HR can play a pivotal role in creating and sustaining a culture that contributes substantially to creating competitive advantage, writes Wayne Brockbank
HR departments and line executives in companies throughout the world struggle to define and create corporate cultures that serve as the basis for competitive advantage. How do successful HR departments define, create and sustain the competitive organisational culture? The good news is that the process for so doing is relatively straightforward. The further good news is that we know what the obstacles are and we know how to overcome them.
Creating the competitive culture
Step 1. Since the goal is to create and sustain the competitive culture, we must start with a clear understanding of what constitutes competitive advantage. Competitive advantage is what your company must do to improve the quality of life of your customers better than anything that our competitors might do. More crassly, but realistically defined, competitive advantage is measured by what a company does to get money out of its customers’ pockets and into its pockets, instead of into its competitors’ pockets; this is the so-called “wallet test”. Examples of this include getting attractive products to the market ahead of the competition (Apple) and ensuring the best customer service (Disney).
Step 2: With a clear definition of competitive advantage, we are then in a position to define the competitive culture. Defining the competitive culture starts by selecting the words that most accurately reflect your sources of competitive advantage (such as “fast and stylish innovation” for Apple and “courteous” for Disney theme parks). However, culture words must be further defined into specific behaviours that answer the question: How do our people need to individually and collectively behave so that customers take money out of their wallets and put it into our wallets instead of our competitors’? For example, at Disney theme parks, “courteous” has been defined in specific employee behaviours including smiling while making eye contact, approaching “guests” who appear confused and offering assistance, answering questions accurately until the guest is satisfied, and personally recognising and acknowledging children. When Disney employees exhibit these behaviours, their guests have a positive experience and pay for that experience over and over again. Thus, when you manage culture you are actually managing aggregations of behaviours and their antecedent patterns of thought. Culture management is not a side issue; it is not a nice-to-have issue. Rather, culture ultimately determines an organisation’s ability to meet the requirements of the marketplace.
Step 3. With the desired culture accurately and clearly defined, we then ask ourselves: How do we create and sustain the competitive culture? The good news is that the answer to this is relatively straightforward. With the competitive behaviours defined, we can then embed these behaviours in virtually all HR, organisational and leadership practices. We can hire and promote people on the basis of these behaviours. We can train and develop people in the requisite behaviours. We can measure them through 360s, through performance evaluations, and through employee surveys. We can reinforce the culture through financial and non-financial incentives. We can communicate them throughout the organisation. We can design work processes, information systems and organisational structures to reflect the desired culture. Through the application of these practices throughout the leadership hierarchy, we encourage leaders to serve as effective role models of the competitive culture. The disciplined integration of all practices around the desired culture is exactly what companies do that are effective at creating the competitive culture.
When the above three steps are followed and the above four obstacles are avoided, you will create and sustain the culture that will substantively contribute to your company’s competitive advantage.
Obstacles and solutions
One might think that the above steps move forward with relative ease. Unfortunately, several practices frequently inhibit a company’s ability to successfully embed the desired culture.
To help avoid these obstacles, I would suggest you avoid consultants who are trying to sell you a specific culture or generic competency models. Rather, define your culture in terms of what the marketplace requires.
Also avoid local definitions of culture. The question is not: How do we do things in my country, province or city? Rather, the question is: What do we need to do to win the hearts, minds and wallets of our customers wherever they may be?
Also avoid relying on one or two HR practices such as training or recruitment to embed the desired culture. Rather, design and implement the aggregate HR practice with a shared and disciplined focus on the desired culture.
Finally, and most importantly, avoid HR drift. Occasionally, HR professionals get trapped by what they have always done, by their legacy processes or by the belief that they must always do something new. The key to HR success is to ensure that cultural behaviours are clearly defined and that all HR practices are designed and delivered with dedicated discipline to create and sustain the market-centric culture.