Is your terrible culture killing your business?

Published: Monday, March 11 2013 4:35 p.m. MDT

Companies who have thrived in periods of rapid change are often companies who have had a culture focused on their customers and, equally critically, on their employees.

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Editor’s note: This article originally appeared in Alan’s weekly Forbes column.

I recently reached out to an executive who operates a pediatric practice to learn how he manages his company culture. He shared with me a letter he sent his employees:

"Dear fellow employees: We are a medical practice, but we are also a business. This is an important point — I believe the healthcare industry has, at times, rejected ideas from other industries because ‘it isn’t how we do it in healthcare.’

"I disagree. Consider this example: Sears, an 111-year-old American retail institution, embarked on a process of change in 1992 that brought it back from the teetering edge of a cliff. At the heart of this dramatic change was a concept that is simple to understand, but far less easy to implement. The concept was this: Employees’ attitudes about their job and company are the two most important factors affecting their behavior and attitudes towards customers. Employees’ behavior towards customers, in turn, predicts the likelihood of retaining customers and the customers’ willingness to recommend the company to others. These two factors are highly correlated with and predict company performance.”

In short, the Service Profit Chain. I’ve written about this concept before.

This executive went on to note the results of the company climate survey he’d conducted with them for the prior year, noting both the top five and the bottom five scores on key company culture issues, and compared them with scores on the same items from the year prior.

In 2011, the results showed employees enjoyed a culture of empowerment and respect from their superiors. Conversely, this business also learned there were interoffice politics that threatened their happiness in the workplace. The same items in 2012 showed an even stronger environment of employees' affinity for their company and called out a need for more recognition for the good work they do.

The executive then noted that “while there remains significant work to be done, it is a pleasure to work with so many of you who have truly taken it upon yourselves to actively participate and ‘own’ a piece of this effort to improve our culture.”

Like my COO friend, as I point to companies who have not only survived, but also thrived in periods of rapid change, the one common denominator is seldom a grand strategic vision. These companies are companies who have had a culture focused on their customers and, equally critically, on their employees.

Culture can be an overused and nebulous term, but in shorthand terms it means simply “the way we think” and “the way we act.” It defines our working relationships: how we interact, what we expect of each other and how we take care of our company’s customers.

I view this executive as an exemplary model of a remarkable leader who “gets it” on this critical front. I predict his firm will endure the challenges ahead for the healthcare industry and will prosper. For any business not supporting this emphasis, 2013 marks your opportunity to make a swift change of course, or to suffer the consequence. Here’s to the creation of strong and prosperous organizational cultures, across all industries, in 2013.

You can contact me at @AskAlanEHall or via my personal website, www.AlanEHall.com.

Alan E. Hall is a co-founding managing director of Mercato Partners, a regionally focused growth capital investment firm. He founded Grow Utah Ventures, is the founder of MarketStar Corp. and is chairman of the Utah Technology Council.

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