ve got to fight the temptation to create huge manuals on everything because we cannot ever be so smart as to codify every situation that might come up. Simplicity and clarity of how the firm does business and why will help us be more successful as we grow. Any doubters? Look into Wal-Mart! Originally published 3/06/2006

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Zweig Group, a four-time Inc. 500/5000 honoree, is the premiere authority in AEC management consulting, the go-to source for industry research, and the leading provider of customized learning and training. Zweig Group specializes in four core consulting areas: Talent, Performance, Growth, and Transition, including innovative solutions in mergers and acquisitions, strategic planning, financial management, ownership transition, executive search, business development, valuation, and more. Zweig Group exists to help AEC firms succeed in a competitive marketplace. The firm has offices in Dallas and Fayetteville, Arkansas.