Culture Drives Business Value: A Positive Correlation by Tim White, PeopleView Advisors

A positive correlation exists between the extent to which a business culture is effective and the performance of a business.  Business culture impacts performance. 

Businesses trying not just to survive, but to accelerate performance and grow business value, must define the core business values and drivers, plus ensure that peoples’ daily behaviors are aligned with and directly reinforce those respective values.  If the cycle connecting core business values and peoples’ daily work behaviors becomes compromised, business performance wanes.  For the ~15-20% of businesses working to develop and maintain effective business cultures, they are enjoying accelerated growth and success in KPIs versus their competitors because they work more effectively and better deliver for their customers.  Effective business cultures create sustainable market differentiation resulting in better performance and increased business value.  

The key to developing an effective business culture is to create appropriate core business values and connect those values to the daily behaviors of each person within the business.  The connection between values and behaviors is critical for a business creating and maintaining consistent growth.

Initially, there must be an accurate understanding of the current value of the business, plus an assessment of the strategy and how it is being implemented across all areas of the business.  A business valuation exercise will address cash flow, revenue, profitability, etc. and determine a more objective view of the business value absent emotional influence.   Business owners, equity owners and senior executives need to understand the difference between what they might think and feel a business is worth and what objectively can be shown as a value for the business.

Also, a clear understanding of how the business is performing and what is working and not working is required.  The business valuation will determine the current value of the business and the business assessment will set the stage for potential opportunities for growth and identify areas for improvement.  For example, a business assessment may show that the primary revenue stream from current customers is at huge risk due to a lack of timely product development or an implementation of inconsistent customer experience threatening customer retention. A business assessment will likely also identify any process(es) or system(s) that should be amended, changed or otherwise enhanced to increase effectiveness.

Once the business valuation and the business assessment are each completed, a strategy must be developed to build and maximize transferable value of the business.  Creating an effective business culture will focus the business on specific growth drivers and ensure that core business values are reinforced by peoples’ daily work behaviors – a cycle of reinforced business culture performance. 

An effective business culture will ensure aligned business focus and behavior across the board.  For example, if a core business value focused on the importance of being customer-centric, then practically almost every decision (big or small) should align to that business value, including how the business goes to market, how marketing and messaging are developed, how voice of the customer information is implemented, the type of people that are hired, how employees are on-boarded, employee compensation metrics, employee performance variables, how the business protects customer data, etc.  The core business value will be the ever-present guide to how people work and behave. 

It takes real effort to create the appropriate core business values and identify daily work behaviors (for all team members) that reinforce those core business values.  For those businesses focused on building value, the effort to instill an effective business culture will produce a stronger performing business with market differentiation and a clear plan to continually maximize business value.

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Tim White is currently Principal at PeopleView Advisors, a people-focused business performance firm driving clients' business performance by developing effective business cultures.  PeopleView Advisors builds business value.  [See www.PeopleViewAdvisors.comTim has 25+ years of business experience and has held senior global positions with Thomson Reuters, including VP of Culture & Business Transformation, VP of Market Development, plus VP of Business Segment Strategy.  Tim’s prior experience includes key positions in strategic marketing at LexisNexis, research management at Russell Reynolds Associates, plus other significant positions in corporate legal, professional sales and business operations.  Tim began his career as a corporate attorney.  [See https://www.linkedin.com/in/tim-white-3570574]

Tim White

Tim White is currently Principal at PeopleView Advisors, a people-focused business performance firm driving clients' business performance by developing effective business cultures.  PeopleView Advisors builds business value.  [See www.PeopleViewAdvisors.com]  Tim has 25+ years of business experience and has held senior global positions with Thomson Reuters, including VP of Culture & Business Transformation, VP of Market Development, plus VP of Business Segment Strategy.  Tim’s prior experience includes key positions in strategic marketing at LexisNexis, research management at Russell Reynolds Associates, plus other significant positions in corporate legal, professional sales and business operations.  Tim began his career as a corporate attorney.  [Seehttps://www.linkedin.com/in/tim-white-3570574]

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