Creating a Profit Culture

[EDITOR’S NOTE: VITAL is in its second year of monthly CI Business Mastery Classes where it addresses important CI business topics via webinars. Each class is supported by an industry brand. VITAL has agreed to share some of the information from these classes in a monthly column of highlights from its most recent webinar. The topics are the same as the previous year’s classes, but the content is refreshed. This CI Business Mastery Class was on key management practices that drive the profit culture, and it was supported by Jason Sayen of I am Sayen.]

You may have heard this quote before: “Culture eats strategy for breakfast.” This is a phrase originated by Peter Drucker and made famous by Mark Fields, the president of Ford, and it’s absolutely true. The culture of a business is not easily copied like the strategy of your business. There are tens of thousands of custom installers across the country who are basically doing the same thing. The best cultures are richly protected and self-policing, with the ability to stand the test of time. Too many companies today spend lots of time talking about strategy and tactics and yet frighteningly little time talking about or understanding their culture.

Culture is the who and the how of your business — it’s the business’ personality. Some are strong and obvious, while others are a little more subtle or forgettable. The culture resides inside the company’s values and the behaviors of its employees, customers, and vendors. It’s how the company makes people feel both inside and outside of the organization. It’s in the celebrations, traditions, and activities of the company and in what it finds to be important every day.

Culture is something that every company has already, from the moment the founders start the business, and it is defined not only by the actions the company takes but also by the actions it doesn’t take. Who you hire and promote has a big effect on culture as it sets the expectation for what you consider to be behavior that should be rewarded. Who you decide to fire, or people that don’t meet those expectations, will also define your culture. What you put up with as a company will color in the shades of your culture.

Culture is the playbook for your company. It is how you handle situations and how you build the organization, and it should be uniquely yours and provide an immensely powerful edge over your competition by who it attracts in both employees and customers.

Creating the Right Culture

Creating a proper culture is incredibly difficult but immensely rewarding. To get started, you need to take an honest assessment of where you are today. It could be difficult, but you need to document your findings.

You will need to establish new norms, processes, expectations, and ways of being. Depending on how drastic your culture needs to change, you must be prepared to make some difficult decisions. You’ll need to assess who on the team fits with that culture and who doesn’t, as well as which of your customers and vendors won’t support your new culture.

This process never really ends — you will need to make a firm commitment to reassess your culture at a minimum of every few years, but annually is better. If you can get outside help with this, you are always going to get a better result because you get an unbiased opinion through clear lenses.

Profit Culture

Profit culture is not intended to replace your company culture — it’s simply a component of the behaviors in your company. When every employee knows the value and importance of the company making a profit, they can tie that back to how they individually impact profit in their roles. It’s simple to explain, but more difficult to instill throughout the company. Some people think of this as an “ownership mentality,” where your team does the job as if they owned the company.

In most cases, employees have not been taught about profit and why it’s important. They don’t know how it works, and it’s treated as a secret in most businesses because the owners and managers haven’t found a way to communicate it properly.

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When the team understands where they’re going and the plan to get there, they can make decisions and turn out work that aligns with that vision and plan. Once profit is part of the plan, which it should be, you must get your team in sync with that plan and all row in the right direction.

The most common failure here is not having a profit plan in the first place. Profit is often a hope or a guess rather than something that’s planned for. We must first start with a profit plan, which should not only be powerful, but it needs to create a vision that your team can actually see. When you’re able to communicate that vision in a way that other people can understand and communicate to one another, the real power of that vision compounds.

The key to that vision is to make sure that it’s clear to you as the leader to be able to communicate that plan to others in an unambiguous way. It must be something that others can stand behind and work toward that provides more benefit than just putting money in the owner’s pocket or benefiting the shareholders of the company. It must be bigger than all of you, which means you need to demonstrate what’s in it for them.

When a company makes a profit, it improves job security and longevity of the company for its clients and employees. Profit also clears the path for growth, pay, and personal development for those who want and deserve it.

Of course, business cycles are inevitable, and every company is going to be challenged eventually, whether it’s an individual cycle in your market or a macro cycle. Running a consistently profitable business helps you to weather those inevitable storms. Profits get reinvested into the business to grow the team’s benefits, add new staff, create purchasing advantages, and invest in the growth of the company.

When a company is profitable, it can invest in the best resources to support those employees and leaders, including services such as VITAL or outside experts to help cross the growth chasms we discussed last month so that you can improve your company’s outcomes every single year. Profit is also an indicator that the staff is working well, chaos is reduced, and the team is winning.

Taking Action

Here are seven management actions to take to instill the profit culture in your company:

1. Get each employee and mentor to assist in producing profit influences
2. Brainstorm and share ideas with the team
3. Make impact actions visible
4. Encourage fixes to wasteful activities and practices
5. Have written profit influences for each job
6. Celebrate project wins (on time, under budget)
7. Build a profit-sharing plan based on overachievement that is not an entitlement

One of the most commonly quoted sentiments from Zig Ziglar, who has written over 30 books and spoken across the world on topics ranging from sales excellence to maximizing personal performance, is, “You can have everything in life that you want if you’ll just help other people get what they want.” If you want profits in your company, think about how you can tie that to helping your team get what they want.