Brokerage Ops the Jan/Feb 2011 issue

Cultural Warrior

Create a high-performance business culture that defies the gravity of your competition.
Posted on January 23, 2011

Last October we watched the end of an era in Detroit: the General Motors line Pontiac was discontinued. Contracts with its dealers expired Oct. 31. The name and distinctive red arrowhead shield came down at dealerships around the nation. Industry observers mourned the loss but noted that Pontiac had lost its way. Instead of continuing to excite drivers with high-performance cars like the GTO, Trans Am and Firebird, it hewed to the middle of the road and created cars like the Aztek, a crossover SUV that critics called one of the ugliest cars ever created.

Nobody wants to see their firm lose its way. But hearing response after response to my article about company culture [“The Great Divide”] last October, I am afraid it could be happening to you.

People have strong feelings about this. Unfortunately, some of your comments bordered on depressing. The most amazing thing I heard is that many employees believe their firms don’t have any culture—good or bad.

I heard comments such as:

• “Our culture is just ‘grow 15%.’”

• “All we do is focus on expense control.”

• “We all operate in silos.”

• “Producers run the zoo, and as long as we keep producers happy, that is all that matters.”

I could go on, but I will spare you. Scary stuff.

I was being kind last year when I said I was surprised by how few firms can really describe their culture or explain how that culture inspires performance. I thought I was going out on a limb to say many firms lack any culture—good or bad. Your comments proved otherwise.

So what can you do to avoid going the way of the Aztek? What does a high-performance culture look like, and how do you create one?

What Is a High-Performance Culture?

A high-performance culture does more than just provide a fun place to work. Winning “Best Place to Work” in your town is a good start, but there’s more to it than that. Culture is the collective behaviors of employees and how they interact with various stakeholders, such as other employees, vendors, clients and carriers. It is also the common values and beliefs that firms cultivate and then pass on to their employees. The sum: a combination of behavior, values and beliefs.

Behaviors are often formed by firm leaders—who are sometimes the owners—over a period of time. These behaviors become entrenched in a company. However, this process does not guarantee results. Such cultural behaviors are often formed from previous success and don’t always change as the business, environment, markets and industries change.

Culture does not mean simply writing words on a piece of paper to codify company values. Even words like trust, respect and integrity have no meaning unless they are ingrained in the daily activities of an organization.

I thought I was going out on a limb to say many firms lack any culture—good or bad. Your comments proved otherwise.

By themselves, behaviors or a written code of values do not constitute a robust corporate life. Further, having an organizational culture does not guarantee a high-performance culture. These are building blocks, but they must work together.

A common characteristic of companies with high-performance cultures is that their leaders inspire loyalty and performance from employees. Their staff wants to be part of a winning team. A high-performance culture is a collective mindset of employees who expect great things to happen, even in rough times. The employees generate the commitment to go the extra mile, not because they have to, but because they want to.

At insurance brokerages with high-performance cultures, the employees not only know what they should do, they know why they should do it. Given the challenging environment that the insurance industry has endured in recent years, how many leaders see their companies in that description?

Glorifying the Past

Many brokerages lack a high-performance culture because they resist change. The insurance industry is old-school, with many flawed legacy strategies. I believe the cultures of many firms have failed because they were based on what worked in the past. They take culture for granted. But we live in a new world. The only constant is change. Changing a business’s internal makeup is difficult because it requires influencing long-held values, beliefs and behaviors. Thus the culture itself is a barrier to success.

Of course, not all high-performing cultures are the same. If they were, how could it be a competitive advantage? To be effective, a high-performance culture is tailored to your firm. Research by Bain & Co. is compelling for creating a high-performance culture and, more importantly, for leading a cultural change. Bain describes a high-performance culture as the unique fingerprint that can’t be replicated by competitors.

In high-performing cultures, employees understand the combination of corporate values, beliefs and behaviors. They can articulate that combination and how it defines the foundation and personality of the firm. In these companies, the culture motivates the employees to do the right thing, not because they are accountable but because they are responsible—willing to accept the challenge from within.

In its research, Bain studied the link between financial outperformance and high-performance culture and found six common attributes of high-octane business cultures.

  1. Know what winning looks like. Beyond the desire to win, employees set high standards, and the performance bar keeps going up. Winning includes understanding that short-term success pleases financial markets but does not build long-term value or create a passion for results. I believe this is an issue with many of the public firms and those backed by private equity in the insurance industry. I’ve had this conversation with many of their leaders. At high-performing brokerages, winning is about exceeding goals on client service, customer satisfaction, retention rates and new business. Objectives that lead to profit, short- and long-term, are real and measurable for the front-line employees.
  2. Look out the window. High-performance cultures don’t get overly distracted by looking inward. They focus on what’s outside the window: clients, competitors, vendors and the evolving market. Competitors are an important aspect. They are never taken for granted or ignored. This is what keeps employees up at night: How do we stay ahead of our competitors? A perfect example is healthcare reform. What are your competitors doing to adjust to this quickly evolving market? How are you implementing wellness strategies, and what are your competitors doing?
  3. Think and act like owners. A given in a high-performance culture is that employees take personal responsibility for business success and failure. While in the insurance industry, they often are owners, the difference comes from employees who think and act like owners.
  4. Commit to individuals. As much as we don’t want to admit it, many firms treat individuals like cogs in a machine. High-performance cultures turn this upside down. They make a point of investing in individuals at all levels of an organization and helping them develop to their full potential. Investments in training and self-improvement are provided for all employees, not just management. The bottom line is that a company cannot achieve its full potential unless its employees achieve theirs.
  5. Spread courage to change. Successful companies must be able to quickly and continuously adapt to new environments and changing markets. This should ring true for all insurance professionals. But how many of you can truly say that your employees feel they can take risks or challenge the status quo? High-performing cultures find ways to make risk acceptable within clearly defined boundaries. There is a reason we all use that maxim “risk versus reward.” You can’t succeed without taking measured risks, and all employees must feel like they can live by this rule.
  6. Build trust through debate. Cohesive teams trust one another and are aligned together. They are not afraid to engage in conflict and debate ideas. However, once they commit to a decision, the team leaves the meeting with a common plan of action. I refer you to the ideas of the “Collaborative Way” [“Walking the Talk,” November 2010]. High-performing cultures follow the concepts and ideas of the Collaborative Way, intentionally or not. Conflict and debate result in the best decisions.

Each of these six attributes contributes to a stronger, more coherent structure. The real measure of a high-performing culture is a firm’s ability to nurture and combine all six.

Even words like trust, respect and integrity have no meaning unless they are ingrained in the daily activities of an organization.

The one attribute I did not list is leadership. It should go without saying, but I’ll say it anyway: Effective leadership is the foundation of a high-performance culture. Aligning firm leadership around a common vision is the most important factor in developing a high-performance culture. Corporate change cannot happen unless leaders mold the behaviors and values that define the firm’s culture and continuously apply the culture throughout the organization through personal contacts and communication.

The link between successful companies and high-performance culture is indisputable. In high-performance cultures, effective leaders clearly articulate their mission, vision, values, strategic goals and the critical measurable priorities. Then all employees are held accountable and assume responsibility.

We all recognize the challenges facing our industry. Yet culture as a competitive advantage, let alone a high-performance culture, remains a rarity. Make the commitment to create a high-performance culture and see how employees will change and do the right thing—not because they have to, but because they want to. Like you, they want to be winners. They know what a winner looks like.

It should go without saying, but I’ll say it anyway: Effective leadership is the foundation of a high-performance culture.

Take the time and make the investment. You’ll find it’s worth the effort. Companies that achieve a high-performance culture will see greater profitability and will grow shareholder value over the long term. You’ll keep your nameplate on the door and avoid going the way of the Aztek and its Pontiac brethren. But more importantly, everyone from the receptionist to you will find it a more exciting and vibrant place to work. 

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