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A healthy culture can give you a competitive edge, drive value into your business, and help your company stand the test of time.

Employer strategies

M&D Companies: A Strong, Vibrant Culture Often Means Strong, Vibrant Profits

  • Tylan Miller
  • 9/30/2016

I have the privilege of spending the majority of my working hours inside our manufacturing and distribution clients’ businesses. I’m there primarily to help them with their finances, so I see firsthand how these companies make money and how they lose it. Being in the midst of things, I am also privy to a wide variety of cultures and leadership styles — and I’ve come to see that there is a direct connection between culture and the making and losing of money.

From my experience on the job, I can tell you this: Of the dozens of companies that I work with regularly, those with a strong, vibrant culture tend to have strong, vibrant profits. And companies with strong, vibrant profits hold their value and better stand the test of time. I can also tell you that culture and succession are inextricably linked. Whatever you intend to do with your business, whether pass it along to the next generation or sell it to the right buyer, culture will play a big role in that plan — like it or not. It really is one of the secrets to long-term success.

Culture is a growing focal point for M&D organizations

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A healthy culture gives a competitive edge

Culture is a funny thing. It is hard to pinpoint precisely what or who drives it; it can’t be bought; there’s no return-on-investment calculation for it. It’s squishy, hard to quantify, hard to tell if it’s getting better or getting worse. And yet, when you go from one company to another, you can palpably sense the difference in cultures immediately.

As a “gearhead” in a former life, I was always amazed how two identical Chevy V-8s of the same size could have drastically different horsepower output. A standard Chevy V-8 out of the box might produce 275 horsepower. That same engine with some fine tuning, adjustments, and expertise can produce up to 400 horsepower (even more in exceptional cases). Like the Chevy V-8, M&D businesses are pretty similar on the surface, but look under the hood and you’ll see that it’s their culture that gives them their financial horsepower.

So how do you rev up your company’s culture? Here’s what I have observed at the high-performing businesses I work with:

They look to visionary leaders

There are managers, there are leaders, and then there are visionary leaders. What distinguishes the visionary leader is the uncanny ability to focus and execute on the organization’s dreams yet manage the day-to-day grind that drives the cash flow necessary to stay in business. The visionary leader can rally everyone behind the dream and inspire them with an idea that is larger than themselves. He or she uses culture to align the day-to-day activities and interactions of team members with overall business strategies.

They make culture a deliberate strategy

A focus on culture does not come naturally for most businesses. Those with strong cultures developed them by emphasizing and nurturing them. When I walk the halls or the shop floors at a client site, I observe the employees’ workspaces. In organizations with strong cultures, I typically see common signs, sayings, and other cultural “paraphernalia” that define and announce their cultural values and traits. These are indicators that the company makes a deliberate effort to mold the culture — but they must not belie reality. It’s one thing to pin up a poster and an altogether different thing to live the culture from the top down. A high-performing organization is purposeful in driving its culture strategically rather than having it haphazardly shaped by other forces and influences.

They are hard on processes, not on people

When things don’t go as planned, it’s natural to want to place blame squarely on someone else. It’s easy to point the finger at who we think is the problem, when more often the problem is a what. Nothing does more to degrade morale than a culture of blaming people and naming scapegoats. Companies that have strong cultures tend to assume positive intent when it comes to the human factors and are relentless in their quest for continuous improvement when it comes to matters of process.

They collaborate

A strong culture fosters and promotes collaboration. Collaborative work environments are the spawning grounds for the ideas that drive progress and problem solving. But collaboration is more than being in the same room together. It involves breaking down traditional hierarchical business structures that prevent real change. Most companies give collaboration the obligatory lip service and install the standard suggestion box and call it good. In a truly collaborative work environment, free thought and ideas are encouraged and celebrated at all levels. More important, there are processes in place to actually implement the good ideas that are offered. Ignoring a good idea is the fastest way to build a culture of stagnation and inertia. Remember what Harry S. Truman said: “It’s amazing what you can accomplish if you don’t care who gets the credit.”

They provide opportunity

Most business owners I know agree that the single largest challenge they have is finding and keeping good employees. Naturally, the high performers will master their tasks quickly, and if they are not given opportunities to advance, they move on to where they see more opportunity. Providing opportunity is more than just promotional titles. It is about culturally embracing the entrepreneurial spirit that most high performers have. It’s having a culture of inclusiveness and an environment that encourages and recognizes their investment of time and energy into the organization.

How we can help

A strong culture is the engine that can help your business reach its true potential and drive greater value. Just like a finely tuned V-8 engine will outperform its factory counterpart, a finely tuned culture can help you outperform your competition. It’s never too early to start planning for the succession of your company, and culture plays a big part in that plan. CLA’s manufacturing and distribution professionals can help you plan for a variety of possible succession options and leverage your culture to build value into your business.