Perceptual Biases

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C O L U M N

B y S a r a h L . S i m o n e a u x a n d C h r i s L . S t r o u d

Sarah L. Simoneaux, CPC, and Chris L. Stroud, MSPA, MAAA, EA, provide consulting services to third-party admin- istrators and financial institutions through Simoneaux & Stroud Consulting Services. The firm specializes in strategic business planning, general consulting, industry research, customized brain- storming sessions and professional development workshops, and Webcasts for the retirement services industry. They are both past presidents of ASPPA.

Defining Corporate Culture So exactly what is “corporate culture”? Investopedia

defines it as

The beliefs and behaviors that determine how a company’s

employees and management interact and handle outside

business transactions. Often, corporate culture is implied,

not expressly defined, and develops organically over time

from the cumulative traits of the people the company

hires. A company’s culture will be reflected in its dress

code, business hours, office setup, employee benefits,

turnover, hiring decisions, treatment of clients, client sat-

isfaction and every other aspect of operations. [http://www.

investopedia.com/terms/c/corporate-culture.asp, last accessed on

June 16, 2014]

Many factors shape and impact corporate culture. Here is a list to start with, but you can do an objec- tive “cultural walk” around your office to develop your own list of factors.

• Corporate values; • Symbols (logos, jargon, status symbols like corpo-

rate cars or offices) • Environment (layout, community areas and open

space, desks, bulletin boards, objects and artifacts,

dress, how employees interact—tone and emotion, email etiquette);

• Organizational structures (flat or hierarchical, for- mal or informal lines of authority)

• Control systems (What is monitored and/or reported on? Where are the strongest controls? Where are the weakest controls? Are employ- ees rewarded for good work or punished for bad work?);

• Power structures (Who has “real” power? How are decisions made? Is power abused? Who are the “influencers”?);

• Rituals and ceremonies (rewards, celebrations, rou- tines, awards);

• Stories (reputation of firm, history, heroes and vil- lains, what new employees are told).

A strong culture also shapes how people work together and ultimately what they are able to achieve together. To support the culture, management should encourage employee involvement and accountability at all levels and exhibit consistency in applying company policies. Holding town hall meetings or retreats and conducting facilitated brainstorming sessions to solicit employee input are effective ways to keep employees engaged and informed. You can generate excitement by creating new rituals or a slogan or mantra—or simply just by hosting some fun activities. Social com- mittees (with revolving cross-generational employee members) that are given a budget are a great way to take the burden off management for generating ideas for social activities that appeal to all ages in order to build a stronger culture.

Corporate Culture and the Hiring Process There are a number of things you can do to

strengthen and evolve your culture. A good place to start is by reinforcing the firm’s mission and values,

Business Best Practices

A Strong Corporate Culture Is Key to Success A strong corporate culture reflects the values of the owners, the management team, and the employees.

It also reflects the company’s mission and has a direct impact on company policies and strategies.

The corporate culture defines how employees interact with each other and with clients and other stakeholders.

Successful firms exhibit strong and vibrant corporate cultures.

52 JOURNAL OF PENSION BENEFITS

or creating them if they do not already exist. The values are the cornerstone of your culture and should permeate everything you do, starting with hiring and firing. When you conduct interviews with pro- spective employees, you should not only consider the person’s technical skills but also whether the person is a good cultural fit and exhibits values consistent with the firm’s corporate values. Hiring like-minded managers and executives is especially important in driving culture. If the people at the top do not share the company’s values or demon- strate those values in their actions, it is likely they also will not hire people who fit the culture. The number one reason employees leave a company today is because of a bad manager. Bad managers create bad cultures.

An effective orientation program, which reinforces the mission and the values, and relates company history, goals, and strategies, should be created for new employees. Initially, equal time should be spent explaining the elements of the firm’s culture as well as teaching technical skills. Job descriptions, perfor- mance evaluations, and reward systems should all be reviewed during orientation, and each should contain references to the corporate values. Zappos, an online retail firm known for its extraordinary customer ser- vice, puts all employees through a four-week orienta- tion class, with an intense focus on company values. At the end of the first week, they offer employees $2,000 to leave if they do not feel they fit the cul- ture. Although the offer stands through all four weeks, less than 1 percent leave. Zappos’s process underscores how important culture is in attracting and retaining employees and living out corporate values.

Corporate Culture in Action Successful retirement services firms typically exhibit

the following six traits, with corporate culture being an important core element:

1. Corporate culture is strong and vibrant. 2. Strategic planning is an ongoing journey—

not an event. 3. The planning process is transparent and

includes top-down and bottom-up input and communication.

4. Values, goals, objectives, and strategies are clearly articulated and communicated.

5. Strategic implementation includes account- ability, metrics, and monitoring controls.

6. Strategic plans are aligned with core com- petencies, structure, hiring practices, job descriptions, rewards, and culture.

Strategic planning is a process that includes set- ting a strategic direction and figuring out ways to get to where we want to go. Sometimes it may be a fairly straight-forward path, and sometimes we know it might be a stretch. But what we often do not think about are the unseen obstacles that might get in our way, such as things in our corporate culture that might prevent us from maximizing our success. As author Kevin Craine says, “Corporate culture provides the human glue that can rally the collective energy of your company toward improvements and accom- plishments, or it can be the glue that fastens your organization to the way things have always been.” [DOCUMENT magazine, Feb. 2004, “Supporting Your Document Strategy”]

For a firm to be vibrant and relevant in today’s fast- paced world, the firm’s culture must be aligned with its values, strategies, and driving forces. For example, too much discipline at Apple would stifle innovation. Too many rules and policies for Ritz Carlton employ- ees would limit their ability to make decisions and respond quickly to hotel guests’ needs. If one of your firm’s values is continuous learning, then there should be a sizable budget for resources, educational oppor- tunities, seminars, webinars, credentialing, and other learning opportunities. If you value collaboration, then create task forces across departments and age groups or organize large group social events to encourage interaction. Create rituals and celebrate successes that reinforce your values.

Google is a great example of a successful firm that carefully aligns its corporate culture with its goals and strategies. Google is an innovative com- pany that promotes an employee-friendly, uncon- ventional corporate culture, which has earned it repeated high ratings on Fortune magazine’s list of “100 Best Companies to Work For.” Numerous perks and on-site services, including flex time, tuition reimbursement, free lunches, onsite doctors, oil changes, massages, and fitness classes, blend the line between work and home and encourage high productivity and keep people in the office longer. Employees can use in-office “fun slides” instead of elevators to go down to a lower floor, and conference rooms contain pool tables to promote creativity. The atmosphere is very appealing to creative, young, energetic employees and makes work fun, and the

BUSINESS BEST PRACTICES 53

rewards for Google are big in the way of new, inno- vative products.

Conclusion Firms with strong positive cultures experience many

benefits. It is easier to implement strategic initiatives

because these firms are better able to focus, change, and adapt. Morale is high, which makes employee recruitment and retention much easier—and happy employees translate to happy customers! Productivity is high, which yields higher profits. When a firm has a strong and vibrant culture—life is good! ■

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