Creating a Culture of Excellence

It means something different for every company, but for all of them the key to success is the same: the person at the top.
Magazine Contributor
14 min read

This story appears in the March 2010 issue of Entrepreneur. Subscribe »

Ever since Tom Peters introduced the word excellence into the business world, companies have been madly scrambling after it. His 1982 book, In Search of Excellence, spawned a whole industry of excellence--management gurus and cultural consultants invading the workplace with formulas for total quality control, going from good to great, breaking all the rules, getting things done, busting e-myths and moving cheese.

But in the end, it turns out the quest for excellence is a little like stopping smoking--there are hundreds of plans, but in reality none of them work very well, at least without a strong commitment from the top. According to research by IBM and others, between 60 and 90 percent of organizational change initiatives fall flat. It's no wonder. Making the changes that lead to excellence is not an overnight pursuit--it's a long process that often means rewiring a company's fundamental DNA.

That's something Atlanta audit firm Porter Keadle Moore learned early on. In 1995, PKM was a typical stuffy auditing firm, with dark wood paneling, a command-and-control system and overworked employees. When Phil Moore and his colleagues split up, though, Moore decided to make the new incarnation of PKM very different. "At that point in time, we wanted to have a firm that had a culture that embodied our hearts and minds," he says.

Fifteen years and countless initiatives later, PKM is Atlanta's top accounting firm, with a 98 percent positive rating, 11 percent turnover rate and awards for being one of America's psychologically healthiest workplaces.

How did PKM do it? Its approach to excellence isn't off-the-wall. In fact, PKM has followed fairly conventional strategies to make it to the top. It's just that it has implemented those extremely well, stayed focused and learned that managing people is the key. PKM also had the essential element in place with Moore: The chief motivator of change in an entrepreneur-led company is the leadership.

"The willingness and desire to make personal changes themselves will radiate out in the business," says Peter Bregman, a corporate culture consultant and author of Point B: A Short Guide to Leading a Big Change. "A corporate culture is incredibly strongly linked to a leader's personality."

Change begins with asking what you want your company to do and what your company could be. The greatest skill that PKM has developed is its ability to harness the ideas and wisdom of its employees and apply them to that grand vision. "We've created a continuous feedback culture," says Debbie Sessions, a partner and COO who helped launch a program that trains employees in the art of feedback. "We're getting and giving new ideas on a daily basis."

We took a close look at PKM and at the most current research and thinking on corporate culture. We can't promise instant success. No one can. We can't give you the zeal to make it happen. You have to have that yourself. But we can give you the tools to create your own culture of excellence.

Make a Plan--and Stick With It
Pursuing excellence is unique for each company that reaches for it, but almost all of them have trouble figuring out if they're hitting their goals. Sometimes, even knowing what constitutes excellence can be a stumbling block.

Rick Maurer is an advocate of detailed benchmarking. Before starting a change initiative, some of which span many years, he advises sitting down and deciding what excellence looks like for your company. What does an excellent manufacturing process look like? What is good customer service? As your changes take hold, consult those benchmarks and see if your changes are moving you in the right direction. Here's how:

  • Create a master document. Spell out exactly what excellence means. Be as detailed as possible and set up reasonable timelines and benchmarks.
  • Survey your customers. Studies show long paper questionnaires are often ignored. Instead, pull aside a few customers and personally ask them two or three specific questions.
  • Get outside help. Whether it's a heavy-hitting consultant such as Gallup or McKinsey & Co. or a local management coach, they can help identify problems you can't see yourself.
  • Talk with the neighbors. Find some local businesses you hope to emulate and learn what they're doing right and use them as benchmarks to measure your progress.
  • Survey employees anonymously. One of PKM's secrets is an in-depth biannual employee survey that asks detailed questions. Creating a climate in which employees can express criticism without worry is essential. PKM also holds an NCAA bracket-style competition to get all employees thinking and innovating on one another's ideas. Besides leading to improvements on the technical side of the audit business, the game results in lots of small cost-saving changes, such as closing the offices between Christmas and New Year's.

COO Debbie Sessions is in charge of employee engagement, the fine art of keeping the 85 people at PKM motivated and even excited when they come to work each morning. For her, engagement means creating a fun office atmosphere to counter the often stressful and technical workload and to promote a happy work/life balance, strategies that have been shown to increase productivity and employee loyalty.

"There's absolutely a financial benefit to employee engagement," she says. "Clients aren't happy if we have turnover, and it costs twice as much to train new associates every year."

Employers often think money is the key to motivating employees, but research shows it only works in the short term and other things keep employees happy and productive over the long run. "Our notion of recognition tends to be antiquated," says Bob Nelson, an incentive specialist and author of Keeping Up in a Down Economy. "In this new generation, flexibility and time are more important rewards."

Here is what he suggests:

  • Make days off, long lunches or customized work schedules rewards for meeting new goals.
  • Praise is difficult for many managers, but Nelson says acknowledging good work--face-to-face, via e-mail or in a newsletter--lets employees know they're on the right track and creates more loyalty than you think.
  • Office-wide rewards build teams and shake employees out of their ruts--and are usually cheaper than parties or cash bonuses. Think about a spa day or an afternoon baseball game.
  • Reward productivity, not long hours. Encourage employees to get their work done quickly.
  • Promote good health. Setting up a company gym membership or wellness plan, or even providing healthy snacks in the break room, can lead to more alert, engaged employees.
  • Promote a strong work/life balance. At PKM, the top management makes a point to leave the office at 5 p.m. and take time off for personal events.

Developing a thoroughly engaged, motivated workforce is the surest route to productivity, but it takes time. So it's a good idea to aim for some quick boosts in the meantime.

The first one is simply stepping back: Micromanagement is a huge problem for entrepreneurs because of their strong personalities and personal stakes. "Entrepreneurs are often worried about revenues," consultant Bregman says. "So they start micromanaging. It can lead to personal conflicts, especially in small companies where the politics are much starker." That makes employees more likely to disengage and possibly even quit--and that's not productive.

You should also:

  • Explain every change. A streamlined workflow might make perfect sense to you, but don't assume your employees will get it. Schedule an in-depth meeting or training each time you alter your business. It will help alleviate fear and resistance.
  • Get people on board. Those new systems will be worthless if employees don't use them. One of PKM's most successful strategies is creating competitions. When the company recently switched from weekly to daily time tracking, it set up a contest: The team with the highest compliance rate after 10 weeks won a fully funded happy hour, and a drawing of top compliers had a $250 cash prize. The result: More than half the firm had 100 percent compliance within 10 weeks.
  • Give them freedom when it comes to the web. Employees who check personal e-mail, watch YouTube or peek at Facebook are almost 10 percent more productive than those whose access is blocked, mainly because the frequent, small breaks help them to regain their concentration.

Investing money and training in a few key pieces of equipment can help your office stay organized, reduce stress and get more work done. And in most offices, nothing is more key than its server.
A server, or at least a shared hard drive, should be what keeps people connected. Problem is, most people ignore the public space or clutter it with ancient documents.

"Unless there is a mandate from the top down, many employees save documents on their hard drives instead of the server," says Laura Leist, founder of Eliminate Chaos. "When they leave the organization those documents might be lost. Or, while they're still employed, other workers aren't aware that the projects exist." That means a lot of wasted or duplicated effort. Institute a uniform naming and filing system to help the company navigate what is often an under-used repository of information. Then consider:

  • Syncable calendars. They are found in most office software suites or can be used online free through Google. In one company Leist worked with, employees wasted hours every week walking office to office, scheduling meetings.
  • Instant messages. They speed the flow of information.
  • Meeting software. If you have employees in the field or in other cities, you can save travel expenses by using Go To Meeting, Skype or other new, affordable web conferencing software.
  • Paper management. A good document scanner to digitize files costs less than $1,000. If paper filing is a must, schedule regular times to clean out and organize filing.

Creating a culture in which people can do their best work sometimes means retooling the physical office. Here's what we know about making your headquarters productivity-friendly.

  • Provide quiet spaces. Creative thinkers often need solitude, so be sure there are enclosed offices or temporary spaces available where they can block out distractions.
  • Have informal gathering spots. Employers often see water-cooler chats and break-time conversations as wasted productivity, but they're actually some of the main conduits of office communication and innovation, especially between departments. Make sure there are spaces that encourage interoffice networking.
  • Keep employees comfortable. A controversial 2004 study showed that keeping an office at 77 degrees versus 68 degrees made employees 46 percent more productive. While the science might be questionable, the underlying idea is not. Comfortable employees are more productive.
  • Bring in an ergonomics consultant to help determine what each employee needs. It might be as simple as a better keyboard or adjusting a chair a couple of inches.

Three Steps to Take Now
Rick Maurer, author of the soon-to-be published Beyond the Wall of Resistance: Why 70% of All Changes FailÿFD--and What to Do About It, offers some key advice on engaging your employees in the pursuit of excellence.

  1. Some people will always be suspicious of change. Ignore them. If you put your attention on converting the 5 percent who aren't going along, you're missing opportunities with the other 95 percent.
  2. Employees need the same fire in their bellies as their leader when it comes to change. Hold meetings on implementing your plans and really let employees engage in the discussion. They need to walk out saying, "I contributed something."
  3. Give employees room to create change. They're often busy enough; when extra assignments add stress, they're more likely to fail. An employer needs to ask, "What support do you need to make this project happen? What can we take off your plate to help? What money or access do you need?" The leader needs the guts to say, "Spend 70 percent of your time on this project and let other things slide." Otherwise, change projects don't get done.

Jason Daley is a freelance writer based in Madison, Wis.

10 Companies Getting It Right

If you want to create a culture of excellence, it pays to take a look at the companies that do it best. That's where the Great Place to Work Institute comes in. The research and management consultant group makes an annual survey (in partnership with the Society for Human Resource Management) of businesses ranging from the smallest mom-and-pop operations to mega-corporations. It questions employees and performs "culture audits" that reveal on-the-job perks, benefits and training. The results are its annual lists of Best Companies to Work for in America.

"The main thing all these companies have in common is that their leaders and managers are visible and openly convey how valuable each employee is to the company," says Amy Lyman, the institute's co-founder and director of corporate research. "The result is a high degree of trust, which makes people commit more to their jobs. In the top 10, more than 90 percent of employees said they trusted their companies. That's phenomenal."

Here are the top five small companies, with 50 to 250 employees, and medium companies, with 251 to 999 workers, and what made them stand out. --Jennifer Wang

Best Medium Companies

  1. Ultimate Software
    This publicly held HR software development firm in Florida employs more than 930 people and provides benefits, stock options and lunch lectures on personal finances. A vanpooling program helps employees save money on gas.
  2. Acuity
    The 840 employees at this private property and casualty insurance firm in Wisconsin enjoy flexible schedules and are encouraged to be a community. Off-the-wall parties such as "Lumberjack Day" help.
  3. Holder Construction Co.
    The CEO of this Georgia commercial construction services firm, Tommy Holder, encourages communication and a "challenge everything" attitude from 696 employees. To increase participation in a meeting, Holder awarded $1,000 in prizes to the individual who asked the toughest question.
  4. Integrity Applications Incorporated
    IAI's 297 employees were sheltered from the worst of the recession. The Virginia company, which services engineering and software systems for government and intelligence organizations, still provides paid perks, including an anniversary trip to the Grand Cayman Islands.
  5. Sage Products Inc.
    Sage, an Illinois manufacturer of hospital patient hygiene products, offers its 546 employees an on-site fitness center with a basketball court and softball field and free on-site mammograms. To offset the slowdown, a profit participation program paid a 10-percent to 15-percent cash bonus to workers.

Best Small Companies

  1. Badger Mining Corp.
    The Wisconsin silica sand mining company employs 160 and heads up the small companies list with a minuscule 1.2 percent employee turnover rate, full medical coverage and a smoking cessation reimbursement up to $350.
  2. Dixon Schwabl
    This upstate New York advertising agency is run by a husband-and-wife team that rewards its 75 employees well--free tickets to sporting events and concerts, free ice cream and flexible scheduling. A full 90 percent of its hires are through employee referrals. No wonder turnover is less than 3 percent.
    This Virginia staffing and recruitment company keeps its 117 employees team-oriented. They earn prizes for getting to know new hires and get "SnaggerPerks" for free lunches and early Friday exits--if they invite someone from a different department.
  4. Heinfeld, Meech & Co.
    The 80 employees at this Arizona CPA firm are asked to focus on honesty, excellence, attitude, respect, teamwork. Office "decathlons" include paper airplane flying, office-chair racing and paper football.
  5. McMurry Inc.
    The employees at this Arizona marketing and communications firm are "an integral part of the identity of the company." During the downturn, each was given a monthly savings goal of $400, achieved through improved work efficiency. So far, the tracker program shows total savings of $1.6 million.


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