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Corporate culture is a community best described in sociological terms: sociability and solidarity. (See Rob Goffee and Gareth Jones, "What Holds the Modern Company Together?" Harvard Business Review, November-December, 1996.) Sociability comes naturally to most people. They want to socialize in a way that develops relationships with no expectation of gain. In these relationships, people regard others as equals who share their attitudes, interests or values. They help each other, talk, laugh and cry together. Would this be a good culture for a financial planning firm?
A high-sociability culture fosters teamwork, information-sharing and a spirit of openness to new ideas. People often work harder to help colleagues succeed because everyone wins. The negative side of a highly social organization, however, is tolerance of poor performance, an exaggerated concern for consensus and an unwillingness to disagree. Often, an organization like this seeks the best compromise rather than the best solution.
An organization with high solidarity can be compared to a professional sports team: It generates a high degree of focus on a few strategic goals, a swift response to competitive threats and a general intolerance of poor performance, even to the point of ruthlessness. If the organization's strategy is correct, this focused intent and resulting action are overwhelmingly effective. Would high solidarity be better for a financial planning firm?
On the bright side, ruthlessness can reinforce the positive as-pects of solidarity; everyone must perform to the very same set of very high standards. The "equality of suffering" that results helps build community--just ask any former United States Marine. When employees are all held to the same standards, they often build a strong trust in the organization, because the company cuts no special deals for connected or favored employees.
This kind of culture can, however, lead to business suicide if the wrong objectives are chosen. The firm may be doing all the wrong things really well--as everyone marches smartly off the cliff. From an individual standpoint, cooperation only comes when the advantage is clear. The infamous radio station "WII-FM" (What's In It For Me?) plays loudly in the background here.
THE LOVE BOAT OR DAS BOOT?
Back to my first question-does a big cruise ship have a high-sociability or a high-solidarity culture? How can you use this information in your advisory firm? To find out, ask everyone in your organization the following questions and score the results:
Sociability Test (Answer each question low = 1; medium = 2; high = 3.)
1: People here try to make friends and keep their relationships strong.
2: People here get along very well.
3: People in our group often socialize outside the office.
4: We learn more informally than we do through formal training.
5: People here really like each other.
6: When people leave our group, we stay in touch.
7: People here do favors for others because they like one another.
8: People here often confide in one another about their personal matters.
Solidarity Test (Answer each question low = 1; medium = 2; high = 3.)
1: Our group understands and shares the same business objectives.
2: Work gets done both effectively and productively.
3: Everyone knows what his or her job is and does it well, or else.
4: Our group takes strong action to address poor performance.
5: Our collective will to win is high.
6: When opportunities for competitive advantage arise, we move quickly to capitalize on them.
7: We share the same strategic goals.
8: We know who the competition is--and we will beat them.
The cruise ship scores as a high-solidarity group, focused on efficiency, rigid structure and shared goals, with a strong response to address poor performance. For example, the cruise director said: "This will be the best cruise you've ever been on!" and he believed it. This really is more like Das Boot than the Love Boat--and it works.
FOUR CULTURES
Organizations can be roughly fit into four distinctive cultural categories, based on the combination of sociability and solidarity found in each (see "Which Style Suits Your Firm," below).
The networking organization works in the hallways and in after-hours socializing. People move from job to job with little formal training, and flexibility is the rule rather than the exception. Because there is little commitment to shared business objectives, employees often contest the use of resources, budgets and remuneration. Few planning firms start as networked organizations, but one I worked for ended up that way, going from startup to meltdown in about four years back in the mid-1980s.
The mercenary organization is low on socializing and high on data-rich email. Very little socializing happens outside the office. Most, if not all, communication focuses on business issues for good reason: Individual interests coincide with business objectives. Further, these objectives are linked to clear, defined tactics to beat the competition. Priorities are decided quickly and action occurs with little debate. In the 1960s, I worked during college on a national manufacturer's local sales team--a quintessential mercenary organization.
Working for a fragmented organization sounds pretty bad. But every university and most highly successful research-and-development and professional organizations such as law firms are fragmented. I helped found a fragmented planning firm back in the late 1980s. I learned that this type of organization might work for a shared office, but it won't work if you are considering centralized management and a "corporate client" model.
The communal organization would seem to have the best of both worlds--or does it? Many fast-growing startups quickly evolve into this culture where shared objectives are the norm. The corporate vision is often given front-office billing, evoking enthusiasm from employees. Intense personal relationships develop, often involving significant social events, even to the point of ritual. Not surprisingly, the "enemy"--the competition--is well identified, and efforts are focused on beating it.
There may be a built-in tension between solidarity and sociability in communal cultures. It's harder to find large commercial enterprises in this quadrant, as this structure is often formed and held together by a leader whose departure can leave the community "ship" without a "captain." Further, as the organization grows, high-sociability employees may oppose certain types of diversification or institutionalization. This culture works well for religious, political and volunteer groups. Can it work for a planning firm?
DON'T ROCK THE BOAT
In my March 2005 column ("No Chicken Little"), I described different types of competitive business models for advisory firms, including "rocket science" or expertise-based, "gray hair" or experience-based, "systems" or procedure-based and "commodity" firms. When we map these models against the aforementioned cultures, a communal culture fits best with the gray-hair and systems firms. The mercenary culture works well in the systems or commodity model and the fragmented or modestly networked culture can work for the rocket-science firm. In short, there is no ideal culture, just as there is no one perfect business model.
That said, is striving to change your firm's culture important? I suggest you first understand what sort of culture and business model you have. If there's a fit, you probably don't need major "cultural surgery." But keep in mind that constant effort is necessary to maintain relative market position using any business model. If you need to change your business model, then consider whether the current culture is appropriate.
The cruise ship's high-solidarity organization works well in an environment of well-known objectives. The crew won't make a mistake that sinks the ship. I won't change our firm's communal culture for fear of sinking our ship, either. If, in your case, the culture seems out of sync with the firm's business model, maybe it's time to perform a cultural analysis to see if you need to change. Just don't rock your boat for nothing.
Glenn G. Kautt, CFP, EA is an active financial planner and president of The Monitor Group, a wealth management firm in McLean, Va. He can be reached at kautt@themonitorgroup.com.
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