By Marty Parker

Firms with Strong Corporate Culture Outperform Peers

Guest Column in The National Post by Marty Parker (Click HERE for direct link to article)

In my early days of executive search, I noticed a correlation between clients who were putting more weight on candidates being a good fit and successful placements that seemed to have longer tenures.

The candidates who had difficulty --not exclusively, but a very high proportion -- were those who were recruited solely based on their skill set. They were terrific marketers or operators; the "best of the best" that often beat out a competition of very good people for the job. But once in their new job, they were having trouble.

On the other hand, the candidates that may have surprised you during the search process, by winning the placement, often held the values and exhibited the behaviours our clients were looking for. They were more successful in the long-term too.

In the late 1990s and early in this decade, the concept of cultural fit at the leadership level, or of organizational culture as a whole, was somewhat amorphous. And clients weren't keen to talk about them in detail.

Today, culture is a top priority at the more successful companies, such as Yellow Pages Group, RBC, Tim Hortons, Four Seasons Hotels and Resorts and WestJet -- all members of Waterstone's Canada's 10 Most Admired Corporate Cultures Hall of Fame.

The reasons are many: from helping retain the best talent, to wanting to be better (which is how they got to be great in the first place), and because they know culture is about more than simply creating great workplaces. In fact, if they get it right, there's a payoff -to employees, but also to shareholders and to stakeholders.

Quite simply, organizations with strong corporate cultures outperform their peers.

Clearly culture is now on the radar of Canadian companies, and with good reason: the performance of Canada's 10 Most Admired Corporate Cultures of 2009, in terms of three-year compounded annual revenue growth, significantly outpaced the S&P/ TSX by an average of more than 300%.

In Waterstone's 2010 Canadian Corporate Culture Study, which serves as the basis for the annual Canada's 10 Most Admired Corporate Cultures program, we ask 100 Canadian executives from a cross-section of industries a variety of questions about corporate culture. Consider this cross-selection of findings:

-83% of respondents feel cultural fit is more important than necessary skills when finding candidates for their organization;

-71%say their organization's corporate culture drives sales and revenue;

-82% and 87% agree or strongly agree their organization's corporate culture affects their ability to acquire and retain, respectively, top talent.

Culture is driven by leadership, which in turn is driven by who is the best fit for the organization. At the senior level especially, companies want, and need, to hire for fit. The ideal candidate is the one that walks-the-talk; he or she drives both the values and the behaviours of the company.

This year's results also show respondents are measuring culture more than ever before: In the 2006 survey, 35% of respondents said they measured culture, versus 77%now.

This reflects a general increase in awareness of corporate culture and how critical it is to measure it. Measuring uncovers the drivers of your company's culture -- a critical gauge of corporate performance.

Think of cultural assessment, as we call this process, as a self-reflection, allowing you to dive deep, to examine how the values and behaviours of your company align with where you as a company are trying to go, and to determine if there are gaps. Regardless of what you do with it, a cultural assessment can provide insights into the way your company works as a whole, and by functional area.

Corporate culture is a strategic competitive advantage. The really great organizations -- and more specifically, the leaders of those organizations-- know this. They understand that culture is perhaps the most important asset they can have and if they get it right, they'll see the results on the bottom line.

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-Marty Parker is managing director of Waterstone Human Capital, a leading professional recruitment, executive search and human resource consulting services firm based in Toronto. He has written for the National Post, Canadian Business and Profit.