Companies exist to create value, and the more value they create the more successful they will be. To maximize value, companies have pursued myriad initiatives, including investing in capabilities to improve the efficiency and effectiveness of their business processes such as business planning, resource allocation and management reporting.
Unfortunately, in many cases, these investments failed to generate the increase in value the companies expected—mainly because the companies overlooked the linkage between an organization’s culture and the value the company ultimately creates. In other words, these companies did not explicitly address the critical challenge of making employees aware of how they, as individuals, can use new processes or technologies to contribute to value creation for the overall company.
One key to focusing employees on value creation is what is known as a value-centered culture—which Accenture defines as a company’s set of philosophies, values, and norms that positively shape employee attitudes and behaviors to drive performance excellence.
In this paper, we provide a new framework that can help companies understand the critical elements of a value-centered culture and the steps they can take to get their people and culture more explicitly focused on creating value.
Many organizations find it difficult to articulate what “value” means because there’s no definition of value that’s shared consistently across the organization. The Oxford dictionary defines value as “Something that is useful or important.” In corporate terms, that could mean book value, intrinsic value, market value, enterprise value, economic value, fair value, current value, future value, or some other type of value.
Thus, if the definition of value and how it is created are unclear or inconsistent, the mindsets of people in an organization may not be focused accordingly.
For example, value viewed from “the worker’s perspective” is anything that rewards the individual (both in terms of personal and professional fulfillment and in the monetary sense). It’s about loving what you do, doing what you love, with tremendous faith and conviction, and being rewarded fairly for the fruits of your labor. So for the worker, value is equal to what they are compensated, how they get recognized and how they feel about their company.
Conversely, value viewed from “the leader’s perspective” is something that rewards the business and shareholders. It is focused on financial results with a bias toward driving efficiency and productivity (sometimes, at the expense of the employee). For leaders, value is equal to the overall return to shareholders.
Then there are customers’ definitions. For these individuals, value is a function of the company’s ability to influence and impact their lives—how the company’s products or services solve a problem, enhance their standing, or fulfill a need. In short, value is the sum of a customer’s perceptions of the brand.
Reconciling all these perspectives is often critical to the success of an organization but, based on our client experience, it is hard to accomplish without a strong value-centered culture.
As illustrated below, a value-centered culture has two main dimensions:
- the company’s ability to inspire employees’ passion for their work and their company
- the company’s ability to influence employee performance by translating behaviors into actions that drive real value for the organization
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The Value-Centered Culture Framework
Ability to Inspire
This refers to the level of enthusiasm, energy, passion and engagement that employees display and the strength of their belief that their behaviors are appreciated and drive value. Many would say that the higher the levels of engagement employees feel, the more care they take in their job and activities for which they are responsible.
The major influencers of the ability to inspire are a company’s culture and norms, as well as its leadership and mechanisms that foster strong motivation, or heightened engagement and passion. Each goes hand-in-hand to influence the level of commitment people place in the work they produce.
Clear Ethos. A strong ethos is an essential component of a value-centered culture. It includes not only the core values that an organization’s people share and that guide an organization’s behaviors, but also the cultural norms that govern the behavior of people within the organization and the policies that help ensure people will act and work in a way that drives value creation.
It is important to note that a strong ethos alone will not necessarily create a value-centered culture. It is possible for a strong ethos to exist, but not be aligned with the ultimate vision, mission, strategy and objectives of the company or its leaders. The key is to establish that values, norms and policies are helping to support the goals the company wants to achieve, which is only possible when strong leadership is present.
Aligned Leadership. Leaders not only provide a clear picture of the direction for the organization, but they also strive for strategic alignment and commitment among the entire leadership team. Leaders set the tone of the organization, and that can ultimately translate into values for the group. Values can then be translated into the behaviors that are followed and policed by the people within the group.
An important part of leadership is visibility. Companies with strong value-centered cultures typically have leaders who are not content to sit in their offices poring over reports, but instead, are out on the “front lines” with their employees.
At Walmart and Southwest Airlines, two of the most successful companies in their respective industries, managers spend a tremendous amount of their time working side-by-side with employees to get a first-hand look at what they need to do their jobs better.
Ingrained Motivation. Many organizations with a value-centered culture have mechanisms in place to capture employee and customer feedback and include that feedback in helping to improve internal processes, the customer experience, and the overall innovation of products and services.
They also have clear performance standards and continuous learning that help employees keep pace with work demands. They encourage employees to participate in decisions that affect their jobs and departments. And they provide clarity for employees on how their role fits within and impacts the performance of the larger organization.
One way Walmart helps foster “ingrained motivation” is by regularly helping employees understand what their purpose is. For instance, in a meeting room at the retailer’s Bentonville headquarters, an electronic board continually updates the amount of money (in billions of dollars) the company has saved consumers during the 50-plus years of the company’s existence.
Ability to Influence Performance
Companies that exhibit an exceptional ability to influence performance have the process and technology in place so employees can properly plan and monitor how effectively they are achieving their commitments and goals. The action steps include:
Planning Performance. This is an important first step in developing a closed-loop enterprise performance management process. It helps set the foundation for allocating resources to support the strategies and objectives that have been developed across the organization.
An effective performance plan includes multiple sets of key elements. One set includes value drivers and metrics that provide a clear linkage between the organization’s strategy, the tactics that are aimed at creating value, and the metrics used to gauge value. For example, the key value drivers of revenue for a retail organization could consist of basket size, traffic, and customer retention.
A second set of elements includes specific, measurable and achievable financial and operational targets that are derived from the organization’s overall strategic objectives. The targets become the basis of compensation and annual evaluation of employee performance.
A third set of elements incorporates plans, forecasts and budgets. The company can also gain advantage by developing a forecast of future performance that
- helps indicate future resource allocation
- provides early warnings of deviation from targets
- serves as basis for responding to information requests from management
- serves as an input to setting investor expectations
Monitoring Performance. This is the ongoing measurement of performance to identify continuous improvement opportunities and respond to gaps relative to short- and long-term targets. The main objective is to provide more accurate and timely information for better and less risky management planning and decision making.
Several delivery mechanisms can help to effectively monitor performance. One of the most basic and essential are reports that go beyond providing a point-in-time view of performance and, instead, communicate both how the organization is doing compared with the plan and how the organization is trending over time.
Another mechanism are scorecards that focus on a “critical few” financial and non-financial metrics that measure the successful execution of strategy. A third, analytics, can enable the organization to develop a deeper understanding of performance shortcomings by quickly illuminating what has happened, why it happened, and what the organization must do to get its performance back on track.
Enabling Performance. A value-centered culture also often includes capabilities to enable the appropriate performance within an organization. These include:
- business processes and action planning that drive the development of corrective actions to close the gap between current performance and targets, encourage speed to action, and empower innovation
- a simplified technology infrastructure, tightly integrated with the business processes, to support agility and effective decision making
- a performance-based rewards system that includes incentive compensation linked to the communicated measures of value and tied to individual employee performance
Increasingly, companies can benefit from extending their performance management capabilities to external “workforces”—namely, customers, suppliers, business partners, opinion formers and other individuals and entities whose actions can have a significant impact on the value a company creates.
Social networking tools have made it possible for companies to collaborate on a mass scale with these external workforces to harness their insights, energy and passion and put them to work for the betterment of the company. Crowdsourcing, in which companies solicit ideas for new products or services from customers, suppliers and other non-employees, is a great example of this trend.
Another example is company-supported online support forums, in which customers solve each other’s problems related to the use of specific products. Dell, for example, created the Dell Community Rockstar program to “recognize independent experts and enthusiasts for their contributions on Dell’s Community Sites.” Those selected to be “rock stars” receive a wide range of benefits, including access to insider information and beta tests, gifts and logo merchandise, a “rock star” badge to use on their forum profile, and participation in Dell events.
There are six key techniques a company can consider using as part of a strategy to get its people and culture more explicitly focused on creating value.
One: Get the message through
As mentioned at the beginning of this paper, one challenge that prevents many companies from creating a value-centered culture is the lack of a common understanding and definition of value. Different functions within a business, and even different people within a function, may have a different notion of what value is.
“Speaking the same language” is especially true for the finance function. To become a better partner to the business, the finance function must be fluent in not only its “native language”— finance—but also in the language of the everyday business. And it must be able to translate financial concepts into the everyday vernacular of business people.
However, even if a workforce has a common understanding of the notion of value, it is not necessarily motivated to perform its best. This is where a properly aligned incentive and rewards structure becomes extremely important.
People like and need to be rewarded for good performance. But rewards can be more meaningful if they reflect the specific contributions that an individual has made. If a reward system is only based on the company’s overall performance, it can lose its power and make it difficult for a person to understand—and feel good about—their role in the company.
To enhance employee engagement with and support of the overall mission, a company can benefit from clearly tying rewards for how an employee acts and what they do to both intermediate results (for example, department or business-unit performance) and ultimate results (overall growth and shareholder value).
Two: Translate and embed a clear ethos
Just as marketing and communication professionals at consumer products companies craft messages to create clear and meaningful brand identities and personalities in the minds of consumers, leaders often use the same types of techniques to create a shared view about the way things get done inside the organization.
The look and feel of communications of all types (written, video, audio, imagery, etc.) can help reinforce the company’s ethos in a way that people understand and identify with. Of course, leaders’ actions often speak louder than words, and can be critical to helping align people on what is important in the organization.
Three: Clarify why value is important
Getting people aligned on creating value is furthered if everyone understands not only what “value” means (in other words, be very clear about what the target is) but also the rationale for the target (why the target is important).
For example, by using an external perspective to inform its target definition, a company can create rationales for meeting investors’ expectations for growth in free cash flow: “We have to meet a RONA (Return on Net Assets) of 15% three years from now to sustain our enterprise value. If we want to increase our value (by increased stock price), we need to deliver even better on RONA.”
Each manager will also need to understand why he is managed on a certain target and how he can have an impact on target achievement.
Four: Strive for a high degree of “sensitivity” for all managers’ targets
To help employees understand how their actions contribute to the good of the enterprise, a company can draw a clear line between those actions and the ultimate value created.
For example, consider a manager whose goal is to improve Days Inventory Outstanding (DIO) by five days. Although the manager may intuitively understand that such an improvement is a worthy goal, he may not see how reducing DIO by five days impacts the value the company creates.
He can benefit from being able to see how meeting his target will contribute to working capital improvement for the specific business unit, which in turn, can impact capital efficiency and improve return on invested capital, which can increase spread and ultimately the total economic profit for the larger enterprise.
Five: Connect investment business case development to group-level performance
Similar to the preceding section, helping a manager understand how a decision to invest in a particular project will impact the company’s overall financial performance can be beneficial. By using a procedure for requesting investment funds that includes a business case template which calculates the impact on metrics such as spread, the manager can more effectively determine how that single investment decision will impact the larger enterprise and, consequently, whether the investment is truly warranted.
But they should not be content with only justifying the investment. Once an investment is made and realized, the manager can benefit from having a standard procedure for following up on the results of the project to determine if it, indeed, had the anticipated impact on the business. Such insights can be used to help make future business cases more accurate.
Six: Nurture motivation with “gamification”
A growing approach to fostering a value-centered culture is “gamification.” This innovative idea distills the essence that makes games so compelling, and applies it to non-game contexts (employee motivation, in this case) to achieve practical outcomes.
What gamification aims to do is to manifest the natural association between intrinsic motivations, like the desire for status and recognition, with behaviors associated with a value-centered culture.
For example, Accenture recognizes employees with outstanding contributions to the company’s collective knowledge base—objectively measured by contribution points—through what the company calls the Addo Agnitio Award (A3) program. The program awards badges which are prominently displayed with the employee profile in the company’s global collaboration portal.
Together with other game mechanics and recognition during the individual’s performance review, the A3 program encourages habit-forming behaviors and builds the critical mass needed for culture creation within Accenture. Ultimately, people feel that they belong, that they matter, are having an impact and that they are more than just an employee in a large, global organization.
About the Authors
Robert Bergström is a Managing Director and leads Accenture’s Finance & Enterprise Performance practice in ASEAN. He is also the Asia Pacific lead for Accenture’s Enterprise Performance Management (EPM) capability group. Richard R. Smith is a retired Accenture Global Managing Director of the Leadership Effectiveness practice. This article is excerpted from the newly released Accenture report “Creating a Value-Centered Culture to Drive High Performance.”
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