Aug 30, 2022
Corporate culture and customer-centricity: The often-disregarded link
Ferdinand Goetzen
Corporate culture is an often overlooked element of customer experience. It’s a vital component of an organization’s overall health that promotes long and short-term performance.
The importance of culture has seen considerable change over the years. While the customer is still at the heart of an organization’s CX efforts, ensuring that your employees are aligned with corporate values has gradually become a new standard.
In this article, we’ll take a closer look at the importance of corporate culture, its role in your customer experience strategy and how employee satisfaction can build a loyal and long-lasting relationship with your customer base.
Let’s dive right in, shall we?
Defining corporate culture
While this term may appear fairly intuitive, it’s safe to say that most people’s definitions of corporate culture will differ. Let’s go back to square one and explore what “culture” means and why it matters.
Basically speaking, culture is a guide that outlines how an organization operates beyond what could be considered formal requirements. For instance, think of a customer support rep—one of their fundamental responsibilities is to answer calls, but culture defines how their interaction with the customer will take place—their tone, their willingness to help and their drive for excellence.
Fundamentally, corporate culture outlines the beliefs and behaviors that define the interaction between an organization’s employees and management outside business transactions. Culture affects a wide array of parameters like dress code, working hours, benefits, hiring decisions, attitude towards customers and their satisfaction, etc.
It’s also important to mention that often these values and principles aren’t explicitly communicated but are implied through communication and behavior.
In a nutshell: Corporate culture defines how an organization operates beyond base-level, formal requirements.
What is a customer-centric corporate culture?
At Reveall, we believe that customer-centricity is a critical differentiator between successful and unsuccessful organizations—and being customer-led is a vital part of a healthy corporate culture.
A customer-led culture should aim to tie its values and actions to customer satisfaction. A product or service on its own can’t achieve that without an engaged and passionate team.
It’s important to underline that a customer-centric set of values goes far beyond offering good customer service. Instead, it’s about making an emotional connection with the people your organization caters to and ensuring an excellent experience starting at the awareness stage throughout their lifecycle. This is exactly why “being empathetic” is one of our core values—it’s a surefire way to build a product that fits the needs of the people we built it for, not the other way around.
In the now legendary book, “This is service design thinking” Marc Stickdorn emphasizes the importance of cohesive corporate culture and the way the organization is perceived by its customers:
“The system design of an organization, its inherent culture, values and norms as well as its organizational structure and processes are important issues for the design of services. Disparities between the corporate identity embodied by the organization’s management and staff and the corporate image perceived by the customers need to be ironed out.”
In a way, a customer-centric culture places the entire company on stage—acting out the service it provides. Like any actor, an organization needs a clear understanding of what its purpose is in every act of the play, a strong drive to amaze and entertain, and, most importantly, communicate its purpose to its audience (the customer).
However, being customer-led isn’t always as intuitive and straightforward as it may appear. It often demands a sort of “aha” moment to understand that an organization is much more than just a product or service—it’s an entity that addresses people’s needs.
In a 2006 interview for CustomerThink, Jan Carlzon, the then CEO of Scandinavian Airlines SAS, speaks about how he realized that an airline is far more than just airplanes and itineraries—it’s an amalgam of experiences between customers and the organization:
“What I saw was that we had to change the culture of our company and leave behind the focus that we used to have on technical operation issues and, instead, turn our focus to the market and be customer-driven. The whole case that I was driving was to make this very proud and very successful technical operational organization become a business enterprise or business organization. The way I described it to people was “We used to fly aircrafts, and we did it very successfully. Now we have to learn the difficult lesson, how to fly people. [. . .] When we questioned our passengers, it showed that 90 percent of them didn’t even know what kind of aircraft they were flying. Where did they get their impression or perception of the company? We found out that they got the perception in those meetings with human resources, the employees working in the company: a salesperson over the telephone; the person behind the check-in counter; a stewardess on board the aircraft; the captain, the way they spoke over their microphone. And all these meetings really constituted the company as such.”
A customer-centric culture is fundamentally performative—and like any good actor, the people in the organization must believe in the company’s values.
Failing to communicate the culture and values to your customers is like having a screenplay, but not having a stage to perform on—no one will show up and no one will believe you.
In a nutshell: A customer-centric corporate culture relies on employee excellence. Customer-centricity is about crafting meaningful and enjoyable experiences, rather than attempting to communicate its technical prowess to its customers.
Culture shapes customer-centricity and performance
One of the most valuable consequences of good corporate culture is employee engagement. An engaged employee cares about their work, their responsibilities, and their performance. It's safe to say that high employee engagement is almost impossible without a set of values that supports and empowers them.
In 2015, Lindsay McGregor and Neel Doshi published a book called “Primed to Perform: How to Build the Highest Performing Cultures Through the Science of Total Motivation," which explores why some organizations manage to create corporate cultures that inspire engagement and innovation while others only seem to cause anxiety, boredom, or cynicism.
In their research for this book, they’ve surveyed over 20,000 employees worldwide, analyzed over 50 companies, and studied a massive body of academic research. One of the most important conclusions they arrived at was that “the reason why we work determines how well we work."
One of the academic studies they cite echoes the same idea. The researchers interviewed 2,500 medical workers to assess images for so-called “objects of interest.” The participants were divided into two groups—one was told that their work would be discarded once they were done, and the other was told that they were looking for “cancerous tumor cells.” Despite earning approximately 10% less per scanned image, the group that scanned for cancer cells delivered higher quality work, indicating that motive is a vital component of performance.
The link between meaning and work has been an object of interest for many scientists for quite a long time, but an important leap in this area happened in the 1980s when Edward Deci and Richard Ryan published a study called “Intrinsic Motivation and Self-Determination in Human Behavior” that explored six central reasons why people work: play, purpose, potential, emotional pressure, economic pressure, and inertia.
Obviously, every reason is different in terms of its performance output. Organizations should seek to harness play, purpose, and potential while trying to diminish emotional pressure, economic pressure, and inertia. And it’s safe to say that it’s nearly impossible to build a truly customer-led, or as we like to call it “customer-obsessed” organization, when people are motivated by the wrong reasons.
By creating a corporate culture that builds on play, purpose, and potential, employees will develop a sense of trust and respect for their work and become more engaged with their roles. As a result, this will lead to a shared sense of ownership of their responsibilities within the organization’s CX strategy and stronger customer-centricity.
In a nutshell: Truly customer-centric cultures leverage the right motivation in employees—their work should be meaningful, inspiring, and done for the right reasons.
Culture and organization health
It’s also important to mention that a strong culture permeates all areas of an organization’s success and performance. However, many companies choose not to invest too much time and effort into it because it’s not something you can easily quantify.
For instance, how do you know that your attempts to create an open, trusting and operationally disciplined work environment will have any effect on the organization’s growth and bottom line? McKinsey’s Organization Health Index (OHI) is an attempt to do exactly that.
The OHI score is an indicator of a company’s capacity to ensure sustained performance. It’s a framework that allows business leaders to assess how well their organizations are equipped for growth based on nine outcomes. Let’s take a closer look at them.
If we were to take a closer look at the organizational outcomes that McKinsey outlines in their OHI, we’d immediately spot that most of them are tightly connected to culture and the way it’s managed and enacted.
A report published by Bain & Company also suggests that nearly 85% of organizations fail to reach sustained, profitable growth. More importantly, they fail to do that due to internal issues, not external factors. This figure stems from a five-year-long study that analyzed 8,000 organizations around the world and investigated their key barriers to continuous growth.
As a result, the authors identified that an organization’s health is defined by “The Founder’s Mentality.”
This term encompasses three attributes:
An insurgent mission—a powerful drive for success that inspires everyone in the organization.
A frontline obsession—the empowerment and celebration of customer-facing workers and a meticulous approach to CX.
An owner’s mindset—a shared sense of responsibility among all employees that leads to relentless problem-solving.
Those that invest in maintaining these attributes as they grow have a five times greater chance of avoiding or overcoming internal hurdles and delivering top-performing business and financial results.
Okay, but how does the Founder’s Mentality benefit an organization’s bottom line? Bain and Company’s research suggests that the most sustainably profitable organizations exhibit behaviors specific to the Founder’s Mentality nearly five times as often as companies that perform worse.
A study published by PNI Consulting identifies a very similar trend. They found that companies that can be considered “successful,” meaning that they can secure continuous growth and innovation, begin with a culture that inspires excellence and empowers employees. According to their report, a critical component of a sustainable and inspired organization is “psychological” ownership—the employees’ shared sense of responsibility for a company’s success.
Their conclusions can be summarized in five points:
Growth relies on culture: A critical part of building innovative products, earning customer advocacy and securing continuous growth is an engaged and inspired workforce that aims to exceed customer expectations because their expectations are also exceeded by their employer.
Growth revolves around good culture: Employee engagement is a critical element of growth and is strongly correlated to customer loyalty and a drive for innovation, which result in a greater bottom line.
Growth comes with complexity: Complexity is a destructive consequence of sustained growth that often leads to a significant loss of focus on what Bain and Company call “frontline obsession."
Complexity is corrosive to culture: As complexity starts setting in, it leads to organizations becoming more siloed, micromanaged and stressed. As a result, this results in decreased trust, empowerment and inspiration (otherwise known as culture).
Bad culture stagnates growth: When organizations lack a corporate culture that inspires and empowers their employees, this leads to diminished psychological ownership. As a result, driving nothing but value destruction and a lack of security.
Their organizational health quadrant suggests that the most important drivers of growth and profit are employee productivity, turnover and engagement, as well as customer engagement, advocacy and acquisition costs. According to their study, most companies fall into the first three quadrants, while only about 5 percent qualify for quadrant number 4 by showing culture excellence. These organizations have low employee turnover, high productivity, high employee empowerment, increased customer engagement and advocacy, all with minimal costs.
As PNI Consulting puts it: “A culture is not simply a feel-good, kumbaya moment but rather a quantifiable, profit-generating machine that either creates or destroys value.”
In a nutshell: Organizations should constantly focus on a healthy customer-centric culture, especially during growth. Once this goal leaves the company’s horizon, its culture declines—so does its growth.
Good culture stems from purpose
The path toward creating a lasting and performance-driven corporate culture lies in meaning. We mentioned above that people strive to do their best when their work is rooted in purpose. While this may sound like a truism, many companies fail to take that into account.
In their HBR article called “Creating a Purpose-Driven Organization,” Robert E. Quinn and Anjan V. Thakor suggest that the reason employees get stuck in a rut and stop being engaged with their work is that organizations fail to use the right incentives.
Modern organizations often choose management practices that are rooted in “conventional economic logic” that reduces people to “self-interested agents.” As a result, this reductive approach only seems to backfire on the organizations by reaping what they’ve sown.
Instead, companies should invest their time and effort to connect their employees with a sense of higher purpose—this allows them to inspire their workforce to be more creative and thoughtful in regard to their responsibilities, which invariably results in a better customer experience.
Let’s take a quick look at some important things you should take into account when developing your corporate culture.
1. Define your inspired workforce
In Economics, employers have to deal with the so-called “principal-agent problem.” Simply put, this problem describes the relationship between an organization and its employee—the latter will only invest so much effort for so much money, but no more. Unless there are financial incentives to over-perform, the employee will generally underperform.
However, we can all agree that this problem is entirely detached from the idea of culture, purpose, and meaning. People can and will become passionate about their work when they have the right conditions to do so. As a team leader, manager or employer, your goal is to continuously identify people or even teams that seek excellence in their work and build your culture around this sentiment.
The first step toward creating a strong culture is about envisioning how this passion for excellence permeates your entire workforce.
2. Find the purpose
At NEXT, we advocate for organizations to constantly communicate with customers in order to understand their needs and motivations better. This practice can and should be applied toward understanding what motivates and inspires the people in your organization.
Conducting thorough research into what drives your employees is a critical component of a healthy and meaningful corporate culture.
3. Your purpose must be authentic
Not only does corporate culture have to resonate with employees, but authenticity and honesty are also an essential part of it. When an organization’s leadership announces its purpose and values that are obviously not in line with its actions, people immediately recognize that they “don’t walk the walk.”
A dishonest corporate culture serves no real goal. It comes with no benefits. It sounds hollow and superficial and further dissuades people from building a meaningful relationship with the company and their work.
4. Your message must be constant
An authentic message that resonates with employees is important, but it won’t do much if it isn’t constantly reiterated through action. When a leader strives to communicate the purpose honestly and constantly, people recognize their commitment, they start accepting and enacting the purpose themselves and grow along with the message. Culture should always be signaled from the top, but it must also sprout from the bottom.
5. Individual learning is key
We mentioned above that conventional management practices tend to focus too much on external motivators, most of the time financial. However, it’s fairly easy to notice how this type of incentive will do very little for purpose alignment. In contrast, investing in employees’ growth and development will help you achieve just that.
The bottom line
Corporate culture has been an afterthought for many decades, mostly because it couldn’t be tied to any tangible returns in revenue. However, there is now a vast body of research that confirms the importance of culture within an organization’s customer experience efforts, health, growth, and bottom line.
The path to good culture lies through the empowerment of all employees—it imbues a sense of ownership, purpose, and motivation across all departments, which will invariably result in happy and loyal customers.
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