Four Principles to Sustaining a Desired Culture

Once we define the culture we aspire to build, our challenge and responsibility is to cultivate it over time. That process is far from automatic and has no finish line. Rather it requires a conscious, consistent, and ongoing effort.

That’s a tall order. But four principles can contribute to constructing and sustaining that desired culture for the long term.

1. Make Culture a Priority

Given the demands of running a business, revenue-generating and cost-managing activities tend to be the main focus. It’s not hard to see why: These pursuits contribute to growth and profit in an objective and quantifiable manner. Cultural activities are much harder to measure, their payoffs more difficult to gauge. So culture often gets short shrift when it comes to setting firm priorities.

But such thinking is flawed. A firm’s long-term success depends on its people, and those people are more effective in a culture that fosters their collective intelligence (CI).

Of course, managing people is more art than science. We all have well-documented unconscious biases, natural defense mechanisms, and faulty intuition. Often we default to old habits and comfortable patterns when alternative behaviors are not nurtured or encouraged. Thus, leaders need to make culture central to all facets of the business, from hiring and personnel decisions, to management practice, communication, and training.

2. Don’t Tolerate Poor Behavior

Just as most of us would rather be praised than criticized, we tend to have an easier time giving positive rather than negative feedback. That means we have to make more of a conscious effort to challenge unwanted behaviors and, in parallel, reinforce techniques that shift those behaviors back to those we prefer.

The responsibility for achieving this should not be left to leaders and managers alone. All team members should be encouraged to take a stand against bad behavior. This creates greater alignment, transparency, and impact. In the right culture, simply identifying unwanted behaviors in a clear and deliberate manner can help us recalibrate to the behaviors we want.

Of course, our desired behaviors are aspirational. None of us are perfect. When we are challenged or questioned, our natural instinct is often to deflect, deny, or dig in. But such responses miss the point. If someone debates the wisdom of our decisions, they are giving us an opportunity to be curious about our logic and the alternatives.

So the first step in pivoting away from defensiveness and toward openness and acceptance of different views is to embrace self-awareness. From there, we can move to become more curious and constructive about the feedback we receive. We need to remember that candid feedback is a valuable gift and is essential to sustaining a culture.

3. Be Consistent

Firm policies and management practice should nurture the culture’s development. When the stated values don’t reflect how the firm behaves in practice, it undermines the firm’s cultural efforts. For example, if we value responsibility but tolerate blame or a lack of initiative, we are not reflecting our stated values and are sabotaging the culture we seek to build.

Management can reduce the gap between the desired culture and actual practice by working to align the two. To promote open dialogue and to ensure that all viewpoints are heard from, leaders can institute limits on speaking time during meetings, for example, so that the most vocal participants don’t dominate.

Inconsistency undermines trust — the bedrock of any collaborative relationship. By designing practices that reflect and align with our values, we can “walk the walk and talk the talk.”

4. Lead by Example

Culture doesn’t happen on its own: It must be cultivated. A senior team can be integral to this effort by nurturing the firm’s culture, demonstrating its commitment, and leading by example.

When leaders listen with curiosity, we encourage others to voice their opinions and thereby to contribute to higher levels of CI.

In contrast, when we tune out or dismiss dissenting opinions, we send the opposite message — that we are not curious or open to different points of view. As a consequence, team members may withhold their perspectives and the team may fall prey to the “groupthink” trap.

At Research Affiliates, we believe culture is essential to fostering high-functioning teams and raising the CI of the team and the firm. Yet, achieving the benefits of a culture requires regular practice by all and vigorous commitment from the leadership team.

Human nature is formidable. Often our instinctual response to candid criticism or disagreement reflects our anti-values rather than the values to which we aspire. Best intentions aside, drama is inevitable. Resilient cultures have methods and protocols for handling such situations that reinforce the desired values over the anti-values.

Collaborative processes can be awkward and difficult to manage. Soliciting and processing dissenting feedback takes time. It can be uncomfortable to let go of prior opinions and submit to group decision making, particularly when we are taken out of our comfort zones or when the decision is not our preferred outcome. Nevertheless, this discomfort is a feature — not a bug — when cognitive diversity is present and respected.

Finally, we must acknowledge the aspirational nature of our commitment and strive to learn as we go, building on practices that are working and identifying others that may be hindering our progress.

Embracing these four principles can help us be more deliberate in encouraging the desired culture, which in turn increases the odds of improving business outcomes.

In the next and last installment of this series, the focus shifts from the business leader’s perspective to that of the investor.

If an emphasis on positive cultural values improves business outcomes, do investors also benefit? How can investors include culture considerations in the investment process? Those questions will be explored in the next piece.

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All posts are the opinion of the author. As such, they should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute or the author’s employer.

Image credit: ©Getty Images/ Iván Muñoz Photography