Can a Positive Culture Boost Your Business Value?

Culture is a critical factor in your business’ success or failure. Culture is not something tangible and is hard to describe. A positive entrepreneurial culture will provide the company with the food it needs to grow healthily; a negative culture will poison everything your organisation tries to achieve. Growth is one of 8 factors building the value of a business

Where is the growth? Let’s have a look at the Value Pyramid:

In an owner, driven business, the proprietor makes all decisions, and control the transactions. As the firm is highly reliant on its owner, the risk of a business losing its profitability following a succession is highest. This company is not yet ready to sell. A potential buyer would certainly value the company below 33 % of its potential value.

In a people-driven business, the main contributors and the owner share decisions and transactions, reducing succession-related failure, but the risk is still high since the key employees could leave, and thus take valuable information, and even customers, with them. This business is almost ready to sell, but a potential buyer would value this company at less than 66 % of its potential value.

In a company driven by process-the business is run by systems to ensure that operations continue as planned, with or without the owner or key employees, so the firm is set up well to run itself. This type of company has more inherent value than the first two levels and is in sellable condition. It could reach up to 90% of its potential value

In a culture driven company, the activity is run by both people and systems. We consider level four as close to a “pure investment” as a business can come. Its culture indoctrinates new hires into an environment of continuous improvement, based on systems. The result is what we call, a “Culture of Excellence.” This type of business has the least chance of succession related failure and is therefore considered the most valuable to a prospective buyer.

How would you build a Culture of Excellence?

We would describe a culture of excellence as the shared values and codes of conduct that bind everyone together in a company to define how employees interact with each other, how they behave with customers, suppliers, and other external stakeholders. The leaders set out the right culture and make it a priority to meet their goals.

A real culture will help your enterprise – whatever its size – to achieve its aims, thanks to the enthusiastic support of staff who embrace the vision of their leaders. Because culture pervades everything the business does, this positivity and engagement will be apparent to both your existing customers and the prospects which will provide the company with its future growth. It will also help attract new talent and foster loyalty throughout the organisation.

Your business’ culture is critical. It is the key to ensuring you have talented employees committed to your business’ purpose to secure the business and loyalty of your customers.

There is no right or wrong recipe to build a real culture success because every company is different, but if you follow the four-step process “IDEA” it will help you achieve those goals:

I           Investigate

D          Design Strategies

E          Execute

A          Analyse

Investigate:

The first step in building a positive business culture is to investigate the current state of the firm, understanding:

  • What motivates your employees at work, why they stay at the company, what they would change about the business and what they would not
  • Why do customers choose to do business with your firm, how could you serve them better, and what is it that they like?
  • What is the staff turnover rate? How does it compare to those in similar organisations?
  • Whom are your most talented employees?
  • What is the Customer satisfaction level? Are your clients impressed with the service they have received? Are complaints higher than they should be, and how are these resolved?
  • How is the mood of the organisation, the ‘energy’? Are your staff happy? Do they like working for your team? How do you know? Are they enthusiastic? Do they identify improvements because they care about what you do and how you do it?

Design Strategies:

Now that you have a right understanding of your culture,  you can think about what needs to change and how you will achieve that:

  • What are the core purpose that drives the business and the set of values that defines how everyone behaves and works towards that goal?
  • Set out a clear vision for the company that all its stakeholders can understand and is relevant to everyone in the business so that all staff feel they have a stake in the company’s future and an opportunity to align themselves with their colleagues.
  • What is your mission statement? Articulate it very clearly and make sure that it expresses what you want to
  • Describe in clear and simple English what sort of organisation you are, and what that means in very practical terms, performance, standard and behaviour?
  • Address how you communicate your new culture to the rest of the business and beyond. Your aim should be to take people with you right from the start, but you will only manage that by engaging with the staff and other stakeholders regularly and consistently. You need to tell people what the company wants to do and what everybody’s role will be in achieving its goals. Even better, you need to get them involved from the very start. Building a culture takes time and involves everyone, so include them in the investigation, designing the strategies and the tactics to achieve your goals.

Execute:

There are two keys to success in communicating the vision and the culture you want to achieve – be clear and be consistent.

Start with an execution plan that sets clear and measurable targets:

  • When do you want to make it happening, and what the milestones will be along the way?
  • Focus your efforts on few priorities and know what resources will be required
  • Do not direct from the top get employees involved in the change process right from the start
  • Seek out ambassadors for cultural change who will take responsibility in particular areas, or with a particular individual
  • Give people the authority and autonomy they need to seize the initiative for themselves
  • Provide feedback mechanisms so that you hear about problems and roadblocks as quickly as possible
  • Keep highlighting the progress made, so employees have a clear picture of what you have all achieved and what lies ahead
  • Communicate: hold ‘town-hall’ meetings, put up posters on the walls, issue many ‘desk-drop’ leaflets, run quizzes and competitions. Walk the floor, hold informal Q&A sessions.

Analyse:

During the change process to a new culture, you will certainly have both successes and failures. Monitoring them is crucial to adapt your strategy carefully,  and make sure you implement the culture you aspire to.

  • Internal issues may arise as some people, or parts of your business are more resistant to change than others, you need to work with them closely to overcome their fears. Consider focusing on some easy wins to prove to them that change is achievable. Concentrate on the future rather than highlighting problems from the past that may undermine people’s self-confidence and introduce blame.
  • External factors may get in the way of your implementation plan. An unexpected economic change may force to change your priorities as they are not any more relevant. One of your competitor action may require an accurate response.

Don’t be afraid to adapt, while continuing to communicate so that people know what’s going on effectively to enhance the value of your company through a culture of excellence.

Can your business survive without you?

Take the free mini value builder test

If you wish to build up the value of your business and would want to explore what you could do to make it sellable, please do not hesitate to call Jean-Bertrand de Lartigue on +44 1656 766 363 or email him, jb@exit-planning.co.uk

Be the first to comment

Leave a comment

Your email address will not be published. Required fields are marked *

You may also like...

Actually, Would Your Business Value Increase Exporting to The USA?

When selling your business is it the most opportune time to consider entering new markets overseas? YES, it delivers High Return On Investment! Why not the USA? On a national …Read more  »

See Why Subscription Can Boost Your Business’ Value?

Why are so many companies leveraging the subscription business model? The obvious reason is that recurring revenue boosts your company’s value, but there are some hidden benefits to augmenting your …Read more  »

See, How Addressable Market Can Make You Rich?

Imagine you’re a farmer who has been tending to your crops all year. It’s harvest season and finally time to collect the spoils of your labour. You start harvesting your …Read more  »

Actually, Would You Be Rich Enhancing Your Business Value?

If you have resolved to make your company more valuable in 2017, you may want to think hard about how your customers pay. If you have a transaction business model …Read more  »