How Much Does Company Culture Matter for Success?
I have been providing CFO consulting to organizations for over 20 years. In that time I have seen organizations with amazing strategy and vision fail and those with questionable business plans realize incredible levels of success. It always comes down to culture. If the culture is wrong, then the smartest team with the best strategic plan can still fail.
A strong culture of execution starts with a strategic plan and focuses on accountability as a core discipline. The team has complete corporate alignment and works in an environment of risk taking and learning from failures. In 2009 Turning Point started implementing a concept called the Board of Managers (BOM) to create alignment, accountability, and an environment of learning within an executive team. The BOM meets quarterly and operates like a board of directors but consists of the functional leaders in the organization.
The BOM should include the heads of marketing, sales, service, operations, and finance. While the CEO and the Board of Directors set the corporate strategy for the organization, the BOM is tasked with breaking that strategy down into three to five operational goals per quarter and executing them. At the end of each quarter the BOM must present their successes, failures, and plans for the future to the team and the CEO. It’s a time of vulnerability where they share their experience and get valuable feedback from their fellow managers, a time when managers who may be siloed from one another on a daily basis are brought together and are aligned in their mission to improve the culture of execution within the organization.
Karl Moehring, CEO of 128-year-old Washington Shoe Company, was one of the first to implement Turning Point’s BOM meetings into his company’s quarterly calendar after realizing his employees lacked a unified vision. “Some of the comments that came out of [our employee engagement survey] was that there was a lack of transparency in leadership and they didn’t know the company’s goals—at very best they knew their department’s goals,” he recalls. However, three years of BOM meetings later, Moehring says he’s seen a complete transformation. “It is probably one of the greatest tools that I can actually see measured results from, specifically with employee morale,” he says. “Now they understand why we go to work each day and what we are doing as a company. And there are less surprises on the leadership team.” A total of 10 members, including Moehring and myself, attend the BOM meeting the first Monday after the quarter ends before presenting the findings before the entire company at a breakfast that Wednesday. “It gets stronger with each report,” Moehring adds. “There is almost a friendly competitiveness to it.”
The effect of the BOM is to align the management team around the corporate strategy, create both peer and executive accountability, and foster an environment of risk taking, shared learning, and execution. We advocate that the BOM members’ incentive compensation be tied to achieving their goals outlined in the meeting, as it helps make the corporate objectives a personal matter. Sometimes, we also recommend that the company invite outside members, including those on the Turing Point team, to gain outside input and perspective and help create the best company culture possible.
