Succession Planning, Culture
January 6, 2017
Succession Planning Question 8: What is your company’s culture?
Every organization has its own unique culture, and that culture is a major asset when it comes to determining the overall value of your company. So what, exactly, defines your company’s culture? In essence, it is the shared values and business practices of the company. It involves the company’s goals, structure and how it treats employees, suppliers and customers.
Positive company cultures typically lead to greater profitability because the entire team has a passion for the business, which drives value. You can see it in shops whose employees truly enjoy working there and are great ambassadors for the company.
Unfortunately, you can also see the results of a negative company culture in employees who drag themselves into work only because they need the paycheck, and who complain to anyone who will listen about what’s wrong with the company.
Whether positive or negative, it’s not unusual for the business owner’s and the employee’s perception of the company culture to be out of sync with one another. Here’s a simple exercise you can perform that will help you to learn how closely you and your people are aligned: First, write down how you would describe your company’s culture to another business owner or to a customer. What are the key words that come to mind? If you were on the outside looking in, what would it look like?
Next, without sharing your own thoughts, ask your employees to write down how they would describe your company’s culture to an outsider. Caution them not to confer with other employees, but rather use their own words. Make it clear that there are no right or wrong answers, that you want complete honesty, and that their responses will be anonymous.
If you find that the majority of opinions match your own definition, you and your employees have a good handle on your company’s culture. If it’s positive, you’re in good shape. If there is a disconnect or the majority opinion is that the culture is negative, you have serious work to do. A beginning point is to reexamine your core mission, vision, goals and strategies. Do you and your employees differ because you’ve lost sight of these, or do you need to rethink the kind of company you want to be?
Another tool you can use to help maintain or improve your company’s culture is an employee survey. Again, these should be anonymous so you will get honest answers. They should also be done on a regular basis, perhaps weekly or monthly. The questions should focus on your company’s core values and practices, so you can determine where any shortfalls are. Of course, having employees take a survey is only useful if you share the results with them. They need to know that their opinions are valued and that their concerns are being addressed.
Although you won’t see it on your balance sheet, an appealing company culture is a major asset and a reason for someone to want to buy your company.
Another critical asset, and an important component of a strong company culture, is our next topic: Are you investing in innovation and R&D?