High performance and organizational cultures

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High-Performance Cultures:How Values Can Drive Business Results

Jeff Rosenthal and Mary Ann Masarech

Tom Murphy, CIO of Royal Caribbean Cruises Ltd. (RCCL), likes to tell the story of hisdepartment’s dramatic turnaround in the last few years. The IT group, once described as a “nameless,faceless, toothless, bureaucratic organization with no vision or identity” is now a strategic businessdriver within RCCL, and it has captured a spot two years in a row on Computerworld’s list of bestplaces to work in IT. Murphy, a self-proclaimed cynic of “touchy-feely management,” peppered arecent speech about the IT department’s success with references to values and culture.

Culture? Not long ago, biologists were the only ones “creating” it — in petri dishes. There were afew maverick business people who espoused culture as the secret to their organization’s success, butmany more in the business world, like Murphy, dismissed it as merely “soft.”

Today, culture is earning a reputation as a business tool for driving high performance. It is on leaders’agendas for several reasons:

• Companies are searching for true competitive advantage — something unique and nearlyimpossible to replicate that will keep them a step ahead in their markets.

• As uncertainty pervades global politics and markets — and as people spend more hours thanever making a living — the workforce is searching for employment that offers more than just apaycheck (purpose, meaning, camaraderie, and other intangibles).

• Organizations are turning the microscope on their internal workings to uncover and addresssigns of trouble, and to find reassurance that the embarrassing corporate scandals of 2002 arenot growing unchecked in their cultures like mold on leftovers in the back of a refrigerator.

• Despite a looser labor market, leaner organizations need to attract and retain star performerswith talent and “fit” to get the work done.

• Organizations depend on innovation for growth and high performance, which in turn dependon employee initiative, risk taking, and trust — all qualities that are either squelched ornurtured by an organization’s climate.

• Evidence indicates that culture can be shaped — even if the organization was not founded by ashrewd, offbeat business person like Southwest Airlines’ Herb Kelleher.

This article will discuss:

• The elements of high-performance cultures — in particular, the core driver: organizationalvalues.

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Jeff Rosenthal and Mary Ann MasarechJeff Rosenthal and Mary Ann Masarech

• Experiences of a diverse selection of organizations in creating and sustaining high-performancecultures.

• Pitfalls to avoid in using organizational values as a business driver.

WHAT DO WE MEAN BY A HIGH-PERFORMANCE CULTURE?

Corporate culture at its most basic level is the “sum of an organization’s behaviors and practices.”When we talk about culture that drives business performance, we do not mean a great place to work(although that is often part of the picture). Great places to work have certainly been linked to strongbusiness results (check out www.contentedcows.com for data), but HR-driven employer-of-choiceefforts that are disconnected from “the business” can fall prey to budget cuts as profits fall or thebalance of power in the job market shifts.

A high-performance culture that supports your organization’s success — even in hard times — needs to be deliberately shaped around these components:

• A clear, compelling corporate mission or purpose that informs business decisions, generatescustomer loyalty, ignites employee passion, and inspires discretionary effort. It answers the question of why the company exists or, as Jim Collins and Jerry Porras, authors of Built toLast: Successful Habits of Visionary Companies (HarperBusiness, 1994) say, “What’s your reason for being?”

• Shared organizational values that guide employee behavior and influence business practices asyour organization delivers on its promises to customers, employees, and other stakeholders.They answer the question: What are your company’s guiding principles, its authentic, enduring“rules of the road”? Business strategies will shift; core values do not.

• An environment that encourages individual employee ownership of both the organization’sbottom-line results and its cultural foundation.

WHY BOTHER WITH CULTURE?

We believe a values-driven culture contributes to business performance because it can:

• Attract and retain star performers who not only have the skills required to achieve ambitiousbusiness goals but also are so invigorated by the company’s core beliefs that they give “110percent.”

• Guide and inspire employee decisions and contribution in a flatter, fast-paced, decentralizedworkplace that is void of day-to-day management direction.

• Provide fixed points of reference and stability during periods of great change or crisis (muchlike a lighthouse with its beacon of light during fog and rough seas).

• Create a more personal connection between employees and the organization, a type ofemotional contract to replace the agreements implicit in our parents’ world of work.

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High-Performance Cultures: How Values Can Drive Business ResultsHigh-Performance Cultures: How Values Can Drive Business Results

• Align employees with diverse interests around shared goals to create a sense of community andencourage teamwork.

• Export what the organization stands for so that customers and other outsiders can sense anddescribe what the organization is about, and help employees develop an emotional bond thattranscends mere satisfaction — in other words, loyalty to the company.

Perhaps one of the most compelling benefits of a high-performance culture is increased employeecommitment. In a workplace rampant with cynicism and echoes of “what’s in it for me?”, commitmentremains a key competitive advantage.

BlessingWhite’s experience over the last three years indicates that organizations with a solid sense of purpose and a history of well-articulated values enjoy this advantage. As Exhibit 1 illustrates,employees in these more “established” values-driven organizations appear to be more committed thanemployees in organizations that are just starting to intentionally manage their cultures around corevalues. In fact, the data shown in Exhibit 2 indicates that the more established cultures have lessthan half as many potentially disgruntled or disillusioned employees.

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Several research studies in the last twenty-five years have provided solid evidence that links thebottom-line to culture. Kotter and Heskett’s 1992 landmark study, described in Corporate Culture and Performance, revealed that, over a ten-year period, companies that intentionally “managed theircultures well” outperformed similar organizations that did not.

• Revenue increased 682% versus 166%

• Stock price increased 901% versus 74%

• Net income increased 756% versus 1%

• Job growth increased 282% versus 36%

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Research that shaped Jim Collins and Jerry Porras’ book, Built to Last, was reported in Harvard BusinessReview, and it indicates that “visionary” companies — those with timeless ideology (core purpose and values) and adaptive business tactics — outperformed the general stock market and comparablecompanies in their industries. To illustrate, a $1 investment in 1926 would have the following valuein 1990 if it had been invested in:

• The general market stock fund: $415

• One of the comparison groups: $955

• One of these visionary companies (with core ideology and adaptive tactics): $6,356

However, their research also reveals that while culture is necessary for such success, it is not the onlyfactor.

THE GOAL: BRAND INTEGRITY (THE “4th QUADRANT”)

What happens when an intentionally managed culture is paired with laser-like execution of soundbusiness strategies? Brand integrity. Brand integrity exists when an organization’s walk equals its talk— inside and outside the organization — so that it consistently delivers on promises to customers,employees, and all other stakeholders. The payoff is emotional bonds, credibility in the marketplace,and stakeholder loyalty. The secret is successfully integrating focus on business performance andculture.

The degree to which an organization uses business performance and culture as drivers greatlyinfluences the company’s long-term viability and success. For example, companies in Quadrant 1 ofExhibit 3 have a weak focus on both performance and culture. If you think your organization residesthere, read quickly — you may not be employed there tomorrow. Levi-Strauss is often described asan example of a company in Quadrant 3 of Exhibit 3: it was so focused on its internal workings inthe 1990s that it lost its focus on making jeans profitably. Companies in Quadrant 2 may be ridingthe momentum of a “big idea,” a short-term focus on profits, a churn-and-burn work environment, or some other condition whose long-term strength is uncertain or inherently difficult to sustain.Quadrant 4 is the desired spot — solid business performance generated by a motivated workforce —but it is not easy to get there or stay there. At the time of this writing, Southwest Airlines resides inQuadrant 4, with an acclaimed work environment, strong culture, and modest profits at a time whenits industry is hemorrhaging. Nordstrom might also be considered a “4th Quadrant” organization.Hewlett-Packard had been in Quadrant 4 for a long time, but where is it now and where will it be ayear or two after its merger with Compaq?

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We will assume in the following discussion that your organization has a clear strategic vision and issufficiently focused on the business performance side of the matrix in Exhibit 3. Our purpose here isto provide concrete guidelines for improving your company’s position on the culture side of thematrix, and also to share some real-world examples of companies that committed themselves to suchimprovement.

HIGH-PERFORMANCE CULTURES COME IN ALL SHAPES AND SIZES

Our intent is to demonstrate that although managing your culture requires a lot of hard work (Kotterand Heskett estimate that it can take five to ten years to actually change a culture, depending on theorganization’s size), there are few restrictions on who can and should try to create a high-performance culture. The organizations we highlight in the rest of this article provide evidence that:

• Whether your organization has a tradition of core values or is looking to values clarificationand alignment to build on past successes, you need to actively shape culture.

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• Whether you represent an individual department or a business unit with hundreds ofemployees or a large, publicly traded multinational with a workforce in the tens of thousands,you can reap the benefits.

These are the organizations you will hear more about in the pages to follow:

• Computer Associates (CA), a software enterprise with 15,000 employees around the world,which began its values initiative just over a year ago.

• The Charles Schwab Corporation (Schwab), a financial services firm founded in the early1970s and often held up as a model of a values-driven business, with approximately 17,000employees worldwide.

• Xilinx, a Silicon Valley semiconductor manufacturer founded in 1984, with approximately2,600 employees worldwide. Known from the start for a culture based on respect, Xilinxformalized its core values in 1996 after current CEO Wim Roelandts joined.

• The Corporate Banking Group of Allied Irish Bank (AIB), based in Dublin, Ireland, with morethan 350 employees in Europe and the United States. It began its culture initiative in 1999.

• The IT Department of Royal Caribbean Cruises Ltd. (RCCL), which had more than 400employees and contractors at the start of its culture and leadership work in 2000 (now about240 after the industry downturn in the wake of the September 11 tragedies).

• Our firm, BlessingWhite, an international training and consulting firm founded thirty yearsago, which revisited its values and culture on its journey to becoming employee-owned in June 2001.

BEST PRACTICES FOR BUILDING AND SUSTAINING A HIGH-PERFORMANCE CULTURE

Each organization must follow a unique path to shape and sustain a high-performance culture. In light of this, the following recommendations should not be considered a process in sequential,lockstep order. What must underpin any approach, however, is the understanding that shapingculture is a continuous cycle of the five processes shown in Exhibit 4 — none of which you can everconsider completely done. We will discuss each of these processes in detail. An overarching theme of the work done by the organizations we cite is to continuously monitor results and return to theseprocesses in order to reinforce a high-performance culture.

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Clarify your mission and values — and your starting point. Just how close your organization is tothe goal of fully integrating core values into the way the organization functions will determine howmuch work remains to be done. If your company has never explicitly addressed the issue of values,then its position on the values gauge shown in Exhibit 5 is readily apparent. If, on the other hand, it has had some form of values or culture initiative, it may still take more than a cursory review todetermine just how much the organization has absorbed — and is driven by — the values itespouses.


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High-Performance Cultures: How Values Can Drive Business Results

If you do not have a published mission or values, identify and define them. You will not actually be starting with ablank slate. Having no espoused values is not the same as having no values at all. Your organization hasrules of the road even if they are unspoken. Kevin Long, senior vice president, Core Values Office atComputer Associates, explains it this way: “Defining our mission and core values was a natural stepin CA’s evolution. When we were small, everyone knew what we were about. But as we have grownto more than 15,000 employees, we felt it was important to step back and formally write down thecore principles that guide our behavior. They are not foreign to anyone. We just want to be crystalclear how these values contribute to future success and ensure they remain on everyone’s radarscreen.”

Individual leaders may be tempted to shortcut a values-clarification process of seemingly endlessdrafts and revisions (see page 20 for sample mission and values statements) to get to a concisestatement of purpose and three to eight core values. The organizations we spoke to, however,offered good reasons to invest the time and effort to include managers in the process and, in somecases, employees.

Clarifying your mission and values requires looking inward, not outward. You cannot benchmarkthem. They cannot be bought off the shelf. You need more than a passionate senior leader to distilland give definition to the guiding principles that are authentic for your organization. You cannotbypass the debate. CA, for example, established a cross-functional Core Values Team to ensure broadrepresentation. Other organizations actively solicited input from managers and employees throughfocus groups and online surveys.

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The process is critical for another reason, as Schwab co-CEO and President David S. Pottruckdescribes in Clicks and Mortar™: Passion-Driven Growth in an Internet-Driven World, the book he co-authored with Terry Pearce: “The challenge was not document creation, it was commitmentgeneration. To achieve that objective, a process of much broader inclusion was essential (p. 14).Despite the firm having a founder and chairman (Charles ”Chuck” Schwab) who had a very clearvision of the organization’s values, it took ten months and the input of eighty executives for Schwabto revisit its purpose and formally document its values in the mid-1990s. (See the results of thisprocess in the sample mission statements and core values shown on page 20.)

RCCL corporate HR consultant Jay Rombach echoes the benefits of inclusion. Although the ITleadership team identified a set of departmental values in an expedited series of conversations and aone-day leadership team meeting in 2000, the team chose to take another look at the values abouteighteen months later — with lower-level managers. Rombach explains: “The original values work setthe IT department in the right direction, but we wanted to revisit them to ensure they were currentand relevant. We involved managers in reviewing the values, revising definitions, identifyingexamples and stories. In the end, the words didn’t change much but we achieved greater buy-in.”

If you already have a published mission and values, know where you are. Take the plaque down from the wall,revisit the words, and, most importantly, assess whether these tenets actually guide the practices andbehaviors of your organization. Whatever method you use — internal focus groups to gather storiesof values in action or behaviors in conflict, random employee conversations and “check-ins,” or amore formal employee survey — this “reality check” will bring to light any gaps between espousedvalues and day-to-day operations as well as any aligned business practices you can leverage foradvantage (see the checklist in Exhibit 6).


Organizational Mechanics❑ Budget process❑ Strategic planning process❑ Organizational structure❑ Decision-making/authority levels❑ Performance targets❑ Purchasing❑ Other

Employee Experience❑ Recruiting❑ Orientation❑ Development❑ Pay and incentives❑ Performance appraisals❑ Employee/mgmt. relations ❑ Internal communications❑ Office layout❑ Other

Other Stakeholder Experience❑ Supplier contracts and procedures❑ Field site or distributor relations❑ Other strategic partnerships❑ Shareholders❑ Community presence❑ Other

Customer Experience❑ Service delivery❑ Fulfillment❑ Complaint response❑ Marketing❑ Contracts❑ “Bricks” presence and design❑ “Clicks” (web) presence and design❑ Other

EXHIBIT 6. Checklist for Aligning Business Practices with Values

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Xilinx, for example, had clarified its core values in 1996 through a worldwide initiative in whichevery employee had the chance to provide input. When its senior team assessed the culture after fouryears of rapid growth, it realized that the values were known but not always shaping practices andbehaviors to the extent desired. As a result, the senior team implemented several new initiatives,including the addition of culture-building tools and content to their manager “boot camp.” Theirgoal was to renew a focus on values and ensure that managers could fulfill their role as custodians ofthe strong culture of shared values that historically had set Xilinx apart from its competitors.

Communicate — but don’t stop with laminated cards. To simply post a mission and core values ona bulletin board, hand out laminated cards, and wait for change to occur will sound the death knellof any culture initiative. Communication is a critical step for organizations just beginning to shapetheir cultures, and it remains key as organizations strengthen and sustain their cultures.

Communicate, communicate, communicate. CA faced the challenge of reaching 15,000 employees on sixcontinents. Their strategy, according to SVP Kevin Long, was to “roll out our values the way welaunch products, with a month-by-month marketing communications plan.” Long and the CoreValues Team marshaled CA’s marketing resources to introduce everyone to the organization’s valuesin a concerted effort. Teasers from CEO Sanjay Kumar about “something big” preceded the launch.On the designated day, all employees coming to work found a values “kit” at their workstation, witha well-designed brochure and a t-shirt. The company’s intranet hosted a video clip of Kumar, bannerswere draped from the ceilings, and the atrium floor of CA’s corporate headquarters even sported boldstencils of the values. Communications from functional leaders followed a week later. Long continuesto spearhead the communications process through monthly communications and guest columns inthe various division newsletters.

Encourage two-way dialogue. CA did not stop with corporate communications, as many otherorganizations may have. Long understood the importance of two-way dialogue. Managers receivedguidelines on how to not only engage employees in the business rationale for core values but alsoencourage them to think through what the values meant to them personally. “It wasn’t enough toexplain how our values initiative was good for shareholders; we wanted every employee to be able toask the question, ‘What about me?’ and to voice concerns.”

Translate abstract concepts into tangible examples. For employees to align their behavior and decisions withcore values, they need to be able to do more than recite pithy statements. They need to understand,see, and feel the meaning implicit in the words. Pottruck and Pearce describe the challenge: “We donot learn someone’s principles when we hear their concepts, we learn them by listening to theirexperience, their story.… Stories are the living proof of culture” (p. 39).

Leaders at Schwab routinely begin meetings or dinners with storytelling about the mission and corevalues in action. CA, less than a year into its culture initiative, posts stories of “culture keepers” on itsintranet not only to celebrate successes but also to offer tangible examples of what living CA’s valuesactually looks like.

The power of storytelling originates in the emotional bonds that can be created with listeners —connections greater than any forged by data. To be most effective, stories need to be first-personaccounts that contain specific, “sensory-rich” details — so that the listeners can actually feel a part ofthe scene — and cover both feelings and facts.

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Modeling: Actions Speak Louder than Words. Defining values and painting vivid pictures are notenough. Core values need to be lived. It is crucial that an organization’s leaders visibly demonstrateespoused values. If they do not, the values will not take hold — or worse, the posters and laminatedcards will fuel cynicism and be seen merely as a meaningless “flavor of the month” change initiativeor CEO pet project that will fizzle out when the leader departs.

Values need to be modeled at several levels:

• At the very top — by individual senior leaders.

• Within the senior leadership team — as a unified group that holds its members individuallyaccountable for living the values.

• Through the middle management ranks.

At the Top. Employees, customers, shareholders, and the media are watching, and some leaders farebetter than others in this fishbowl of visibility. In BlessingWhite’s experience, senior leaders oforganizations that have established values-driven cultures stand out for walking their talk. Whenasked how consistent senior executives’ behavior was with the organization’s values, more than threequarters of the employees in established values-driven cultures said “very” or “mostly” consistent, incontrast to about half the employees in organizations in the early stages of building a values-drivenculture (see Exhibit 7 for the quantitative results).


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Do those results prove that senior leaders in established cultures are better? Not necessarily. In an established culture, leaders who live the values are more likely to reach top spots as theirorganizations promote and reward desired behavior. These leaders may also have had more time inwhich to prove themselves, whereas senior executives in emerging values-driven cultures are likely toneed a lot more time to win over the cynics.

Modeling in either environment requires great discipline, according to the three senior leaders withwhom we spoke. It is about being purposeful — and visible — so that you explicitly link yourbehavior to the values. Tom Barry, managing director of AIB’s Corporate Banking group explains: “Itry to be proactive in referring to the values as a top priority. When I communicate to employeesabout results, strategy, and other key decisions, I always refer to our values as a critical success factor.We need people to see and feel the priority we give the values on a sustained basis.” BlessingWhitePresident and CEO Christopher Rice underscores the need to remain conscious of your actions as aleader: “I have the values in my office in a prominent place where I can see them from my desk, and Itry to use them as a guidepost for my decisions. I have a group of employees who know them cold,and they tell me every time I violate one. (This is good behavior!).”

RCCL’s Murphy sums up the challenge: “As leaders we accept responsibility for being agents ofchange — change of the organization, change of our teams. Don’t forget that the leader needs tochange also.”

A Consistent Team. It is not enough for the head of the organization — like Barry, Rice, and Murphy —to visibly live the values. Employees also take note of whether the leadership team holds its membersaccountable for behavior consistent with the values. One technique used successfully by someleadership teams is the practice of “discussing the undiscussables” — pointing out and dealing withthe proverbial “nine-hundred-pound gorilla” that everyone sees but doesn’t mention — especiallywhen it comes to team members not living the values. RCCL’s Rombach and Murphy believe thispractice has raised the standard of candid conversation and trust within the IT leadership team.BlessingWhite, Schwab enterprise teams, and Xilinx have all used similar processes to hold oneanother accountable, stay on course as a team, and minimize the competitiveness that commonlyexists among team members.

AIB’s Barry underscores the importance of immediately addressing any situations where there areserious discrepancies between behavior and values. “I continue to seek feedback in conversations andmonitor the impact of team actions through regular culture surveys.”

Middle Managers — The Weakest Link. As Exhibit 7 illustrates, even in organizations with strong values-driven cultures, employees perceive that managers in the middle behave less consistently than seniorleaders. The lower marks may be the result of a number of factors. Managers’ day-to-day behavior ismore visible to the rank and file than that of senior executives. Managers are constantly squeezedbetween the demands to deliver results and model the organization’s core values. In organizationswhere values are relatively new, managers may be watching to see if “this too will pass.” In fact, manymay still be rewarded for the results they achieve but not the manner in which they achieve them.

Another possibility is that managers may not feel they own the culture. Schwab, RCCL’s ITdepartment, Xilinx, and AIB Corporate Banking have all rolled out some type of development

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program in the last few years to equip managers with the tools they need to be successful stewards ofculture. Attention at this level of the organization is critical to achieving the momentum Kotter andHeskett describe in Corporate Culture and Performance: the organization must “motivate an increasinglylarge group of people to help with this leadership effort. These people must find hundreds orthousands of opportunities to influence behavior” (p. 99). The authors point out that somewhere inbetween the executive suites and the front lines, many an organization has slid backward.

Alignment of Business Practices: Where the Rubber Meets the Road. Culture initiatives often hitmajor obstacles when aligning the organization’s day-to-day operations, listed in Exhibit 6, withespoused values. Perhaps this is not surprising since many organizations still struggle to more tightlylink daily practices to their core business strategies. Yet Pottruck and Pearce point out that alignmentcan be likened to “tuning the engine” so that everything in the organization runs more smoothly. As an example, they describe in their book, Clicks and Mortar™, how Schwab aligned its budgetingprocess more closely with its value of teamwork. CA actually identified forty change programs forbetter aligning systems and processes with values; they are being implemented as we write thisarticle.

Two of the most common areas that can have immediate impact on culture are:

• Performance management — measuring and holding individuals accountable for not onlyresults but also the behaviors that achieved them.

• Decision making — to not only drive business results but also inspire employee commitmentand reinforce what the organization stands for.

CA began to revise its performance management system almost before the ink was dry on its valuesstatements. Long explains: “Weaving our values into the fabric of our organization throughperformance management and compensation sends a strong signal that this is not a program du jour.”As part of its efforts, the organization identified specific competencies for employees and leaders.RCCL’s IT department made competencies part of its strategy as well.

BlessingWhite tries to make what Rice calls “fourth quadrant decisions — actions that will achievedesired business results and also be true to — even strengthen — our culture.” He explains how thepractice worked in the fall of 2001: “As the summer wound down, we realized we needed to makesome significant changes to react to the downturn in business. Our senior team was actually meetingon September 11 to discuss cost-cutting measures, and the events of the day strengthened ourdetermination not to forsake the meaning of our work and culture for short-term gain. As a result,the senior team chose to take a pay-cut. We solicited employee input in the weeks that followed andimplemented a number of short-term solutions (such as a four-day workweek) that actually did meetour financial goals without damaging employee commitment. Many employees, in fact, voiced arenewed sense of loyalty.”

Employee Engagement: Capturing Hearts and Minds. Although individual accountability andalignment of practices are key, RCCL’s Rombach bluntly reminds us, “You can’t be passionate aboutsomething that is mandated.” Culture change and high performance need to be actively nurtured.

Inspiring Leaders. Leaders need to do more than relentlessly communicate and visibly model theirorganization’s espoused values. They need to be able to inspire employees to actively own the firm’s


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culture and business goals. For countless successful business leaders, that task is easier said than done,as AIB’s Barry describes: “A large percentage of us are left-brained, myself included. We tend to startwith logic, move on to logic, and finish with logic. It’s a struggle for us, even though we understandthat logic doesn’t inspire.”

BlessingWhite’s review of leadership-assessment data from our clients supports Barry’s view. From our preliminary analyses, shown in Exhibits 8 and 9, we found that senior executives scored higheston characteristics associated with traditional business competence, such as job expertise, clarity ofcommunications, and focus on results. Yet the characteristics most predictive of such highperformance as successfully leading innovation and change, building loyal teams, and demonstratingcredibility are associated with people skills, or what many might label as “soft” traits, such astrustworthiness and empathy. The findings do not suggest that leaders replace their business savvywith interpersonal skills. Rather, they suggest a goal similar to the one described earlier fororganizations, that of integrating business competence with personal connection, as illustrated inExhibit 10. This integration is the hallmark of “4th Quadrant” leaders — those who demonstrateleadership integrity.

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What does leadership integrity take? In addition to applying the strong business skills they alreadyhave, leaders need to:

• Personally connect with their organization’s values.

• Be clear — and lead from — their own personal convictions. (Pearce points out that youcannot inspire others if you do not know your own sources of inspiration.)

• Stay tuned to the needs of all stakeholders.

• Make an effort to infuse meaning and empathy into their messages.

Nearly a decade ago, Collins and Porras spoke to this challenge in Built to Last: “Some managers areuncomfortable with expressing emotion about their dreams, but it’s the passion and emotion that willattract and motivate others” (p. 234).

Self-Motivation. More inspiring leadership goes a long way in creating a passionate community ofemployees, and regular coaching can help adjust employee behaviors to better align with values andbusiness goals. Yet employee motivation remains largely in the hands — actually, the hearts andminds — of employees.

Barry Posner and Warren Schmidt’s often-quoted 1993 study on values congruence indicated thatemployees who “had the greatest clarity about both personal and organizational values had thehighest degree of commitment to the organization” (p. 174). This implies that as clear as you may bein communicating the organization’s values, if employees aren’t tuned in to their personal motivators,they won’t necessarily be able or willing to engage fully and contribute toward the organization’sgoals. As Posner points out (with James Kouzes) in The Leadership Challenge: “Those individuals withthe clearest personal values are better prepared to make choices based on principle — includingdeciding whether the principles of the organization fit with their own personal principles” (p. 51).

You may be thinking, “What? Now I need to worry about individuals’ values?” The secret is not inmaking “values clones” but in encouraging reflection and connection. AIB Corporate Banking tackledthis challenge head on. During its values rollout, every employee and manager attended a workshopthat helped them clarify their own values. They also had the opportunity to consider how their jobsfit into the organization’s definition of success. Thus, by identifying the “sweet spot” where theirconvictions and career goals intersected with the organization’s values and goals, they were morelikely to achieve satisfaction — and AIB Corporate Banking was more likely to obtain a high level ofcontribution.

It’s Never Over: Monitor Results, Reinforce Ownership. All the organizations identified in thisarticle monitor their culture. All have used culture or employee surveys to stay in touch with what isworking and what is not.

Ownership is also a critical issue, and it cannot reside with the human resource function alone. Longof CA comments: “A key success factor for starting out is identifying one executive accountable fordriving change, someone to eat, sleep, and drink the stuff and be held accountable.” RCCL’s Murphyand Rombach model the type of strategic line-HR partnership that can facilitate change and sustainmomentum.

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PITFALLS TO AVOID

To ensure the success of your company’s efforts to build and sustain a values-based culture, take careto plan, implement, and monitor your initiative to avoid these common errors:

• Thinking your culture initiative has an “end date.”

• Not building support and capability in middle management ranks.

• Undercommunicating.

• Not aligning business practices with values.

• Treating culture as a fad or “HR initiative” rather than a core business driver that must beowned by business leaders at all levels.

• Letting long-term business performance take a back seat to culture.

• Assuming employees can translate abstract values into relevant job behaviors without help.

• Thinking senior leadership’s failures to model the values will go undetected.

• Copying some other company’s values (they need to be yours, relevant to your business).

THE RESULTS

As we write, the published business results of organizations with heralded cultures — like SouthwestAirlines, GE, and Johnson & Johnson — are strong. In a struggling economy, most organizations withhigh-performance cultures seem to be ahead of the pack, or at least staying steady.

As for the organizations highlighted in this article:

• AIB Corporate Banking has more than doubled profits. Significant improvements have beenmade in key employee survey items, such as “I understand why my job exists and how itcontributes to AIB Corporate Banking success” (95 percent agreement in 2002, up from 77percent in 2000) and “Staff are treated with respect regardless of their job” (74 percentagreement in 2002, up from 47 percent in 2000). Barry says he is “100 percent convinced” theculture initiative is key to these results.

• Xilinx earned the sixth spot in Fortune’s 2001 list, “100 Best Companies to Work For,” (up fromfourteenth in 2000). One employee was quoted in the local press as saying, “It would takedynamite to get me out of here.” The firm avoided layoffs despite the difficult economy,significantly increased market share, and introduced new programmable system solutions in2002. Its stock continues to outperform many other Silicon Valley firms.

• RCCL’s IT department survived the impact September 11, 2001 had on the hospitality andtravel industry, and Murphy reports increased productivity and employee satisfaction: “I cannotunderscore enough the importance of the alignment of our management team’s understandingof authenticity, genuineness, core values, and clarity of purpose with the success weexperienced, even as our responsibilities and projects became more complex and challenging.”


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• CA’s Long qualifies his comments, noting that although some change programs have producedresults (e.g., a 25 percent reduction in turnaround times for customer contracts), it is really toosoon to observe major change. “We’ve done a good job so far in raising awareness. But rollingout change programs isn’t enough. We’re focusing on outcomes. Everyone knows the metricswe’re using. We’re also going to continue to focus on winning hearts and minds.”

• Schwab conducted another round of layoffs in the fall of 2002 as individual investors stayedaway from the stock market. Yet the organization’s actions continue to withstand mediascrutiny. Laid-off employees receive generous benefits and assistance — including a sign-onbonus should they be rehired when business picks up.

• Our firm, BlessingWhite, expects to end 2002 stronger than we were a year ago — andprofitable. Recent employee satisfaction scores also indicate, in Rice’s words, that “despite theeconomic challenges, uncertain business climate, and the precarious nature of our business,BlessingWhite’s employee-owned culture is taking hold. Top-scoring items indicate that wehave a clear understanding of what we need to do, we care about each other, we have a voice,and we believe the work we do is important.”

What else keeps these champions of high-performance cultures motivated? CA’s Long paints thefuture of brand integrity: “I see a customer able to describe CA’s values just through his personalexperiences with us. That’s proof of the values being woven into our fabric.” RCCL’s Murphydescribes an enduring legacy: “The most fascinating aspect of this to me is that the organization haslearned to draw strength, passion, and energy from within itself. It is no longer necessary to our verysurvival that I be available to offer my passion and energy. Not only has it dispersed itself among myleadership team, many leaders have emerged at all levels of the organization, with a newfoundconfidence and self-awareness of what we stand for and what we are capable of.”

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Examples of Mission Statements

BlessingWhite: Reinventing leadership and the meaning of work.

The Charles Schwab Corporation: Provide customers with the most useful and ethical financialservices in the world.

Examples of Core Organizational Values

Xilinx:

• Customer Focus: We exist only because our customers are satisfied and want to do businesswith us… and we never forget it.

• Respect: We value all people, treating them with dignity at all times.

• Excellence: We strive for “Best in Class” in everything we do.

• Accountability: We do what we say we will do and expect the same from others.

• Teamwork: We believe that cooperative action produces superior results.

• Integrity: We are honest with ourselves, each other, our customers, our partners, and ourshareholders.

• Very Open Communication: We share information, ask for feedback, acknowledge good work,and encourage diverse ideas.

• Enjoying our Work: We work hard, are rewarded for it, and maintain a good sense ofperspective, humor, and enthusiasm.

The Charles Schwab Corporation:

• Be fair, empathetic, and responsive in serving our clients.

• Respect and reinforce our fellow employees and the power of teamwork.

• Strive relentlessly to innovate what we do and how we do it.

• Always earn and be worthy of our clients’ trust.

ADDITIONAL INFORMATION

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ADDITIONAL RESOURCES

Collins, J.C., & Porras, J.I. (1994). Built to Last: Successful Habits of Visionary Companies. New York:HarperCollins.

Kotter, J.P., & Heskett J.L. (1992). Corporate Culture and Performance. New York: Maxwell MacmillanInternational.

Kouzes, J.M., & Posner, B.Z. (2002). The Leadership Challenge: How to Keep Getting Extraordinary Things Donein Organizations, 3rd. ed. San Francisco: Jossey-Bass.

Posner, B.Z., & Schmidt, W. (1993). Values Congruence and Differences Between the Interplay of Personal andOrganizational Values Systems. Journal of Business Ethics, 12, 171–177.

Pottruck, D.S., & Pearce, T. (2000). Clicks and Mortar™: Passion-Driven Growth in an Internet-Driven World.San Francisco: Jossey-Bass.

AUTHOR BIOGRAPHIES

Jeff Rosenthal is vice president of BlessingWhite’s western region and a visiting professor at the HaasSchool of Business at Berkeley. Mary Ann Masarech is product manager of BlessingWhite’sleadership and culture programs and services. They can be reached at 1-800-222-1349 and by e-mailat [email protected] and [email protected].

This is a preprint of an article published in Journal of Organizational Excellence © Spring 2003.

http://www.intersciences.wiley.com

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High performance and organizational cultures

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