Building A Vibrant Organizational Culture With Warren Coughlin

 

A vibrant organizational culture contributes to better employee engagement, innovation, productivity, and a more positive impact on everything in your business. But how do you know if you already have a vibrant organizational culture or what you need to fix in order to get one? In this episode, Warren Coughlin gives an in-depth discussion about organizational culture. He explains why a vibrant organizational culture brings out positive traits that lead to improved performance while a dysfunctional company culture brings out qualities that can hinder even the most successful organizations. Tune in learn how to build a vibrant organizational culture.

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What You’ll Discover About Building A Vibrant Organizational Culture:

• The definition of organizational culture
• Common misconceptions about a vibrant organizational culture and business culture in general
• Why metrics are not everything
• Where to start when examining your culture
• The negative impacts of dysfunctional company culture
• How to deal with “cultural misfits” in your organization
• Why communication is high on the list of leadership skills
• What staying true to your values means
• The one non-negotiable thing that’s essential to building a vibrant organizational culture.

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Guest

Warren helps principled entrepreneurs build a Business That Matters. That is one that delivers to you, the owner, attractive profits and a fulfilling lifestyle while also creating positive impacts on customers, team and the larger community. In other words, it is one that helps make the world – or just your corner of it – a better place.

This requires a combination of solid business skills and disciplines guided by deeply held values.

He’s been helping entrepreneurs do this since 2002. He was the top Coach in Canada with the world’s largest business coaching company before going out to focus on Businesses That Matter. His clients have experienced everything from 8 figure exits, to 7 figure salaries, from rapid expansion to minimized operational work because of the development of great leaders and high performance values-driven cultures.

Warren is the creator of The Business That Matters Playbook, a tool that automates and eases the strategic planning process so the entrepreneur and the team know exactly what to do and when. He’s also the founder and host of the podcast “The Business That Matters Spotlight”

Warren’s a recovering lawyer, a serial entrepreneur, college professor, presentation/pitch trainer, actor, theater director and Dad to a wonderful daughter who constantly challenges him to be a better person.

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Building A Vibrant Organizational Culture With Warren Coughlin

It’s no secret that a vibrant organizational culture contributes to more employee engagement, innovation, productivity, and a more positive impact on everything you touch. How do you know if you already have a vibrant organizational culture or what you need to fix in order to get one? We’re going to explore those questions and more with our special guest. Stay tuned.

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I’ve got a great guest for you in this episode. He’s Warren Coughlin. Warren helps principled entrepreneurs build a business that matters, one that delivers to you, the owner, attractive profits, and a fulfilling lifestyle while also creating a positive impact on your customers, team, and the community at large. Warren is also the Founder and host of the podcast the Business that Matters Spotlight. Let’s bring him on now. Welcome to the show, Warren.

Thank you very much. It’s a pleasure to be here, Hanna. It’s nice to talk to you.

It’s good to have you. I love this idea of creating a business that matters, one that has a positive impact on customers, team, and community. Being able to accomplish that sounds like the intersection of business strategy and culture because you need to have the right environment for your employees to impact customers and those around them positively. I’d like to explore that with you.

Before we do that, I’d also like your thoughts about organizational culture itself because I get the feeling that a lot of business leaders think you just start doing stuff. You start doing business. Culture springs up organically from that. Let’s get into the nitty-gritty a little bit. What, in your opinion, is organizational culture?

That’s a big question to start off with. You can look up lots of academic versions of that. I’ll tell you my practical definition of culture. My practical definition of culture is systems, incentives, and the informal signals that produce the behaviors that reveal the values of the organization. That’s a practical thing because often you hear things about culture as the manifestation of values and all that thing, but how do you influence that? This definition gives you the tools by which you can produce a culture. Here’s a simple example. If you say that we want to have a culture that values safety, the only incentive you have for your project managers is that we will reward you based on productivity.

The only system we have in place for a foreman is to put a document in that measures productivity. When there’s a snowy or rainy day outside and the conditions aren’t safe, your systems and incentives are going to encourage people to do things that are against what you say your primary value is, which is safety, because you’re going to push for productivity. These tools of looking at each of them have systems, incentives, and informal signals that tell you what behaviors you’re encouraging in the organization, and that behavior will reveal what the values are. You can reverse engineer it and say, “If we want to have these values, we got to revisit those three elements.”

Is it one big thing or a collection of micro-cultures, like bigger organizations where there are decent-sized departments?

Culture is the systems, incentives, and informal signals that produce the behaviors that reveal the values of the organization. Click To Tweet

I play in an entrepreneurial environment. There are a whole bunch of small things that go into producing that big thing, but the culture is a manifestation of how that organization works together through those three elements. In a larger organization, it can be very different. You can have regional differences or departmental differences in culture that are driven by the leadership within that. Larger organizations can create a common, big culture, but it requires a high level of intentionality. You’ve got to have people who are committed to producing that culture. You need performance management systems and training around that. It can be done at a large level as well.

In your experience, what are some common misunderstandings about a vibrant organizational culture or business culture in general?

There are a lot of them. The first one would probably be just values. If you articulate the values, you’ll be producing a culture, but that is nonsense. Enron had fantastic values that were carved into the stone of their building, but they didn’t live it. It’s not enough to put up some values and think people will follow it. Another misconception is that some people go into turning values into performance management metrics way too soon and in way to a rigid way. They think that they can coerce culture through punitive measures. That usually tends to backfire.

The third is that, “I hired good people, so I know the culture is going to stay good because it has been good. We don’t need to do much around that.” As an organization grows, the informality of the relationships that happen when you’re at a small level becomes harder to maintain. It’s easy for the culture to be undermined. Even if you start with a great culture, as the organization grows, it’s easy for that culture to corrode. This myth that, “We’ve started great. We’re a great organization. We’ll always be that way,” is a dangerous thing to believe if you don’t have a lot of intentional thought behind this thing that you’re trying to produce.

You said something interesting about metrics. Could you expand on that about metrics and getting too rigid? Can you give me an example?

I saw one that was interesting. There was a value of humanity. That was one of the values they had. There was a certain behavior about recognizing other members of the organization. They were trying to put in a metric that said, “To meet your qualification or exceed expectations, you have to have recognized someone else a minimum of three times.”

That may sound good, but that has a danger of producing a very mechanistic, “I have to go recognize somebody, so I’m going to get my three recognitions out of the way quickly and then be done with it.” Your minimum becomes a maximum, and it builds resentment because it’s not authentic. Culture is something you want people to live. When people do it that way, they’re saying, “We’re going to do our work, and then we have the culture over here to the side. We want these value things. We want people to do it like checkboxes.”

 

That undermines the culture. You want the values to be lived organically. You can have some metrics about employee satisfaction, employee engagement, turnover, and things like that. If you try to turn specific behaviors into specific metrics as a way of producing culture, you’re probably going to come up with something more robotic and mechanistic than something organic and authentic.

I could see how you missed the mark in doing that and undermining it. I got a puppy and tried to train it, housebreak it, and so forth. The puppy has four paws on the paper, but it still misses the edge of the paper. That’s what this reminds me of. I’m like, “I checked all four paws are on there.”

There’s a tragic example of this. There was a hospital where they were concerned about how long it was taking to move patients from the emergency medical services vehicles through triage. They tried to put maximum times to move people through triage. They put draconian compensation consequences if those triaged metrics weren’t met. What happened as a result of that?

You could see that what they were trying to do was noble. They were trying to build a culture of attention to patients and move people through efficiently so they could get better care, but the metrics and the compensation measures they used caused the nurses to say, “We’re not letting patients off the vehicles until we know we can move them through within those timeframes.”

The consequence was people died. Ambulances were lined up outside the hospital because they couldn’t offload their patients, which means there weren’t enough ambulances out on the road and people weren’t getting the care they needed as quickly as they wanted. It was a good objective with a metric that made sense, but the incentives they put in place were so awful that they undermined the objective they set out to do.

That is tragic. Let me ask you this. If you’ve got a business and you want to create a vibrant business culture because there are all kinds of good things that come from it, how do you go about examining your culture? Where do you start?

There are few places. I’ve created a Culture Analysis Canvas that helps with this, but you go through and do a pretty detailed analysis of how you behave in the organization. How do you make decisions? How do you run your meetings? What behaviors do we recognize? What behaviors do we punish? How do we share feedback? Using the example I gave before, if you have a system that produces things about productivity when you say you value safety, you’ve got to examine that, if you say, “We’re about customer service,” but it’s all about speed is what your systems are trying to promote.

You want to try to work with people to bring them into the culture. But if it's clear that a person is a cultural misfit, move them on. Click To Tweet

For instance, you see this a lot in call centers. People want you to even ask, “How was our call today?” When the incentive and the system built for the call center is to get either a number of calls a day or a limited amount of time per call, what happens is you don’t get a resolution. The customer winds up having to get on three calls in order to get their answer resolved. You wind up with this negative customer satisfaction on what is meant to be a customer service system. The system kills your value because it’s built on efficiency and productivity, not on customer experience.

You’ve got to look at your systems and say, “What values are we showing? What are we prioritizing with the way these systems are done?” and then your incentives. There’s a concept called psychological safety like, “Is this a safe place to make mistakes? Do people support each other? Is it a safe place to give ideas?” When you do all that analysis, what will happen is you’ll see the values that are lived rather than what’s stated because it’s easy to say, “We’re all about this great stuff,” but when you look at how people behave, how they make decisions, and what behaviors your systems produce, you can say, “This is what we’re valuing.”

You then have to say, “Is that what we want to value? Do those values produce the behaviors we want?” If not, you’ve got to revisit those things. You got to get clear on the values, share those values, share the behaviors with people, and then make sure your systems and incentives are aligned. When I say informal signals, that’s who gets to go to the golf game with the president, gets invited to lunch, and gets to go to the good client.

Those are things that you can say. Our performance management system says it’s all about X, Y, and Zed, but the person who’s a sycophant who sucks up to the president gets the best work. Those informal signals communicate to the staff more than probably anything else about what’s really valued. You got to be very intentional about what you’re signaling. I had a client once. They did great work on their values. It’s detailed, spectacular work and aligned a lot of their systems, but they had a problem. They had this one salesperson who was responsible for a huge amount of the sales but was a disaster culturally. It was disruptive.

You’ll read in the literature where people will say, “If someone doesn’t align with a culture, fire them right away.” Even the people who are negatively affected by this person went, “This person’s responsible for 25% of the sales and the company. If she goes, people lose their jobs.” There was this interesting conversation because they acknowledged that we’re signaling that money is more important than our culture because we’re letting this person still do this stuff. The solution we came up with, they didn’t like the idea at first because it was going to cost them money, but it wound up saving a bunch of money.

We hired someone to act as an executive assistant for that salesperson. The salesperson was not allowed to deal with the other staff. All that person’s communications had to go through the executive assistant. What happened? What did that signal now? The first thing was we were signaling that money is more important than culture. Now, the company was putting money to help put a barrier between a negative cultural influence on the staff while preserving the revenue that that person would come in.

That signaled that this is an organization that’s dedicated to the values to success and the preservation of everybody’s jobs. That company won the best place to work in their category for many years running since then. What you signal becomes super important. That shift said to everybody, “They’re serious about this now.” It aligned a lot of values about loyalty. That was a great story.

 

Everybody, at some point in their career, has experienced a situation where the words on the mission statements say one thing, but the behaviors and the norms that are being accepted in the company are something else. It could cause this disintermediation and even cause you to question your own values as far as, “Is this a place I want to work? Can I continue? How can I make a difference here?” It’s interesting.

It’s like the boiling frog. One little thing happens, and another little thing happens. You’re working hard all day. I’m very sympathetic to the entrepreneurs who have experienced it. They’re busy. They’re trying to keep everybody employed. They’re trying to service their clients. One little thing happens, and it’s not a big deal. Another little thing happens, and it’s not a big deal. Before you know it, all of a sudden, the culture drifted away from what you thought it was.

When that happens by surprise, it’s sad. You then got to get intentional. I always try to encourage people to be super thoughtful about it and be intentional as early on as they can. Protect that culture like you’re protecting your life because when you can do that, that will give you a competitive advantage in the labor and customer markets. It will make you more efficient.

For an organization, that inadvertently happens, as you said, people discount these small behaviors like, “We’re making an exception for so-and-so because they’ve got great sales accounts. They’re bringing in all this revenue. The customers love them,” or whatever their specialty is. It doesn’t have to be sales. It could be marketing, finance, and a lot of things. Once things have drifted from where a business owner says, “This is what I want to be. This is what I want my legacy to be. This is what we want the business to stand for,” you need to take those steps like you described where somebody is taking a cold, hard look at all the systems and all these different components. How do the employees trust management at that point when they’ve allowed this stuff to drift so far?

I won’t say it’s easy because it’s not. This is about a whole bunch of things with entrepreneurs. One of the things about entrepreneurs is they’re creative and are always thinking of new ideas. There’s a joke I observe a lot with entrepreneurs. You try to introduce something new into the organization, and everybody puts their heads down and ignores it, thinking it’s going to go away, like the last 73 other new initiatives that were introduced and let die. When you talk about a new cultural thing, that’s the first thing that will happen. People will go. “Right.” You have to have patience with it.

I work a lot around 90-day planning. When you do things in your first 90 days, there will be cynicism. If in the second 90 days you continue with it, then people are like, “This isn’t like all those other things that dropped off the table. They’re serious about this one.” That’s one piece. The second piece is to be candid.

Some entrepreneurs feel it’s an unsavory vulnerability to admit that you made a mistake, but your people appreciate it if you said, “Three years ago, we had a culture like this. COVID and all these things happen, and our culture got away from us. Candidly, I took my eye off it because I was concerned about keeping jobs and servicing clients. That’s my bad. I want to get us back to our culture or move us forward to a culture that will help us achieve our purpose in a stronger way. Because I’ve seen that relying only on me for that is dangerous, I want to enroll you. I want you guys to help both define that culture and preserve it. These are the steps we’re going to take to get there.”

Your intentions don't matter if they're not being communicated. Click To Tweet

If you have that vulnerability, talk about it. Build the values and the behaviors. Build rituals and practices so that everyone sees that the values are being preserved and that you reward people on values. You give criticism based on values. You performance manage to values. You take jobs and don’t take jobs based on values. People start to see that this is a central feature of your decision-making.

Over time, you’ll start to shift it. The hard piece in this, because when you’ve had this kind of cynicism and things that have happened over time, you’ll sometimes hear people in this cultural world talk like everything is peachy keen and all you have to do is everyone will sing kumbaya and come along with it. It isn’t how it happens. There will be people who won’t go along for the ride. One of the strongest things you can do to build your culture is for someone who is not culturally aligned, you exit them to find a place where they are aligned.

When that happens, people will start to see that, “He was serious about this.” The irony is the people who care about the culture when you make that move will be highly appreciative. I don’t say do that right away. You want to try to work with people to bring them into the culture. If it’s clear that the person is a cultural misfit, move them on. The rest of the team will be like, “About time. I’m so glad because now we’re more a unified unit.” I had a client that did that. The transformation in the culture since this one poisonous person left has been incredibly dramatic.

The thing is, the people know who the non-contributors are who are not pulling their weight and being toxic. One thing is that the business owner is not going to just be vulnerable. I love the script that you laid out here. That is a wonderful way to say, “I need your help,” and doing it in a way that doesn’t show weakness, but if anything shows, “We’re in this together. It’s not just about me or you working for me. We’re working with each other.”

Be willing to get the feedback because the folks that are on the front lines know what’s happening. They may have been trying to warn the management and the business owner. They don’t want to hear it for one reason or another because maybe the person that they’re raising a red flag about is a relative, a close friend, a golfing buddy, or something like that. It’s like, “That’s the best friend of Bill’s. You can’t do that.”

That’s the kind that signals things.

People may inadvertently be signaling and not realize it.

 

I had a client not so long ago. It was fascinating. We laid out, and this cultural thing floated out of a strategy piece. We are developing their strategic plan. We laid it all out. I involved the whole executive team in its creation and started rolling it out. Before we rolled it out, it was something weird in the conversation. I went, “What’s going on?” One person spoke up, and then all of a sudden, the flood gates opened. We have to change the entire strategic plan because all of a sudden, all this cultural stuff came out.

It was so interesting that no one had the courage to share their concerns about the company until an outsider like me came in and provoked some conversations about clarity, discipline, and decision-making. All of a sudden, it emerged. The owners are great people, so it was a shock to them that all this stuff came out because they thought that they were open and welcoming, but they were because of their desire to grow and develop their product and all that stuff was signaling that they didn’t want to hear that stuff and just wanted to focus on business development.

That wasn’t, in fact what they cared about. That’s why this part of the conversation is so important. Your intentions don’t matter if they’re not being communicated. I had one other story on this. I had a client who had spectacular success. The owner and the leadership team were deciding to have this big celebratory event. This was a few years ago. They were going to buy everybody in the firm brand new Apple Watches, but here’s what happened. They were going in and having these meetings that everybody could see they were going in and having these meetings.

The culture started to deteriorate over this three-week period because everyone thought there was going to be a blood bath. They thought all these leaders were having meetings because they were going to start cutting people. They were planning a celebration of success for everyone. It was like, “We were trying to do something wonderful for our people because we appreciate and value them so much, and they think we’re going to get rid of them.”

You don’t know how simple it is to signal the wrong thing. One of the things we are genetically hardwired as a species is that if a person is in a position of power or authority, if their actions can be interpreted in two different ways, we will instinctively choose the least favorable interpretation. One of the real requirements for a leader is to be super clear.

I believe that there’s research to back that up about the decision-making bias we innately have. Communication is super high on the list of every leadership skill that needs to be acquired and continuously learned because people don’t realize how they signal. Especially when it’s coming from a position of authority, that can be very scary because people have a lot riding on it, like their livelihoods, families, and everything that goes with it. They don’t have passive income necessarily to pick up the slack if they lose their jobs, especially if it’s a more senior position. Those are some great stories, Warren. Thank you for sharing that.

Besides the communication issue, which is key for being able to signal intentions and being aligned with the values that the message that’s going out is consistent with the value, are there other common mistakes that need to be avoided when somebody is trying to get the wheels back on the train here with their culture and make it a vibrant organizational culture?

Be consistent and committed to your values. It doesn’t mean you have to be perfect. It doesn’t mean your every decision has to be right. It means you are constantly demonstrating that your culture and your values are central to all your… Click To Tweet

One of them is thinking that if you said it once, that’s enough. A lot of entrepreneurs fear being redundant and repetitive, so they don’t talk about it enough. They’ll say it once and let it drift. You have to be consistent, constant, and intentional about reinforcing that this is what we’re about. Assuming that people know is a terrible thing. The second one is the leaders lead. If you are not consistent with the values, if you’re trying to get everybody else to follow the values and you’re not following them yourself, that’s going to be a problem.

That doesn’t mean you can’t make a mistake, but it does mean if you fail to live up to one of the values, you got to own it. Acknowledge and share it. Say, “I dropped the ball on that one. I did not live the value in that case.” Here’s another mistake. This is a harder one to convey. I use that kumbaya example. Too many people think this culture value stuff is all touchy-feely. It’s not. You’re going to know when you are living the values when you have the hard conversations about it. When something goes wrong and you say, “We didn’t live our values there,” you’ll hold it to a higher level.

I had a conversation at a client’s place one time. Somebody was trying to use the values almost like a weapon. They were saying, “So-and-so didn’t live that value.” I went, “Interesting.” I pulled out their values, and it says, “One of the values is to support each other when you see they are in need of support. You’ve got another value, which is to take ownership of the culture in the organization. You’re telling me that you observed them struggling with that and not succeeding. You didn’t offer to support them, nor did you call out the fact that there was a values problem going on. Where were you on the values?”

That conversation got interesting fast. There’s that old saying, “Nobody wants to be on the plane with a pilot who lands successfully 95% of the time.” You want to be consistent with this stuff. Values are like ethics. They’re easy when they’re not challenged and when there’s nothing hard, but they show up when they’re tough and when you have to have a hard conversation about it.

If you experience your cultural conversations as all light, fluffy, yippee ki-yay stuff, you’re not deep enough. There should be some hard conversations sometimes if your values are well-chosen because there should be some difficult conversations, even that productivity versus safety, “It has been six days of snow. We’re three days behind on our targets. How do we balance this?”

The answer isn’t always obvious. You’ve got to struggle with, “What are our hierarchy of values? What are we willing to absorb further into those values? Are we willing to lose money in pursuit of our values? Are we willing to walk away from clients if it means living true to our values? Are we going to lose a skilled person if we’re going to stay true to our values?” It’s a tough mistake to get your head around, but the sign is if all the conversations are light, fluffy, and not meaningful, you’re not going deep enough.

Warren, if there’s one thing that’s essential to building a vibrant organizational culture or one thing that’s non-negotiable, what would it be?

 

It’s got to be consistency. The minute you signal that you’re not committed to it is the minute everybody says it’s bull. It doesn’t mean you have to be perfect at it. It doesn’t mean every decision has to be right. What it means is that you are constantly demonstrating that your culture and values are central to all your decision-making. If you continually show that, you’ll be inspiring other people to do the same. There’s a philosophical thought on this too, which is one of the reasons I’m committed to this work. This isn’t a political conversation or a social one, but there’s a vacuum in ethical leadership.

There are very few places where people have conversations about their values. People are not as committed to faith-based institutions. Political leadership is not a great model of consistent moral leadership. Where do people look to model and learn how to make values-based decisions? There are not a lot of places. People are looking to their workplaces as a real cultural center point. When you run your business as a place that models that our values inform our decisions, you’re giving other people both permission and skills to do that in their own lives.

I believe that the more that organizations use this as a central decision-making tool, the more that will spill out into people’s personal lives, and that can only make our communities better. It isn’t just about personal preferences and things. It’s about what we value and when we are going to make hard self-sacrificing decisions for that. If people build those muscles, we as a society win as a result.

Values do matter. If you don’t have any values, then anything goes. It’s a downward spiral into chaos.

It’s also even when people have their value. What happens a lot is people sometimes have values, but there’s this thing like, “I let it go because of that.” Our culture has drifted in an unhealthy way to an ability to rationalize compromises on our values rather than engaging in the hard discipline of saying, “I’m willing to sacrifice for my values instead of rationalizing away from them.”

That’s a great point. That’s situational ethics, making exceptions for this, that, and the other, and at what point do you hit bottom and say, “This is right. This is wrong. There’s no gray here. We’ve hit a hard wall. This is a hard no. If you don’t stop here, where does it stop?” There’s so much here, and I’m sure we could continue this conversation. I’d like to, at some point. Now, I like to thank you so much, Warren, for your time.

This has been an interesting journey to better understand how to create a vibrant organizational culture that can transform a company and create a business that matters. If you like more information about Warren’s Business that Matters Playbook or his podcast, the Business that Matters Spotlight, you can find that information at BusinessConfidentialRadio.com. If you know someone who could benefit from this interview, and I’m sure there are a lot of organizations, even volunteer organizations, because that’s a whole other conversation, please tell them about this episode. Share the link and leave a positive review. Thank you for reading.

 

 Important Links

• Business that Matters Spotlight
• Business that Matters Playbook
• https://WarrenCoughlin.com/
• https://www.LinkedIn.com/in/warrencoughlin/
• https://www.Facebook.com/abusinessthatmatters
• https://www.Instagram.com/warren.coughlin/
• If you liked this interview you might also like these Corporate Governance and Culture episodes

 

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