Culture is Critical to Executing Strategy
In our last post, we discussed cultural fit and the importance of hiring and supporting people who fit in well with your organization’s culture, values and strategy. That’s advice most of us heartily agree with but don’t always follow, and we explored the reasons why.
Now I want to talk about “when.” Sometimes, a bad culture fit is obvious. Your teammate is selfish, doesn’t always tell the truth, doesn’t support others. In short, he’s a jerk, but the company tolerates him because his numbers look good.
But often, the cause of a bad culture fit is subtler. Someone who has been a good cultural fit and has reflected the organization’s strategy and values for years is now out of step.
What happened? In many cases, the person didn’t change; the organization did. Your organization might be facing a new business environment – a new competitor, a new technology, a new opportunity – that forces everyone to adjust. And a few of your teammates, for all their good qualities, can’t or won’t make the necessary adjustment. They aren’t bad people. But, they are still causing the team and the organization to under-perform. And like it or not, if they can’t get back in step with the organization’s direction and evolving culture, you have to make the tough choice that they must go.
These critical moments are inevitable in successful organizations. Market and customer preferences change, the competitive landscape changes, technology changes. These changes force the organization to change to stay relevant.
I worked with a consumer products company in the US that faced one of these moments. To this point, its sales force had been a “team,” to use the term very loosely, of cowboys. Each one had her own territory and was told to sign up as many customers as possible, plain and simple. If a customer just outside a sales person’s territory had a problem, she had zero incentive to help her teammate – that was just time wasted that could have been spent selling to one of her customers.
Customer turnover was huge. At some point, it became clear that the company’s sales people had successfully sold the product to just about every potential customer in the area. Sales people were paid entirely on commission, based on selling the product to the customer, whether the customer was using it or not. Customers were winding up with a backlog of product they didn’t want and likely would never exhaust.
The company realized it had to change its approach. The focus could no longer be about getting new customers. It became, “How do we keep the customers we have, and make each customer relationship more satisfying and more profitable?”
Accordingly, compensation for sales people changed from straight commission to a mix of salary and bonuses based on team results and dramatically improving the customer experience.
One sales person was resistant to the change. He was a cowboy, and a good one. He had been a sales leader, and a lot of his peers respected him. But now, he was holding the organization back. He saw the new compensation system as a threat, and he didn’t change his approach. The group’s performance was being held hostage by this one guy.
We had conversations with that company’s leadership team about this salesman several times. They agreed he was holding the organization back, but chose not to act. Maybe they thought they could rehabilitate him over time. Months went by. Other divisions were making the transformation much more effectively. Finally, after a year, the division leadership terminated the salesman.
How do you think the team responded?
First, a striking the number of people the very next day told the divisions managers a version of, “Wow, it’s about time. We thought you were never going to make the change.”
As for team performance, it was like flipping a switch. Within days, the performance improvement was noticeable.
We drew two critical lessons from this experience, which have been confirmed on many other occasions:
- You can’t hide a bad cultural fit. Your team members know if someone isn’t playing by the rules, and they expect you to do something about it.
- You might focus on the sales or productivity that walks out the door with the person you just let go. But your team’s performance is likely to rebound, perhaps more quickly than you expect.