CEO Perspective: Why Corporate Culture Is Critical for an Organization’s Success
Many companies tout their culture as what separates them from the competition and makes them a great place to work. But defining a company culture is a very different thing from creating and continually reinforcing it.
“We’re not going to have a culture because senior management says, ‘This is our culture.’ It really has to bubble up throughout an organization and everybody has to buy into it. It’s not going to work if it’s not real,” said Lou Iglesias, chief executive officer, Allied World Global Insurance.
Iglesias discussed what constitutes an authentic company culture, and why culture is so important to an organization’s success, especially today as many organizations contend with talent recruitment and retention challenges.
R&I: What is “corporate culture” really referring to? What are the key components?
Lou Iglesias: The components will be different for every company, but culture in general refers to the way a company operates.
I believe culture refers to how a company goes about meeting its goals. Different companies will take different approaches based on their beliefs. This would include how we want to be viewed by our customers or our reputation in the marketplace, but I think the most important component is the cultural effect on our people. A positive culture where our people know they are valued will lead to a strong performance.
We can think of our organization as a responsive and entrepreneurial company. A specialty company. A company that treats its employees well. However, the culture is really driven by the way employees engage with their work and drive results for the company. Culture and performance are very closely tied.
R&I: Can you describe the relationship between culture and performance? How does one drive the other?
LI: Clearly culture directly effects performance. Culture will affect employee retention, organizational reputation, customer satisfaction – all of which go to the bottom line performance of any company.
Companies like Allied World operate with a flat structure and more of a “team” environment. Individuals are encouraged to take initiative and are held to high standards. This allows us to be more agile and respond faster to changes in the market.
R&I: What role does company culture play in attracting and retaining talent?
LI: Different people will be attracted to different environments. Speaking from experience, a flatter structure allows us to be very nimble, but it also places more responsibility on each team member and ultimately places a premium on working as a team.
In an environment where everyone can clearly see their impact on the bottom line, they have opportunities to use their decision-making skills and see the results of those decisions.
If someone likes our culture, they will join us. But it’s not for everyone. Some do not necessarily need to see their contribution to the financial results, and that’s fine, but it may not fit our particular culture.
This is such a timely conversation because there’s so much discussion going on — not just in our industry, but in every industry — about the importance of culture as it pertains to Millennials. They care very much about culture. They want to be a part of building something, and to be appreciated for their work. A culture that enables that will always be attractive to talent.
R&I: How do you cultivate and reinforce the culture you want to create at your own organization?
LI: One of the things that we do is share the results of individual divisions with that team- encouraging our people to understand their results. At the end of every quarter, we go through the P&L results of each of our 34 divisions so that each one can see how they made an impact on the company as a whole.
Importantly, this process is not meant to call people out for doing a poor job or even an excellent job. It is less about judgment, and more about helping our people to make the connection between their individual efforts and the overall success of the organization.
People who want to see and understand their contribution are people who are curious, usually highly motivated, and who want to better understand the insurance business.
R&I: How have your previous experiences informed and shaped your perception of a good company culture?
LI: Going through my career, I can identify what has motivated me or has had the opposite effect. Looking back over the years, I thought about what made me feel good about working for a particular company, and what kept me enthusiastically engaged in my work. I’ve tried to capture those things and recreate them.
Of course, there have been negative experiences as well. Those have a way of seeping into organizations, so it takes a conscious effort to avoid going down a negative path.
The fun part about culture is it is not a science. It’s the “art” part of our business. It is more difficult to quantify but is just as important as everything else that we measure.
Whether it is in personal life or in business, I think in the end it comes down to treating people the way you want to be treated. That translates into how you want to run your business as well. When a team succeeds, everybody succeeds. To me, that’s the basis of a successful culture. &