The business of credit union culture

What are the values of your organization? Do you value teamwork or integrity or efficiency? More importantly, do your employees espouse the same values as you, as each other? What is your corporate culture? Do your employees fit into this culture? Do you? Should you care?

The answers to these questions are more important to the bottom line than you may suspect. A corporate culture — your company’s prevailing ideas, values, attitudes, and beliefs that guide the way your employees think, feel, and act — has a profound effect on positive outcomes and financial performance.

A 2014 study, “Parsing Organizational Culture: How the Norm for Adaptability Influences the Relationship Between Culture Consensus and Financial Performance in High-Technology Firms,” by Jennifer A. Chatman, David F. Caldwell, Charles A. O’Reilly and Bernadette Dower concluded that corporations with a strong positive culture performed better financially over a volatile three-year period than those companies with weaker cultures. Experts have suggested that the best way to maintain a positive culture with consistent values is to hire employees that will fit into an organization’s current culture. Employees that possess similar values and beliefs as others in the organization, and therefore are a good cultural fit, are more likely to stay with the company longer. When people don’t fit, they should not be selected for employment. If they are selected, they are often uncomfortable and either leave on their own or are terminated for behavioral reasons. The cost of turnover is astounding. Experts estimate that it costs between 1.5 and 3 times the annual salary for every new hire. That’s between $75,000 and $150,000 for a $50,000 employee. With costs like that, poor hires can significantly cut into corporate profits. We therefore need to ensure that new hires will be successful in our organization by carefully focusing on the hiring process.

In order to hire employees to embrace the corporate values and fit into the culture, an organization must first know what their values and culture are. This is not as easy as a simple survey or scanning a company’s website to find its mission and values statement. If values and culture are not systematically and strategically created, they will evolve on their own, sometimes with devastating consequences (as in the case of Enron in the late 90’s). Leadership must profess the desired values and demonstrate them on a daily basis. Once the values are established, an organization can use them to create good hiring practices.

Using structured or behavioral based interviews is paramount in good hiring practices. In order for this to be successful, however, the organization must have a clearly defined set of values. Once these are established, interview questions can be constructed to elicit descriptions of previous behaviors exhibited in specific situations, thus exploring candidates’ individual values. Instead of a subjective interview question such as, “tell me what you value” or “ what is your leadership style?” which tell you nothing about the candidate, questions such as, “tell me about a time when you were leading a team and one of your subordinates didn’t agree with your course of action” can elicit a much more descriptive response that can give you insight into your candidates value system. Structured interviewing has been proven effective in highly successful organizations such as Disney, Google and Southwest Airlines.

But do we want to create a Stepford Wives of the workplace? If you hire people just like yourself, you wind up with a lot of people like you in the organization. You may replicate your strengths, but you will also replicate your weaknesses and not bring any new strengths into the company to augment your existing talents. Although we want to hire those that possess our corporate value system in order to strengthen our culture, diversity in thinking is extremely important for an organization’s success. Without it, we are doomed to “group think” and lose our ability for creative problem solving, thus putting our organization at a devastating strategic disadvantage.

Good leadership is paramount in creating a values system that drives a positive corporate culture, while simultaneously creating diversity of thought and a culture of innovation. That balance is a key to success in today’s business organizations.