Culture is an oft used term to describe the behaviors and attitudes of an organization, and many companies are focused on building and improving their culture. In fact, I have gained many new clients with this goal.
But to what end? How do you know if your culture needs improvement? To find out, you simply have to measure your company’s performance. (You can’t use gut instincts.)
First some definitions: Culture in my view is the result of operating your business by a strict set of values, which includes hiring, promoting and firing by these values.
But even with a clear set of values, culture is undermined by poor management, an insufficient use of systems, and a lack of A players in key positions due to complacency (also known as putting up with ‘good enough’.)
So while it is advantageous to have a great set of values, it must be done with an eye to professional management practices, better systems, and by raising the level of the team you are fielding.
Now back to the premise; what are the metrics you should use to measure how well your culture is doing? There are two types, which together I call Success Metrics:
- Year over year growth
- Increase in Net Profit
- Increase in Divisional Profit
- Client retention, (often predicated on Employee retention)
- Ease of recruiting A and B players.
- Owner’s income (too often under performing the market)
- Cash flow (ability to finance growth)
- Morale, this is important, but should be easier to achieve if the above metrics are achieved.
- Owner’s ability to leave the business for periods of time during the week, month, year.
- Etc, etc.
- Bench strength (you can’t achieve year-over-year-growth without this.)
- Production, also known as throughput (necessary for growing profit)
- Efficiency, (ditto)
- Employee retention (of those above a certain level)
- Market penetration
- Salesperson efficiency
- Etc, etc.
There are many…Are you measuring the right metrics? And how well are you doing?
It is said that “culture eats strategy for breakfast.” But I have found the two are actually intertwined and not separate. You need both culture and strategy to be strong, in order to succeed in today’s market place. With a strong cutlure and the right strategy, you will be able to eat your competition for breakfast!