It has been shown that most organizations hire employees for the skills they possess, yet fire employees for poor behavior. Even worse is when poor behavior is tolerated to the point of lost productivity and the turnover of "good" employees. This hiring/firing cycle costs organizations millions of dollars a year in recruiting and training costs. Poor behavior is usually due to a mismatch in values and/or a failure of the employee to assimilate into the organization's culture. But how do companies both large and small ensure that new hires are a good cultural fit?
Culture is a widely used and misunderstood term. By the strictest definition, culture is the sum of attitudes, customs and beliefs that distinguish one group of people from another. An organization's culture can be defined by a company's prevailing ideas, values, attitudes and beliefs that guide the way in which its employees think, feel and act. Therefore, a company's culture directly impacts the decisions and actions of the organization.
A positive culture, however, can obviously have the opposite effect. The Disney organization, for example, prides itself on closely following its six core values: Integrity, trust, teamwork, honesty, play by the rules and respect. These values drive the Disney culture of excellence, and have resulted in a 54% increase in net profits over the last four fiscal quarters. Disney is not an anomaly. A 2014 study, "Parsing Organizational Culture: How the Norm for Adaptability Influences the Relationship Between Culture Consensus and Financial Performance in High-Technology Firms" by Jennifer A. Chatman, David F. Caldwell, Charles A. O'Reilly and Bernadette Doerr, concluded that corporations with strong positive cultures performed better financially over a volatile three-year period than companies with weaker cultures did.
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So how does a company as large and diverse as Disney consistently maintain an organizational culture that is so powerful? The answer is relatively simple, according to Disney. It's all about the people. The Walt Disney Company has consistently worked to attract, develop and retain employees dedicated to their vision and values.
This modest statement is profound in its simplicity. In order to hire employees to maintain the corporate values and fit into the culture, an organization must first know what their values and culture are. This is not as easy as a simple survey or scanning a company's website to find its mission and values statement. If values and culture are not systematically and strategically created, they will evolve on their own, sometimes with devastating consequences, as in the case of the Enron scandal of 2001, in which Enron's "get it done" culture that emphasized profits and gaming the system to look good to Wall Street investors led to the company's eventual bankruptcy – the largest in U.S. history – and the dissolution of Arthur Andersen, one of the five largest audit and accounting firms in the world.
Leadership must profess the desired values and demonstrate them on a daily basis. They must become masters at strategic communication and consistently walk the talk. A culture must be nurtured and supported and those who are not demonstrating the organizational values or fitting into the culture cannot be allowed to stay.
It's far easier to create a corporate culture than to change one. To change a culture, a company must reward those possessing the desired values, while purging those that do not. The key, however, is finding and hiring those candidates with the desired values.
Using structured or behavioral based interviews, proven effective by Disney, Google and Southwest Airlines, is paramount in good hiring practices. In order for this to be successful, however, the organization must have a clearly defined set of values. Interview questions can then be constructed to elicit descriptions of previous behaviors exhibited in specific situations, thus exploring candidates' individual values. Instead of a subjective interview question such as, "What is your leadership style?" or "Tell me what you value," which tell you nothing about the candidate, questions such as, "Tell me about a time when you were leading a team and one of your subordinates didn't agree with your course of action" can give you insight into your candidate's value system.
When leadership establishes and nurtures a set of pristine values that create a culture of excellence and hires people possessing those values, positive outcomes and financial success is inevitable.
Stuart Levine is chairman and CEO of Stuart Levine & Associates and EduLeader LLC. He can be reached at 516-465-0800 or [email protected].
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