It’s How You Do Things, Not What You Do: Results From The 2010 Canadian Corporate Culture Study

We’ve just released the results of our 2010 Canadian Corporate Culture Study. I’m going to go slightly off-path from the regular format of The Waterline to share a few of my thoughts regarding this year’s survey.

In my early days of executive search, I noticed a correlation between clients that were putting a higher weighting on candidates who ‘fit’ and placements that were successful and seemed to have longer tenures.

The candidates who had difficulty – not exclusively, but a very high proportion of them – were recruited solely based on their skill sit. 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 that our clients were looking for. They were more successful in the long-term too.

Was there something to this?

In those days, in the late 90s and early 2000s, the concept of cultural ‘fit’ at the leadership level, or of organizational culture as a whole, was somewhat amorphous. And our clients weren’t all that keen to talk about these things in detail.

But today, culture is seen as a top priority – at least by the more successful organizations, like Yellow Pages Group, RBC, Tim Hortons, Four Seasons Hotels and Resorts and WestJet, each members of our Canada’s 10 Most Admired Corporate Cultures Hall of Fame.

Why?

Because they see other organizations doing it, and the resulting success.

Because culture helps them retain their best talent.

Because great organizations want to be better (“wanting to be better” is how they got to be great in the first place).

Because they know that culture is about more than simply creating great workplaces. In fact, if they get culture right, there’s a payoff – to employees, yes, but also to shareholders and to stakeholders.

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

The Findings:

Our 2010 Canadian Corporate Culture Study serves as the basis for our annual Canada’s 10 Most Admired Corporate Cultures program, now in its sixth year. In the study, we ask hundred of Canadian executives, representing a cross-section of industries, a variety of questions about corporate culture.

Consider this cross-selection of findings from the 2010 results:

• 83 per cent of respondents feel cultural fit is more important than necessary skills when finding candidates for their organization;
• 71 per cent of respondents say their organization’s corporate culture drives sales and revenue;
• 82 per cent and 87 per cent of respondents agree or strongly agree that their organization’s corporate culture impacts their ability to acquire and retain, respectively, top talent.

Clearly culture is on the radar of our respondents – 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 over 300% --or three times.

Culture is driven by leadership. And the right kind of leadership is in turn driven by who is the best fit for the organization. At the senior level especially, organizations want – 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 organization. Think of it in these terms: great leaders build great organizational culture, and the behaviour that supports that culture drives performance.

Maple Leaf Foods:

Here’s a great example:

At Maple Leaf Foods, every employee is ranked. The ratings aren’t public, but each employee knows his or her overall number. The organization uses a straight-forward matrix based on two key criteria to come up with the ranking: first, “results achieved”; and, second, “values consistency”.

In fact, the performance appraisal system at Maple Leaf Foods measures employees on each of the organization’s 21 Leadership Values – a list of values drafted by the company’s president and CEO,
Michael McCain. At Maple Leaf, compensation is linked to how well each person matches up with those values.

And if there’s a tie between results achieved and values consistency? At Maple Leaf Foods, values trump results.

What’s remarkable here is how Maple Leaf Foods has made a formal commitment to its values by institutionalizing processes that support culture. For any leader grasping for a practical example of alignment, this is it – performance reviews based on results and adherence to stated values. That’s a powerful way to align corporate culture with your business strategy.

Measurement and Cultural Assessment:

The 2010 Canadian Corporate Culture Study results also show that respondents are measuring culture much more than they used to: just 35 per cent of respondents said they measured culture in our 2006 results, versus 77 per cent in 2010.

This is reflective of a general increase in awareness of the importance of corporate culture and how critical it is to measure it. Measuring allows you to uncover the drivers of your organization’s culture – a critical gauge of corporate performance.

Also, organizations are taking new and additional steps to monitor their culture – a process we refer to as a cultural assessment.

Think of a cultural assessment as a self-reflection, allowing you to take a deep-dive in, to examine how the values and behaviours of your organization align with where you are trying to go as a company, and to determine if – and where – 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.

Similarly, it’s what you do with your cultural assessment that matters.

Four Seasons Hotels and Resorts:

A great example of this is the remarkable story of Four Seasons Hotels and Resorts and its founder and chairman, Isadore Sharp.

If you’ve stayed at a Four Seasons, you’ll know that it’s an incredible experience. From the moment you walk onto a property, you can’t help but notice that every single person working there – front desk staff, concierge, chambermaids, restaurant staff, everybody – seems to excel at service. It’s a remarkable experience as a guest; even more remarkable as Four Seasons has grown from one hotel to 82 hotels in 35 countries in its 50-year history.

The idea to build that kind of service culture came on the heels of a tough assessment, by Sharp, of the company’s culture and of its future. In the late 1970s, Sharp made the decision to transition the business from what was largely a construction operation engaged in real-estate development to a management company focused on creating a group of the world’s finest hotels. He then introduced several new concepts to his management team.

For instance, the Golden Rule – treat others as you would wish to be treated – became the operating basis for anyone who worked at the hotel: from how management interacted with employees to how guests were treated. Sharp wanted to empower front-line staff, enabling them to make decisions on-the-spot, thus kick-starting the service experience from the moment guests walked in the door.

This required a change in management thinking – from seeing employees as a group to be managed and controlled, to a focus on mutual values like respect, fairness, honesty and trust. In a nutshell Sharp told his management team: treat employees with the same understanding that they are to give the hotel’s guests and great service (along with satisfied clients and their repeat business) will ensue.

As hard as Sharp sold the idea, it wasn’t always met with enthusiasm by his leadership bench. He then had some tough decisions to make in terms of who would stay and who would go. The simple fact was that many of these individuals weren’t going to be the people to help share, teach and sell the hoteliers in the Four Seasons’ family on Sharp’s vision.

It paid off however and many of the new entries made to the management team at that time are running the company today. In fact, if you look at the Four Seasons senior staff tenure list, you’ll see that the average of years of service on the management committee is 22 years – seeing 30 and 35 years of service is not uncommon.

That kind of loyalty and commitment to the Four Seasons brand, and its world-renowned service culture, is not something that didn’t start with a deep assessment of what Four Seasons was, and what it wanted to be. For Sharp, that assessment said: The Golden Rule was the basis for moving forward; it was the organization’s future.

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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.

To me, both Four Seasons and Maple Leaf Foods are above the line when it comes to driving culture – and performance.

About Marty Parker:

Marty Parker is President and CEO of Waterstone Human Capital, a leading professional recruitment, executive search and human resource consulting services firm based in Toronto. He is a frequent commentator on issues surrounding corporate leadership and organizational culture. Marty has written for the National Post, Canadian Business and Profit, and has appeared on Canada AM, BNN and CP24. He also publishes a regular newsletter called The Waterline: Highs and Lows in Leadership and Corporate Culture. The annual Canada’s 10 Most Admired Corporate Cultures™ program was founded by Waterstone in 2005.