November 2007 | Commentary | Viewpoint

Converting Performance to Profitability

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A workplace culture can be productive or disruptive, profitable or unprofitable. It is up to management to decide—or allow someone else to define a company's culture.

The United Nations defines culture as a "set of distinctive spiritual, material, intellectual, and emotional features of society or a social group. It encompasses ways of living together, value systems, traditions, and beliefs."

So how can you build a healthy, collaborative, and profitable culture at your business? By following this step-by-step process:

Step 1: Define your culture to realize the opportunity. What kind of culture drives your organization? This step requires a clear-eyed look at how your people view themselves, how they view each other, and how they view the organization.

Ask these questions:

Can an investment in improving your workplace culture improve profitability? Identifying the impact of your labor costs allows you to more effectively invest in your people.

Do you have the right team? Unfortunately, not everyone can be expected to buy into changing a workplace culture.

Is your leadership team ready and able to change? A willingness to work and to be flexible is important in your leadership team.

Are you personally willing to fail? You can't expect everyone to change their way of working, communicating, and collaborating while you keep your own habits. This means trying new approaches, stretching your abilities, and risking failure. Creating an improved culture starts with you.

After this evaluation, you are ready to begin implementing a seven-step culture change, described in the sidebar below.

So what's the catch? Time. Progress toward a performance-based culture is measured in months and years, not days.

Step 2: Identify the tools for your plan. To realize a performance-based workforce, you need both a plan and the tools to complete it. Before you start sawing floor planks, you should probably have a blueprint for your house, so let's start with the plan.

Your blueprint is a statement of your strategy and should provide a birds-eye view from 50,000 feet. It should derive from the mission statement and tell the story about how you want to create a performance-based culture.

A good tactical start is making sure your efforts are visible. Use technology to your advantage by sending e-mail updates, putting messages on pay stubs, and setting up information centers to keep everyone in the culture loop.

You should also keep track of relevant metrics and have available a dashboard that keeps everyone aware of the progress made. Cost accounting is a useful metric and its progress should be monitored throughout the organization.

By setting achievable goals and rewarding people who attain them, you can stretch the competencies of your workforce. Paying for performance means building bridges between the workforce and the bottom line.

Step 3: Implement your plan for a performance-based workforce. The first move to make is to closely tie your incentive plans to your core mission.

Identify Key Performance Indicators (KPIs) such as service, quality, sales, cost, and safety or some combination of these. Monitoring KPIs allows you to use metrics to convert performance to profitability and to reward appropriately.

Next, decide how you'll disburse incentives. Should you reward individuals, teams, or a combination? What pay-out frequency would be most effective?

Last, but absolutely not least, make it fun! You know your people. Let them know it by finding creative ways to make this challenge fun. Keep it personal and don't be afraid to look silly.

People won't remember what you said or did, but they'll never forget how you made them feel.

Countdown to Culture Change

1. Identify your core values.

2. Develop a vision and/or mission.

3. Work to build the right team. This is about finding the right people to achieve your mission. Start at the top and hold each and every level accountable.

4. Rely on experience and learning from the past to mold the future. Staying humble and being fearless about asking for advice allows everyone's experience to drive and enrich your business.

5. Communicate to educate. Every time you interact, you have an opportunity to reinforce your culture, values, and mission.

6. Evaluate to improve performance. Specific dates and measures allow you to review the state of your workforce culture.

7. Commit to having fun.

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