Culture AND Performance Why You Need Both

Whether you have 5 or 500 employees, a leader needs to balance a strong culture with performance for sustainable success of the organization.

After watching my home town team get obliterated recently, The Chicago Bears were defeated by the GreenBay Packers, again, the head coach’s comments struck a chord with me. Matt Nagy spoke about the quality of the culture in the locker room. That the players care for one another. That they know what to do on the field. But in the end, the overall performance of the Bears this year will most likely lead to not only a head coach opening but a general manager opening as well.

Small service companies, such as HVAC contractors, building and remodeling contractors. small distribution and representative companies are especially vulnerable to poor culture affecting performance. The owner is in plain sight to everyone and how she operates is how the culture continues to live within the company.

Great Culture Needs High Performance Values to Succeed

I have worked with companies that have great culture but performance was always a question. Everyone bought into the overall mission of the company. Supported it. Many lived it. While culture is needed to bring together like minded people and have a healthy work environment, without results — meaning sales and profit — a true desire to perform well — all you have is a mutual admiration society.

Can a company like that be considered a success? They are making products, selling them, people are working, making a decent wage, so yes it is successful. For now. And possibly for years, even decades. Eventually the competition will meet them and overtake them and at some point the company will find itself struggling to develop new products, struggling to generate sales, struggling to maintain profits. Without a drive for performance, culture keeps you on life support.

Below is a chart that might help explain the balance of Culture to Performance.

Explaining the boxes

Low Culture, Low Performance

The box in the lower left is labeled “Disaster”. This should be self explanatory but may not be that obvious. Startups can start here but need to move quickly either up or sideways. Without a change to improve culture or performance the organization is doomed at the outset. When you are a startup you can create a culture out of nothing, no baggage. Existing companies have to contend with what is there and move to actively change it to succeed. See this article in the Harvard Business Review about a popular smoker company and how the culture affected its overall business. Some companies will eventually move here from the other boxes usually as a cascade of problems overwhelm management to solve.

In this group failure or success is highly dependent on the leader and the ability of that leader to keep the end goal in sight and be willing to shift people and resources around to achieve that end.

Low Culture, High Performance

We have seen this in a dozen movies about Wall Street — the Wolf of Wall Street, Greed, also at internet startups, and more. This is the area of Short Term Success. Performance (meaning cash) is necessary to keep the doors open, pay the bills, pay the employees, but these tend to be more crash and burn types of organizations. They can achieve some initial success. Real life examples include Adam Neumann of WeWork and Elizabeth Holmes of Theranos. For those old enough, most of the internet bubble companies that are no longer around from the crash of 2000 fit this category.

In this group you will find employees who are protective of their work, not willing to share, quick to blame others. They bring in the money but the havoc and disruption eventually crumbles the company.

High Culture, Low Performance

There are a lot of companies of all sizes in this box. Make enough money to satisfy the owners and the employees, nice work environment, happy people. Companies can get stuck here for ages as well as employees. Companies that have strayed from their original purpose, have no specific visions for the company, loose on goals and deadlines to achieve them. The value of the Moral Victory is high on the balance sheet.

In this group employees are not pushed to do bigger and greater things. Probably the owner is the same. Many original engineer founders are in this group. They are more happy to tinker than to set about making plans for growth.

High Culture, High Performance

This is the sweet spot of the chart. Long Term Success. But there is probably less than 10% of the companies in this box. You might put Delta Airlines, Amazon, Tesla or Zoom in this category. The owner/leader is driving a high culture of who they are but also keeping people accountable to improvement and advancements within the company and in the market. Companies in this category generate sales, profits, bonuses, opportunities, development, and more. The trick is to figure how to stay here year after year after year. This is the most challenging, but the most rewarding balancing act for the leader.

The demise of a High C, High P company usually starts with a decline in culture, cutting corners, bad decisions that are covered up, bad behavior that is covered up. Once you are on the downward slope it is extremely hard to regain the culture. From there you wind up in one of the other boxes. Or not in a box at all.

Culture is a top down thing not grassroots up. Some might call it tone of the owner or CEO. However he or she works is how the rest of the company will work. A team may have its own culture but when the team leader is promoted or leaves the culture will change. Similar to when one company is bought by another company. The company being bought will eventually need to follow the culture of the buyer.

While I appreciate culture and deem it a necessity to long term success, there always needs to be a component of striving to do better, striving to develop the owner and the employees, and striving to delight the customer.

Originally published in Medium - March 1, 2021