In John Maxwell’s book The 21 Irrefutable Laws of Leadership, he says, “Trust is the foundation of leadership.” (Maxwell, 1998 and 2007) If a leader continuously breaks people’s trust, he can’t influence them. It takes an authentic leader to build and maintain that trust.
Frances Hesselbein, founder of the Leadership Institute, said:
Culture does not change because we desire to change it. Culture changes when the organization is transformed; the culture reflects the realities of people working together every day.
(HESSELBEIN, SPRING 1999)
Culture is something that you simply can’t fake. If you want to create a Magnetic Culture, you must integrate the guiding principles throughout the company, and most importantly, model those behaviors yourself!
There are many ways to integrate your guiding principles throughout your company to create a Magnetic Culture. In the next sections, I will share several ways to bring your guiding principles to life and embed them in the fabric of your company.
CHAPTER 9
Hiring Process
There’s a world of potential teammates out there. The culture you create determines who you attract, so craft it carefully to hire the inspired.
– ROBYN BENINCASA (DRYSDALE, 2017)
COMPETITION FOR SKILLED WORKERS IS growing fierce. A large segment of the population is retiring, and there are not enough skilled workers to take their places. Additionally, job growth is expected to increase while the talent pool shrinks. These conditions give skilled workers the power to be more selective about where they work.
People want to work for companies that have a reputation for maintaining a good culture. Let’s face it, we spend most of our lives at work. People have figured out that the workplace can actually be enjoyable, and companies who provide this are magnets for employees. There are studies, like Fortune’s “The 100 Best Companies to Work For,” that describe what the best companies are providing for their employees. You can bet that there is a line of applicants for all of these companies.
Many local magazines/organizations recognize companies in the community that are great to work for. In my city, the Birmingham Business Journal (BBJ) provides an annual “Best Places to Work” contest and publishes the winners. The winners are determined by an employee survey, and winners are the top scorers in their size categories. The BBJ states, “…the common thread between all 35 companies the BBJ recently named Birmingham’s Best Places to Work was culture. Each of the honorees has created a unique culture where employees feel valued and workers remain engaged.” (Ty West, 2016)
Do you think a company that is listed as a best place to work has problems recruiting top talent and retaining them? No, people flock to these companies and are not easily picked off by other companies. What do you think this does to their bottom line and ability to compete in their industry? I can tell you that none of the companies on the “Best of” lists are struggling to make a profit.
When you post job openings in your company, make sure that you are very specific about the type of person who would successfully fit into your culture. In EntreLeadership, Dave Ramsey provides examples of how his culture is described in ads:
“Just because your mother likes your family blog doesn’t make you a writer; you really must have professional writing experience,
Two years of sales experience needed, Girl Scout cookies doesn’t count,
We might be wearing blue jeans and flip-flops, but don’t let that fool you, we work our tails off. If you want to join a team that gets it done then you better know how to make things happen.” (Ramsey, 2011)
For some free advertising, try to get on the “Best Places to Work” list in your community, or the Fortune lists. Most of these lists are divided by size, so don’t be intimidated if you have a small company. These businesses are recognized as well.
Also, don’t forget your current employees. If they love their jobs, they will tell others. Your current employees can help you attract other great employees. Implementing an Employee Referral Program, where employees are rewarded for recommending qualified candidates, is a great way to find employees who are a good fit for your organization.
GET THE RIGHT PEOPLE ON THE BUS
If there is one thing that has helped me as a coach, it’s my ability to recognize winners, or good people who can become winners by paying the price.
— COACH BEAR BRYANT (COOPER, 2012).
After completing his Built to Last project, Jim Collins embarked on a new study to find out how companies who did not have a good start (like the Built-to-Last companies) were able to make the leap from good to great and sustain those results for at least 15 years. In this study, he found key determinants for greatness – why those companies were able to make the leap and others were not. In his book Good to Great, Jim Collins details what he found from the study. I will discuss some of those principles here.
One of the key concepts of Good to Great is getting the right people on the bus and in the right seats, and getting the wrong people off the bus. When you have the right people on the bus:
They are able to change direction easily when needed.
They are internally motivated, so they do not need as much supervision.
If you have the wrong people, it doesn’t matter what the company’s vision is, you won’t be able to accomplish it.
Good-to-great companies have rigorous processes for managing people. Consistent standards are applied at all times and at all levels. The research identified three practical disciplines of the good-to-great companies:
“When in doubt, don’t hire – keep looking”. Only the right people can create a great company. Don’t settle for less. The Harvard Business Review estimates that 80% of employee turnover is due to bad hiring decisions. Take the time to find the right people up front.
“When you know you need to make a people change – act.” If a person did not seem to be a good fit, good-to-great companies first assessed whether that person was in the wrong seat on the bus. If that wasn’t the problem, they dismissed the person as soon as possible. Hanging on to the wrong people is unfair to the right people, and you don’t want to lose them.
“Put your best people on your biggest opportunities, not your biggest problems.” The best people should receive the best opportunities, not the worst problems.
When I talk about “rigorous processes” and “discipline,” I’m not talking about the structure of the workplace environment. Having a free-flowing, happy environment is part of the rich corporate culture for many companies. However, when it comes to who you hire and who stays with the company, that process must be structured and administered with discipline. To maintain a thriving culture, you can’t have snakes lurking around.
EJECT THOSE WHO DON’T FIT
Mediocre people don’t like high achievers, and high achievers don’t like mediocre people.
— COACH NICK SABAN (KETEYIAN, 2014).
Hiring the right people is tricky because people will say anything to get the job. If you find that you have hired someone who is not a good fit for your organization, you should get rid of them fast. One rotten apple can ruin the whole barrel. If you have someone in your organization who is not acting according to the core values, he or she is probably harming other people and hurting your culture. Don’t hesitate – show that person the door!
At Zappos, they offer new employees $3,000 to quit after the initial training if they feel the job isn’t right for them. This may seem like a waste of money, but it is actually an investment. It will cost the company more money if they allow an employee to stay who doesn’t fit into the culture. Zappos basically cuts their losses on that employee early.
Visionary companies are so clear about what they stand for and what they’re trying to achieve that they simply don’t have room for those unwilling or unable to fit their exacting standards.
In Built to Last, it says, “Only those who ‘fit’ extremely well with the core ideology and demanding standards of a visionary company will find it a great place to work. If you go to work at a visionary company, you will either fit and flourish – probably couldn’t be happier – or you will be expunged like a virus. It’s binary. There’s no middle ground. It’s almost cult-like. Visionary companies are so clear about what they stand for and what they’re trying to achieve that they simply don’t have room for those unwilling or unable to fit their exacting standards.” (Collins, 1994)
A company that is considered a “Best Place to Work” company is not the best place for everyone to work. The “Best Places to Work” companies generally require enthusiasm, commitment, hard work, and the ability to buy into the company’s demanding culture. While these companies look great from the outside, not everyone can fit into the company culture.
In the Built to Last study, the authors found that visionary companies are not soft and undisciplined; quite the opposite. Since these companies are so focused, they are actually more demanding than other companies. After our doors closed at Scandipharm, employees went to other businesses. Now, when talking with my former colleagues from Scandipharm, they tell me how different work is at other companies. They don’t have to work as hard at those companies, and they don’t have to put in the long hours. We’re amazed that there is another world out there. We were so caught up in the Scandipharm culture, we didn’t realize that other people don’t work like us!
ONBOARDING PROCESS
At Scandipharm, we had a room called the “War Room.” It held symbols of our culture (e.g., wolf head, axe handles) and the oak kitchen table that our founder used as his desk to start the company. As part of the onboarding process, a senior executive would take the new employees into the War Room and tell them the history of our company. He would talk about our mission, vision, core values, and why we do what we do. This grabbed the new employees’ hearts and helped integrate them into our culture.
During our Ziglar Legacy Certification training, Zig Ziglar’s three children (Tom, Julie, and Cindy) shared personal stories about Zig and their family. They treated us like part of the Ziglar family, and we felt like a part of that family by the time we left training. They actually have a name for us – “Ziglets.” People who go through this program say that it is life changing, and that they gain more than they expected.
From a practical standpoint, the company’s guiding principles should be explained in the onboarding process. If you can create a way to make this an emotional experience, it will embed those values even deeper.
Also, the rewards of demonstrating core values and the consequences of not demonstrating those values should be discussed during the on-boarding process.
CHAPTER 10
Performance Management
WHAT GETS MEASURED GETS DONE. Most companies have a way to measure whether an employee has met his or her goals. However, most companies do not measure how those objectives are met. The how has a significant impact on the culture. If goals are being met in a way that does not align with the guiding principles of the company, then a conflict exists that takes the “magnetic pull” out of the culture.
You’ve probably worked with someone who is a high individual performer, but creates destruction on his or her way to success. This could be because of a lack of integrity, not working as a team, stepping on others on the way to the top, and generally creating a feeling of ill-will within the company. This type of behavior eventually impacts the company in terms of turnover, loss of engagement, and even law suits and fines. Therefore, it is very important to assess how the work is actually getting done.
The way you measure the how is by defining behaviors that are expected within the company, and by assessing whether the employee demonstrated those behaviors. These behaviors are also called “competencies.” If you are an HR nerd like me, you probably know this as competency-based performance management program. However, to keep it simple, I’m going to just use the word “behavior” instead of “competency.”
At Scandipharm, we developed a performance management program that measured both whether an employee met his annual objectives and the behaviors he demonstrated in achieving those objects. The behaviors measured were based on our Core Values. The final performance management score was based on what and how objectives were met.
When we added the behavior section to the existing performance management program, we expected pushback from managers. Let’s face it, no one likes performance reviews, and we didn’t think they would like more work in this area. However, the managers thanked us! The behavior measurement system gave them a tool to discuss problematic behaviors with their employees. They reported that the behavior system gave them the words to say during their talks with employees. Sometimes, it can be difficult to describe negative behaviors, and we made it easy for them. Go, HR! This behavior-based system also provided a vehicle for praising employees for the good behaviors they show and reinforcing those behaviors.
To really ramp up your program and help managers develop their people, create a training resource guide that provides development resources for each behavior. When a manager identifies a behavior issue, he or she can work with the employee to select training from that resource guide to shore up his or her weak area. This makes the manager’s job easier and makes him or her more effective.
To create a behavior-based performance program, start by defining satisfactory behaviors for each Core Value. You can add behaviors for other guiding principles as well. How many behaviors you define is up to you. Then, define what unsatisfactory behavior and above-average behavior looks like. To help you get started, I’ve provided a template with instructions on my website paschakelley.com.
TIP: It is very helpful to define behaviors in a team, and it doesn’t have to be only HR folks. It is actually better to get a mixed group of people from different departments and levels to define the behaviors.
As an example, I’ve created a behavior-based system for a company whose Core Values are Integrity, Customer Service, and Team Work. The supervisor reads the list of behaviors for each category and selects a score that best describes the employee’s behavior.
The behavior-based system does not have to be numerical. It can be scored as words: Unsatisfactory, Satisfactory, and Exceeds Expectations. However, when a program has a numerical score, it is easier to tie the performance score to compensation.
CHAPTER 11
Compensation and Recognition Programs
Compensation plans are like recognition: be careful to reward the activities you want duplicated. The team’s activity will gravitate quickly toward how they get paid, so make sure to pay only for the things you want done
— DAVE RAMSEY (RAMSEY, 2011).
COMPENSATION
To integrate the guiding principles into your compensation plan, you must define your expectations and how those will be measured and rewarded. The easiest way to do this is through the behavior-based system described in the previous chapter or through a similar program.
The score from the behavior-based program can be used to make salary increase decisions, target promotion eligibility, and determine variable pay (bonus, commissions) amounts. When you hit employee’ pocketbooks, they stand up and take notice. If you tie their behavior to their pay, they understand how important it is to adhere to the guiding principles of the company. I will discuss compensation in more detail in the next section.
RECOGNITION PROGRAMS
Companies with a Magnetic Culture celebrate achievements a lot! The accomplishments of individuals, teams, and the company are all recognized frequently. This gives people the feeling that they are part of a winning team, which makes them feel like winners. Also, corporate celebrations help bond people together as teammates in achieving goals.
Work is too much a part of life not to recognize moments of achievement. Gr
ab as many as you can. Make a big deal out of them.
—JACK WELCH (WELCH, 2005)
People generally do not want to leave winning teams. In fact, studies show that turnover rates are lower at companies that are intentional with their recognition programs. In The Carrot Principle, a Watson Wyatt Reward Plan Survey was cited:
…. the average turnover rate of employers with clear reward strategy is 13% lower than that of organizations without one.
(ELTON, 2007, 2009),
Companies should celebrate big wins as well as milestones toward achieving objectives. While this is important during the good times, it is even more important during down times. Celebrating small victories when a company is struggling gives people hope and encourages them to keep going.
During the early years at Scandipharm, when we were such underdogs, our leaders celebrated those small successes (e.g., new high in revenue, completing a key project) with the whole company. Even though we had a long way to go to be able to play with the big dogs, celebrating each tiny victory encouraged us to look at the possibilities instead of the obstacles.
At Zappos, “Deliver Wow” is one of their core values. To help reinforce this, employees can give a $50 “coworker bonus award” when they catch someone delivering the Wow. Each employee can only give one coworker bonus award each month, but there is no limit to how many each employee can receive. This award serves two purposes: 1) it integrates Core Values, and 2) it provides immediate recognition to employees. Having a mechanism for on-the-spot rewards is key to having an effective recognition program.
Recognition programs are a powerful way to integrate the company’s core values and build a Magnetic Culture. To do this, establish awards to recognize people who demonstrate the company’s core values. I will discuss how to build a recognition program in the next section.
The Magnetic Advantage Page 5