Elements of High Performing People Process Type Cultures

by

Charles Krueger, Ph.D.

People Process Culture Chair, UW-Stout

This is a second draft of a paper about the elements of high performing people process cultures. The purpose of this paper is to help identify major components of high performing people process cultures. These major components will help to provide a common conceptual model that will facilitate the communication, research, curriculum development and teaching of high performance people process type cultures. The model is intended to be inclusive so that a broad range of culture related theory, tactics, strategy and examples "fit' into the model.  Our four elements of high performing people process cultures now include:

1. Core set of values and beliefs
2. All levels walking the talk
3. Processes and support systems developed to align with values and beliefs
4. Actions that rapidly create, facilitate and adapt to change

The outcome of doing the above four things well over an extended period of
time is that all people benefit in their personal development, financially and in the quality of their lives. Society benefits through the creation of useful goods, services and the creation of jobs.

1. Core set of Values and Beliefs:

What are they? How do they connect with a people process culture? Why are
they important to a business?

Outstanding organization cultures have some less observable yet systemic values that permeate all aspects of the organization. Most research indicates that these values are established by one person, or at most a few people. These values profoundly effect key events and decisions. Blanchard and O'Connor are authors who suggests that many people ( owners, top management, unit leaders, employees, customers, other key stake holders) can be involved in clarifying both mission and values (p. 134).  These core values have deep intellectual and emotional meaning which is shared by many throughout all levels of the organization. "Shared values are the soul of the culture" (Deal, p29). Implicit in the core values of a people process culture is the belief in people.

The core values of all people are important and all people working together will achieve more are the "soul" of the Phillips Plastics Corporation culture. It is demonstrated in everything from the architecture of its numerous facilities, to the programs that give back to the local communities, to the outstanding partnerships it has formed with educational institutions (Beck). This strong belief in people and Phillips Plastics Corporation's long term growth and profit (23% return on equity over the past 30 years) defines a "high performing people process" type culture. Researchers such as Kotter corroborate the importance of people as an essential cultural ingredient in organizations with sustained high return on investments. "We also found considerable more evidence that the high performers (organizations) have a value system that really cares about all key constituencies" (Kotter, p.52). In their book, Hope is Not a Method, Sullivan and Harper communicate the importance of core values and company success. "The reality is that companies with a strong sense of values are the most successful over time" (p64). They also discuss the complementary relationship of the people in the organization and the values expressed by the organization.  "People and organizations are inseparable; you cannot value your organization without valuing your people" (p.68).

At Nordstroms the value of "setting employees free" is critical to the success of the organization. Salespeople can make big dollar decisions that satisfy customers. At J.D Edwards company, one of the core values that helps to shape and maintain the culture is "care for employees, our most valuable asset" (McVaney, p 1). Working together to achieve more is expected at all levels of the organization and with all key constituencies. Larry Quadracci, president and founder of Quad/Graphics, says that "the fundamental attitude of his company towards employees is that we are all, in this thing together for the same thing-and that is to make money. And we believe that together were going to make more money than any of us individually can do" ( Levering, p22). In a people process culture, really caring about people includes making them a part of the organization's growth and profit.

Long-term growth and profit are the results of a people process culture.  The notion of all people benefiting translates into people working together to make useful products, serve customers, serve the public and provide outstanding jobs. In the past our emphasis on capital allowed organizations to view people as a lesser asset. Today, capital has become much more commonplace and accessible. Managers need to shift their priorities from running companies to optimize capital to running companies to optimize people. Today and tomorrow, knowledge is and will be the key resource. People carry the knowledge with them and they must act on the knowledge they have. Unless leaders can accelerate the rate at which people learn, their primary assets (people) will stagnate, and their competitors will out pace them (p.18 Degeus).

In his book, The Living Company, DeGeus underscores the importance of a common set of values in decision making. In his extensive research about long living organizations, DeGeus discusses how the early founders or managers in long lived companies used values to survive."  They knew, or sensed, that the life mission of a work community was not to produce a particular product or service, but to survive: to perpetuate itself as a work community. Their statements contained values and ethical rules akin to a modern 'statement of business principles' or to the basic tenets of a religion'" (p.108). In his discussion, DeGeus pinpoints one of the reasons why companies with a common set of core values contributes to organizational longevity. " More likely than not, in deeply troubled times when nobody knew the answer to totally new problems, the sharing of a set of common values helped companies to make choices to which the individual employees could subscribe" (p. 108). Having many people in the organization believing in the values is implicit in his observation. If people do not understand, believe in and practice the values, the ability for the organization to live through difficult times is impeded. NovaCare Inc., one of the largest providers to nursing homes and hospitals, built a common core of shared aspirations. In 1988, when the company was called In Speech, the only core value was mistrust. CEO John Foster recognized the problem and had the organization go through an exhaustive process of articulating its central purpose and core values. His managers and others practiced the core values and turnover in the organization was reduced by 50%. Their ability to attract and hire talent improved over 200% (Paine pp 115-117). In his book , Managing by Values, O'Connor states that " In a company that manages by its values, there is only one boss- the company's values" (p.55). He notes that the values become the basis for all decision making (p55). One of DeGeus's key points in The Living Organization is that companies must be cohesive with a strong sense of identity. This cohesiveness and a strong sense of identity are primarily a result of many people in the organization understanding, believing and practicing the core values. Having everyone understand, believe in and practice the core values leads to good decision making in complex and changing environments.

2. All Levels Walking the Talk

What is the Role of Leadership? What are the levels of Leadership?

In 1960 Douglas McGregor wrote his landmark book, The Human Side of the Enterprise. McGregor boldly and unabashedly outlines his Theory "Y" assumptions. These assumptions are clear statements that demonstrate the value of people and how believing in these values influences productivity. McGregor said that these assumptions "are not framed in terms of the least common denominator of the factory hand, but in terms of a resource which has substantial potentialities"(p48). Here, McGregor is talking about people and the need for managers to believe in people and practice theory Y assumptions to help people believe in themselves. In essence, McGregor was espousing a people process culture that is dependent upon the assumptions of leadership and how leaders go about practicing their assumptions. Part two of his book was titled "Theory Y in Practice." In this section McGregor discusses promotions, teams, climate, appraisals and staff line relationships. Although McGregor's theory was communicated in 1960, it is safe to say that many organizational leaders did not believe and practice Theory Y assumptions. Other early researchers such as Rensis Likert provided some powerful data which showed that believing in the talent of people and sticking with those beliefs and practices would ultimately lead to long-term growth and profit (Likert). 

Leadership in a high performing people process culture exists in all levels of the organization. Although a single person or a few individuals may create core values, leadership at multiple levels needs to model, coach and practice the core values. Employees also provide leadership; often at the direct value added level of a process or service. Take for example the employee who makes an individual decision to change a process and then encourages others to become involved in the implementation of the process change. Leadership like this, at the value added end of a business is important. It occurs naturally in a people process culture. Using the core values as a base, leadership at all levels encourages and facilitates change. At Nortstroms, the sales person who "steps outside of the box" to make a bold and creative effort to please the customer without fear of reprisal or ridicule is the norm, not the exception. In a people process culture, people at all levels look for business opportunities. These leaders at all levels, understand and trust some of the changes that are and will be thrust upon the organization. As they anticipate change, they help provide the vision of the future so that others can believe and understand the vision. Effective leaders energize their constituencies and enable these constituencies to act or perform in a way that aligns with the core values and moves the organization towards the future in a positive, purposeful fashion.

It is leadership's role at all levels to help everyone:

1. understand the core values
2. believe in why these values are important
3. practice and model the core values
4. communicate the core values
5. reinforce the core values

At Anheuser-Busch, it is the brewery floor worker who gave meaning to the quality and pride he felt about his job by telling a story which to him, demonstrated quality and pride. He told a story about 'ole Tripplesticks, August Busch, III.  "He was driving with a fleet of Mercedes the other day looking for a new brewery site. All of a sudden he yelled, 'Stop the car.' He ran over to a pick up truck and started pounding on the window. A farmer rolled down the window and said, 'Who are you?' "I'm August Busch III, that's my beer in the back of this thing, park it in the shade"(Deal, p. 30). To the brewery floor worker, Busch's behavior demonstrated quality and pride. Some how, some way, the core values need to be received, understood and internalized. Just having the values isn't enough. Using the values to guide decisions and actions is a condition of high performing cultures.

Different mediums need to be deployed to communicate the values. The message about core values needs to be repeated and the message needs to be communicated during propitious organizational moments. Bob Cervenka, President and CEO of Phillips Plastics Corporation, often talks about the need to over communicate the core values in a variety of ways. Leaders also must recognize when a support system like training or policy is incongruent with the core values. Leaders need to modify and adjust any support systems that do not align with the core values. Only through understanding, believing and practicing of the core values can this alignment successfully occur. At Phillips Plastics Corporation the core values of "all people are important" and "all people working together achieve more" are talked about and communicated in a variety of ways. They are repeated as essential ways to behave and the values are practiced by top managers. As an example, top management makes it a point to know everyone and talk to everyone with respect. This demonstrates that all people are important to everyone. If someone treats a secretary in a condescending manner, but displays respect for the CEO, it signals to people that there is incongruence of the practice with the value of 'all people are important." This in turn may decrease the belief in the organization's commitment to a people process culture. 

As DeGeus previously noted, leaders must carry on the core values through difficult times. Kotter and Heskett found that "performance enhancing cultures erode over time, either because they are not effectively passed on to the hoards of mangers needed in a growing business or because time and success and other factors blur people's memories about why they were successful in the first place"(p.144). The stories, successes, failures and history need to be communicated! It is important to note here that leadership still can and does play "hard ball" in a people process culture, but they do it in a way that practices and reinforces the core values. People that do not "fit" in to a people process culture must learn to adapt their style, find another organization or learn to lived  cooperatively within the culture. It is interesting to note that a symbiotic relationship is healthy since both parties recognize the importance of working together to achieve their goals (DeGeus). If the organization dies, the goals of both entities will not be achieved, therefore, the two must work together. The ability to allow differences in a high performing people process culture may in fact give it more strength than an organization that tries to have everyone conform to everything. The individual freedom to act and do things is implicit in a people process culture 

3. Processes and Support Systems Developed to Align with Values and Beliefs

What are they? How do they effect culture?

Processes and support systems are those organization components that people build and maintain to help keep the organization viable. They are an extension of "walking the talk¸." The nature of these support systems express the ways in which the organization manages internally and externally. These support systems shape behavior, thus they help define the organization's culture. Some of the support systems include:

These support systems influence, shape and sustain behavior. If these systems are not aligned with the core values and beliefs, people may not believe in the values or be willing to demonstrate the values (Krueger, p.36). These systems must be built, modified and maintained by leadership at all levels.

In the university system, we ask academic departments to value quality teaching yet we have historically allocated budgets based on the number of students the department can process. After a while, faculty stop believing in administration's commitment to quality. Good teachers continue to give quality instruction, but they often feel that they must sacrifice some quality for numbers and disengaged in some of the less tangible quality activities.

In business, executives often encourage people to behave differently, to work better, but they may not reward people for trying the desired behavior. In some cases, these people may even be punished for using the desired behavior. When this happens, people feel exploited or ambivalent about what good performance is. People then blame others, the system and even themselves. Trust erodes and performance becomes mediocre at best. In situations like this, people spend more time figuring out how to protect themselves rather than how they can use their abilities to improve themselves and the organization. At Toro Corporation, President Ken Melrose spent years developing a new culture. One of the events he discusses in his book, "Making the Grass Greener on Your Side," demonstrates how a leader rewarded desired behavior- risk taking. Several mangers from different functions had developed a new product. This product was designed, manufactured and marketed. After all the time and money was spent on this product, a major flaw was uncovered. The managers who developed the product were no doubt concerned when Melrose called them to his office. What they found was a decorated president's office and a grateful Ken Melrose rewarding them for taking a risk. As it turned out, the work they did on the new product later was invaluable to some of Toro's future products (Melrose).


4. Actions That Rapidly Create, Facilitate and Adapt to Change

How does an organization develop the capacity to adapt and facilitate change?

The organization's ability to anticipate change , capitalize upon change and align the organization with change is the fourth element of high performing organization people process culture organizations. "Change has overtaken every company. Creating change, managing it, mastering it and surviving it is the agenda for anyone in business who aims to make a difference" (Fishman p.66). In high performing organizations, change is a way of doing business. Organizations like Hewlett Packard and Phillips Plastics are proactive about change. Leaders at many levels are quick to spot trends and take good risks to leverage the trends to create new opportunities for people, product development, service and profit. A high performing people process culture is able to galvanize its customers, suppliers, employees and other key stake holders to reduce threats and capitalize better on opportunities. Organizations that do not have the people that can adapt to change do not succeed as well as the high performing people process type culture organization. "In these successful organizations, values are created that emphasize the importance of people and processes that can create change" (Kotter p. 142). It is the optimization of people that will help the organization to rapidly and effectively facilitate the changes needed that lead to profit and growth. If resistance to change does occur and we believe in the people, the resistance probably has some validity. One would hope that in a high performing people process culture, the resistance would be explored and understood so that the proposed change would be even more effective. "Just because someone resists you doesn't mean you're right and there wrong" (Fishman p. 68).

Companies that adapt to external change, facilitate the internal change that keeps them in harmony with the changing environment are more likely to be successful. " This means making continuous fundamental changes in the internal structure of the company" (DeGeus p. 27). DeGeus believes that people in an organization must create memories of the future. By developing these future memories about what might be, the organization is better able to capitalize on change or adapt to change. Many people have this ability. Take for example the professor who has planned an elaborate Powerpoint presentation which he or she is presenting for the first time in a new location; all kinds of future scenarios are developed to ready the professor for the "what ifs." What if the Powerpoint doesn't work? Should I bring back up transparencies, a spare overhead projector bulb? Should I be ready to use the chalk board, perhaps some hand outs, etc. DeGeus argues that planning for the future is almost if not totally impossible. He contends that developing future scenarios of the future and communicating these scenarios helps people to more quickly recognize the changes and capitalize upon these changes. In his long lived company, Royal Dutch/Shell, scenario planners looked at oil related developments, but they also tried to grasp what was changing "in a wide variety of arenas: social values, technology, consumption patterns, political thinking, and international finance in the world at large" (DeGeus p. 47). The ability to focus on the external environment and developing readiness to adapt the internal organization to harmonize is a key characteristic of a high performing people process organization.  These four components of Core Values, All Levels Walking the Talk, Process and Support Systems Alignment and Actions that Rapidly Create, Facilitate and Adapt to Change work together to build and maintain the high performing people process organization. People based core values, practiced by many help build the cultural systems that allow the organization to adapt, facilitate and create change. The sustained enactment of these components will lead to positive people development, long term growth, profit, useful products and useful services. 

References

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