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Evaluating Your Company's Culture

Guest post by: Dennis Gerschick

Article Overview: I believe a company's culture is the single most important factor that will determine whether the company is sucessful or not. Business owners and executives should consider what they want their company culture to be and how they can shape it. This article provides many practical tips.

Evaluating Your Company's Culture

I study both publicly traded corporations, and privately held companies. I consider what factors led to the success, or failure, of a company. Usually, many factors are involved, and they are interrelated. However, if I had to pick a single factor, it would be the company’s culture. This is a nebulous and elusive concept. What exactly is a “company’s culture”? How do you define company culture? I have not read a good definition. I would argue that it is many things combined that create an implicit “Code of Conduct”, or atmosphere within the company. It includes a company’s policies and procedures, which indicate to employees what exactly is expected of them. It is an attitude that is reflected within the company.

I believe several important points should be made about a company culture, including:

1) Every company has a culture, whether they like it or not.

2) The company’s culture sets the stage for its future success or failure.

3) A company’s founder, and management team, should consciously think about what culture they want to develop, and then take specific steps to develop the desired culture.

4) There is no right culture that works best for every company. The desired culture depends upon the goals, and values, of those involved. What is really important to them? An excellent book that addresses the concept of corporate culture is ¬¬¬¬¬Built to Last by James C. Collins and Jerry I. Porras.

So that you can better relate to this concept, I will discuss it in the context of a law firm. Imagine that some of your fellow attorneys, and you, decide to start a new law firm. What kind of law firm would it be? A full service law firm, or a boutique law firm? How would your new firm be different from all of the existing law firms in the area?

Does the firm view the practice of law as a profession, or just a business? How a law firm addresses this fundamental question will say much about its culture.

What should the values of the new firm be? How are the firm’s values and goals communicated to the employees? A firm could have a written mission statement, and/or Code of Conduct, which encapsulates the firm’s values. However, written documents are not absolutely necessary. A firm will have a culture with or without them. The old adage: “Actions speak louder than words” is applicable. It is not what a firm says it values are, but rather what the firm does, that will really reflect the firm’s culture. Virtually, every action a law firm takes will be a reflection of its culture, including:

1) Where its offices are located and how they look
2) Its hiring, retention, promotion, and firing policies
3) Its training programs
4) Its compensation policies
5) Its marketing program
6) Its billing policies
7) Its polices regarding new clients

Are clients really firm clients, or are they clients of the originating partner? Which option would the firm choose if it could produce average quality work, and maximize profits, or produce outstanding work, but with lower profits? Would lawyers, within the firm, be expected to work seventy hours, or more, per week, or fifty hours or less per week? Would the law firm encourage pro bono work? What would the firm’s offices look like? Would it have a lot of marble and oak paneling, or something more modest? The answers to these questions, and many others, would establish a certain culture within the firm.

Years ago I started my own law firm. I remember talking with my partner about the number of billable hours we should expect from our associates, and what the normal work day would be. I recall him saying: “Dennis, remember the pack only runs as fast as the lead dog.” His comment has stayed with me for many years, because it was so simple, and yet it said so much. People often emulate their leaders. In a business context, employees watch their bosses, and often imitate their behavior. If the boss works hard, the employee will work hard. Conversely, if the boss goofs off, it is hard to expect employees to work hard. The tone is set at the top, and the leaders of any organization should carefully review their own behavior and attitudes.

A good article was published in the November – December, 1997 issue of the Harvard Business Review. The article was entitled “Changing the Way We Change.” The authors noted that there are key vital signs that indicate the operating state of any company. The four vital signs are:

Power: Do employees believe they can affect organizational performance? Do they believe they have the power to make things happen?

Identity: Do individuals identify rather narrowly with their professions, working teams, or functional units, or do they identify with the organization as a whole?

Conflict: How do members of the organization handle conflict? Do they smooth problems over, or do they confront and resolve them?

Learning: How does the organization learn? How does it deal with new ideas?

The authors then explained these four concepts in more detail. The authors argue that as organizations become larger, people strive to carve out private patches of turf to protect themselves. In start-ups and smaller companies, employees tend to identify with the company. As companies grow larger, employees often lose their sense of teamwork and seek the safety of their particular function, team, or location.

How a company handles problems may say more about its culture than how it handles success. Does the company ignore the problems, or does it address them head on? Are employees encouraged to speak up and identify problems, or are they encouraged to be “yes” men”?

Lou Gerstner, the former CEO of IBM, wrote a book entitled: Who Says Elephants Can’t Dance? In his book, Mr. Gerstner talks about changing the corporate culture at IBM. Mr. Gerstner wrote: “Culture isn’t just one aspect of the game – it is the game.” He also wrote: “Changing the attitude and behavior of hundreds of thousands of people is very, very hard to accomplish… You can’t mandate it, can’t engineer it. What you can do is create the conditions for transformation. You can provide incentives. In fact, in the end, management doesn’t change culture. Management invites the workforce itself to change the culture.”

Mr. Gerstner also wrote: “Cultures in which it is easier to ask forgiveness than permission disintegrate over time. Leaders who don’t demand uniform and fair adherence to good principles and policies lose their effectiveness.” In short, rules and policies that are not enforced consistently are not really rules and policies. Instead, you get a situation where everyone is doing their own thing, and hoping they don’t get caught.

A firm’s traditions and folklore contribute and become part of the firm’s culture. In short, what does the firm value and reward? It has been said many times that a company gets what it rewards. People will usually adapt their behavior, and do whatever it takes to maximize their own personal income, regardless of how their behavior impacts the company.

A company’s culture influences if not establishes how a company does business. Is your firm’s culture producing the desired results? If not, consider what changes should be made. As Albert Einstein once said: “Insanity is doing the same thing, and expecting different results.” If you really want different results, you have to do things differently.

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Article Tags: atmosphere, attitude, boutique law firm, code of conduct, company culture, corporate culture, corporations, failure, fellow attorneys, full service law firm, fundamental question, james c collins, law as a profession, law firms, management team, many things, policies and procedures, service law firm



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