Hundreds of books have been written about how CEOs should create corporate cultures that use purpose and a sense of mission to help their companies perform at a high level. Thousands of speeches and similar numbers of consulting assignments have tackled the same challenge.
A group of 15 CEOs at a Chief Executive roundtable co-sponsored by PURE Insurance on “Building a High Performance, Highly Engaged Culture” concluded that the challenge is only getting greater. The rise of the Millennials, a demographic contingent of 20- and 30-year olds, means that CEOs cannot simply assume that they will embrace corporate ideals. They have their own distinct set of values that they cling to. Many, for example, choose to work short-periods of time as part of a flexible work force.
At the same time, CEOs are facing ever greater pressures to achieve short-term financial results because of the rise of increasingly successful activist investors and private equity funds—which the Germans call “locusts.” This “rampant shorter-termism,” in the words of moderator Jeff Sonnenfeld, intensifies pressures on employees and tends to erode the building of long-term trust between them and top management.
Still another factor: new waves of technology keep disrupting established industries, forcing CEOs to rapidly shift and reallocate their human resources, making it difficult to build and maintain long-term relationships with some employees. Sir Martin Sorrell, CEO of advertising giant WPP, used an old analogy to explain the situation. “Legacy companies have to change the engine of an aircraft while it is still flying,” he told participants.
The way CEOs respond to these intensified challenges to their cultures, participants agreed, varies considerably depending on:
- The age of their companies. New companies can consciously create new cultures.
- Their size. It’s often easier to create winning cultures in smaller companies.
- Whether a company has grown organically or is the result of mergers. It’s tricky to merge different corporate cultures.
- Whether the company operates in multiple countries.
It may be difficult to persuade different nationalities to buy into the same values.
Jeff Paraschac, co-founder and CFO of PURE Insurance, shared how his member-owned company, created in 2006 to address the insurance needs of high net-worth individuals, went about consciously crafting a culture. The company’s top management was determined to differentiate itself from other insurance companies that provided poor service. It sat down and hammered out a statement, which read: “We help our members become smarter, safer and more resilient so they can pursue their passion with greater confidence.” That gave employees a clear picture of how they were supposed to act every day, Paraschac said. Employee engagement jumped.
Then, top management asked a rank-and-file grouping of employees to produce “principles” that would translate top management’s statement into day-to-day behaviors. Those included such slogans as “be member-centric” and “have fun.”
The firm evaluates its people on the basis of how they adhere to those principles, not just their job performance, and offers perks such as extended time off and hardship loans.
The net result, said Paraschac, has been superior financial performance. The company now has 500 employees, but it aspires to grow to 5,000.