Monday, May 29, 2006

The Corporate Culture Conundrum

John Hamm, a former CEO and current general partner at VSP Capital, reminds us that successful corporate cultures nurture employees' natural drive and enthusiasm toward creating a winning company. In May 2006 issue of Harvard Business Review, Hamm advises that a healthy corporate culture is "created and maintained by focusing on the right goals and creating the experience of winning in the marketplace."

Hamm contrasts this with a "feel good" culture focused on employee morale, attitude and teamwork. With the attention on make-them-happy without any ties to business metrics, employees ultimately will not produce to a level necessary to meet business goals and achieve lasting success.
In companies with healthy cultures, employees aren't kept in the dark; rather, they are supported in the belief that they are part of an exciting future. They come to work with a fire inside them, a result of clearly stated leadership and business practices that everyone explicitly understands. Every person in the company know how to individually contribute to its future.

In Hamm's view, successful companies have workplace cultures where employees want to make a difference – not be coddled.

I agree with Mr. Hamm for the most part. Clearly fostering an environment where employees are tuned in and turned on by a company's success is a winning strategy. And in a perfect world, all employees would be as ambitious, success oriented and driven as Hamm believes you can create with your company culture.

The reality, though, is that most employees don't get off on the company's success. It's difficult for motivated people like Mr. Hamm to come to grips with the fact that a large number of employees – many who for better or worse make up a core group of most mid to large size companies - are not success driven. They might be conscientious workers who will put in a good days work but they will never give a hoot about meeting a price/earnings ratio or market share goal. Most people are just not that ambitious. And that's okay.

I learned this the hard way myself by banging my head against the wall for many years working on ways to motivate the masses. Why didn't they get excited about the things that seemed so obviously exciting to me? How could you not get enthused about 40% year-over-year growth?

You can try and tie in compensation and rewards to your metrics but this yields minimal effects and is limited to the few metrics on which you can focus. When you are able to create attention to corporate goals via your reward system, that attention is generally limited to "What’s In It For Me" thinking and not a more sustaining, success for success' sake attitude. It rarely creates the genuine fire in the belly that Hamm (and I!) seek.

The truth is, there just are no burning embers to stoke in many employees. The sooner highly motivated CEOs accept this the better. The key is to learn how to get good, solid and even exceptional performance from these employees. Because they don't have the fire in the belly, doesn't mean they don't want to produce a good days work for a company that treats them right. There are things a company can do and irritations a company can eliminate to create a successful environment. I'll save that for another post.

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