Resources
Q&A With Richard Barrett: The Bottom Line Impact of a Cultural Transformation
A values-driven corporate culture that attracts and retains talented people is more than just a nice place to work: It is becoming increasingly crucial to an organization’s ability to succeed in today’s market. As Richard Barrett, founder and chairman of the Barrett Values Centre, notes, who you are and what you stand for is just as -- if not more -- important as the quality of products and services your company provides. The Barrett Values Centre provides resources and training to companies interested in increasing their cultural capital and in Barrett’s experience, the companies that focus on decreasing the bureaucratic and personnel dysfunction have achieved significant revenue growth. Barrett has worked with leaders and senior executives in North America, South America, Europe, South Africa and Australia to develop values-driven organizational cultures and he is an internationally known speaker on values and cultural transformation. He has developed the Cultural Transformation Tools values assessment instruments, and is author of the books, A Guide to Liberating Your Soul and Liberating the Corporate Soul. In addition, Barrett is currently working on two new books A Whole System Approach to Cultural Transformation and, Love, Fear and the Destiny of Nations. The Skouting Report caught up with Barrett to discuss the importance of cultural capital, the impact of leadership and how to effect a cultural transformation that sticks.
The Skouting Report: Why is "cultural capital" more important than ever now?
Richard Barrett: Cultural capital is the new frontier of competitive advantage. Who you are and what you stand for is more important than your products and services because the culture of an organization directly impacts its performance. A great corporate culture leads to fulfilled employees which leads to customer satisfaction which leads to strong shareholder value and profits.
Our data [at the Barrett Values Centre] clearly demonstrates that a strong positive culture -- the result of a values-driven organization -- translates into low cultural entropy and increased revenue growth. People are now beginning to realize that these organizations are also weathering the current economic storm better because those companies don’t lose sight of the long term goals. The knee jerk reaction to an economic crisis among many companies is, for example, to fire people. But a values-driven organization considers how its people can help the company for the short term -- ie in marketing -- so they will be around for the turnaround. I don’t mean to say it may not be necessary to retrench staff but it’s how you do it and it’s about responding to a situation with values other than fear. Otherwise your other employees get fearful and they start looking around.
Highly talented people want a place that will support them and a company with a great culture, a mission and values has a competitive advantage. We found that in every successful organization, the focus is on employee fulfillment.
But it’s the leaders who create a company’s culture through their beliefs, values and behavior. Transforming an organization starts with transforming leadership. Who you are as a leader impacts the organization. It’s all about leadership.
TSR: What are the indications within an organization that its corporate culture is impeding its ability to grow and succeed?
Barrett: We researched 600 companies in Asia, Australia and New Zealand and we found that companies with low cultural entropy – the degree of dysfunction within the company -- have higher revenue growth than companies with high cultural entropy. Culture is a significant factor in financial performance. When cultural entropy within a company starts dropping, its revenue starts rising.
TSR: You mention that cultural transformation begins with the personal transformation of the leaders. How do you recommend a leader begins the process of this transformation?
Barrett: First, leaders need to understand that it’s their leadership that creates the culture and is the principal driver of performance in their company. They need to be committed to personal transformation and their leadership team needs to be able to adapt.
Then we start with a baseline measurement on the company’s culture and a values assessment of its leadership team. We find out how much cultural entropy exists by noting the amount of energy going into unproductive systems -- bureaucracy, internal competition, blame, impact of limiting values -- that would indicate a slow moving, fear based culture.
A leader with a demanding bureaucracy, who is not good with people, who blames others and who seeks power is slowing his company down. I like to tell them stop being the best in the world and start being the best for the world.
TSR: How can a company ensure that the corporate culture it develops continues to inform and define its organization?
Barrett: In most big companies, executives have their own personal score cards. We put cultural entropy on the score card and it is directly related to each division leader’s personal score card. When the level of income is impacted by a reduction in cultural entropy, that gets their attention. When a personal transformation is linked to the pay packet, they’ll work on it. Everybody can improve given the right support but the company needs to support the process.
TSR: What are some of your most memorable "turn arounds" -- a company that underwent a cultural transformation?
Barrett: The best one is NedBank, one of South Africa’s oldest banks. It was an amazing turnaround. This company was in dire straits five years ago and almost went bankrupt. The new leadership wanted to build a values driven organization and they used our cultural transformation tools. Their cultural entropy – the degree of dysfunction within the organization -- was reduced from 25% to 13% over four years and their revenues went up significantly. It is a great story about the transformation of a company and it was amazing to watch it happen.
