Do you know how it feels to be surrounded by people who just “get it?” When your company is clicking on all cylinders, it is very likely because your employees are sharing the same values, and those values are driving their work.
Creating and maintaining that sort of synergy is not an easy task, but I know one man who’s been the best in the business at putting together a great organizational culture.
David Friedman was president of RSI, an award-winning employee benefits brokerage and consulting firm outside Philadelphia. He was a valued client of mine, but more importantly, he has been a great friend and a mentor on successfully managing a business. RSI is the best-managed firm I have ever worked with. It set an example of how organizational culture is not only a foundation of a company, but a company’s soul—a vital force that management in any industry can foster and control to create a competitive advantage.
Friedman recently retired from RSI, which is a boon to those of us who are students of great company management techniques. His new book, Fundamentally Different (Infinity Publishing, 2011) is the best ever written about organizational culture.
The hallmark of a successful company is the alignment of corporate culture, defined by a high degree of consistency between the organization’s stated values and the behavior of its work force. A successful corporate culture results in a well oiled machine firing on all cylinders. In his book, Friedman describes how the intentional application of eight key steps to institutionalizing values is critical to this alignment. Those eight key steps are:
- Making Visible
- Using Ritual
- Leading by Example
- Creating Accountability
Here is a brief description of each:
DEFINING—It is amazing how many companies have not clearly articulated a statement of operating values. Defining an organization’s values is one of the essential roles of leadership. Therefore, your company’s values should be deeply meaningful to you as a leader, inspiring both your passion and your conviction. Don’t allow a consultant to develop your company values. You must do it.
Start by thinking about the behavioral traits that you strongly believe in and that you built your life upon. Consider the type of behavior you want to see from the employees you interact with each day. They should be the traits that you value the most, and those values should radiate out from you and your immediate staff to the company at large.
At RSI, Friedman created 30 fundamental values, though most organizations can work with perhaps four to 10. Once you define them, you must create a statement or two explaining what you mean and describe the appropriate behavior that corresponds with each.
SELECTING—If you don’t select the right people, you are not going to get where you want to go. This is true for any business, and it is extremely important when it relates to cultures and values. As Friedman explains, the challenge is that employees generally come on staff with their own set of values. So it is critical, when hiring, that you select people whose values reflect those of your organization.
Hiring people with the right values is just as important as finding people with the right skills and experience. At RSI, Friedman and his colleagues designed behavior-oriented interview questions based on the company’s values. In addition, prospective employees met with current employees who were heavily invested in making sure the company hired the right people.
Not every hire will be a perfect fit with regard to your company’s values. In cases where mistakes are made, it is critical to correct the mistake, even if it means terminating the employee.
INTEGRATING—Integration is more thorough and purposeful than orientation. At RSI, integration implied the new person was becoming part of the company versus simply learning about the company. RSI developed a best-in-class integration plan consisting of a one- to two-week program covering everything a new hire needs to know. This ranges from culture and values to the firm’s history, strategy and finances, from learning employees’ name to learning to work the phone system.
Most firms treat orientation as an afterthought, closer to a “throw them into the fire” approach. But RSI took an uncompromising stand. Every person in every department began his or her career with the full integration program. No exceptions. Finally, at the end of the integration process, new employees were asked to assess the program.
While not all companies have the time and resources to devote to such a comprehensive integration plan, it is essential that organizations recognize the critical opportunity that integration provides. Not only can it introduce new employees to the firm’s values, but it can also demonstrate those values.
MAKING VISIBLE—It is hard to remember to put values into action if you are not routinely confronted with them. At RSI, the company values are printed on folded cards that everyone could carry with them. At company headquarters in Mount Laurel, N.J., 30 artistically framed prints depicting RSI’s values line the hallways. Making the organizational values highly visible keeps them in the forefront of employees’ minds.
USING RITUAL—Creating and maintaining rituals plays a critical role in keeping values omnipresent in the minds of employees. Rituals create a subconscious recognition of certain behaviors becoming the daily norm.
RSI uses several rituals to enhance its practice of the fundamental values. A great example is the “Fundamental of the Week” lesson, which started with Fundamental No.1 and worked through the entire list. Every Sunday an email and voicemail went to each employee with a short lesson explaining the fundamental with some nuance, along with a practical example to ease understanding. While this practice started with Friedman, after the first 30 fundamentals, he passed the responsibility for the weekly lesson to the management team, which ultimately passed it to the staff at large.
This resulted in every employee taking ownership of the fundamentals, and it made them an organization-wide behavioral norm (rather than some leadership initiative). Friedman believes this weekly ritual helps RSI staff connect values to their daily performance more than any other single activity.
COACHING—One of the most important ways people learn how values apply to daily behavior is through the coaching you provide when faced with real-life situations. This is where values become relevant. It’s your chance to take the words down from the poster on the wall and show people how they serve as a guide to appropriate behavior.
As a coaching exercise, RSI developed a series of typical scenarios that employees might encounter. Employees were then asked to determine the appropriate course of action and to identify which fundamental they would use to guide their behavior.
Another critical aspect of coaching is to understand that in highly effective organizations values are used as a tool not to berate or punish someone, but to get people to more consistently behave in ways that are an accurate reflection of an organization’s values.
LEADING BY EXAMPLE—Nothing speaks more loudly than the example set by senior leaders. Both consciously and subconsciously, people look to their leaders for guidance about acceptable behavior.
For better or worse, your employees pay more attention to what you do than what you say. What’s on your walls or your website matters much less than what you actually do. In high-performing organizations, leaders recognize the role their example plays in modeling values. They use this to their advantage by regularly demonstrating behavior that’s consistent with the organization’s stated values.
CREATING ACCOUNTABILITY—You must find ways to hold yourself and each staff member accountable to company values. An easy way to do this is to include a values component on annual performance reviews. This forces you to describe your values in behavioral terms. How else will you be able to evaluate whether someone is performing in a way consistent with your basic values? It also forces a regular dialogue between managers and their direct reports about organizational values and how to apply them. Including values in the performance review also drives home their importance to the organization. Finally, having some incentives and consequences based on demonstrating behavior consistent with your values reinforces that behavior.
Another RSI method was an annual survey based on the fundamentals. The survey was sent to three different groups: customers, suppliers/vendors and RSI staff. It asked each to evaluate RSI in terms of the staff behavior, and it asked if they “almost always, usually, sometimes, seldom or never” acted in the ways described in the values.
The survey sent a strong message to both employees and those they came in contact with that the company was serious about the link between its values and the behavior of its staff. Of the more than 10,000 respondents, 97% described RSI as either “usually or almost always” demonstrating its values, and 72% said RSI employees almost always behaved this way. Highly effective organizations reinforce the seriousness of their efforts by building in accountability.
Friedman sold RSI to Arthur J. Gallagher before he retired. One of the key factors in deciding to sell to AJG was the strong cultural fit. Friedman stayed for several years before he ultimately decided he had accomplished everything he wanted to and it was time to explore new paths and accomplish new goals.
There are many more lessons to be learned from Fundamentally Different. Pick up a copy and incorporate these lessons into your organization.
On a personal note, I want to thank David for all his guidance over the years. I wish him success in his future endeavors. His work has affected the lives of many in countless organizations. The world would be a better place and business would be better off if there were more people like David Friedman leading organizations. May he enjoy his future.