The Culture-Customer-Profit (CCP) Chain

Ask yourself these questions:

• Does the culture in your business help you to increase customer satisfaction and profit?
• Do you know for sure if the culture is getting better or worse? Can you measure it?
• Is all the data about performance, including information from customers, employees, financial and other business performance indicators available in one place and in a common format?
• Are the connections, relationships and correlations between these diverse indicators understood by your key decisions makers?
• Do they know which levers will trigger what results at local, function and organisation level?
• Do you know what value will, or could be, added from investing in people development initiatives and can you track it demonstrably?
• Are you certain that money spent on training programmes is delivering value to the business?

If the answer to these questions is “No”, then you need to let the numbers speak. There is strong evidence emerging of clear links between culture and profitability.

A recent piece of research into 700 Stores of a leading High Street Retailer looked at over 15 different business performance indicators and their relationship with organisation culture. The results supported many of the propositions put forward in parallel studies (such as those from Sears in the USA, the Gallup Organisation and the Institute of Employment Studies) and highlight the importance of people management strategies in delivering customer satisfaction and profits. For example, we found that:

• Culture has a major impact on customer satisfaction and thus results
• Stores with better cultures have lower costs in areas such as shrinkage, absenteeism and staff turnover
• Larger Stores tend to have poorer cultures but this can be reversed by the application of progressive management practices
• Investment strategies can have a high impact on cultural perceptions.

Further research conducted in one of the UK's largest major food retailers and an electrical stores group supported these findings.

What is the Culture-Customer-Profit chain?

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It is a series of links, from management style and employee attitudes, feeding through into relationships with customers and bottom line results, with both sales and cost benefits. The model shows these linkages which are based on both empirical and statistical research conducted over almost ten years in a variety of businesses.

Whilst the links themselves may not be startling (intuitively, most people would recognise the sense in them), we are able to demonstrate the strength and the direction of the links and assist businesses to use this knowledge to plan, measure and evaluate the outcomes of initiatives aimed at improving the important variables in the mix.

What can we do for your business?

We can help you in several ways.

1. Get a handle on the culture
   We can help you establish a full understanding of your Company’s culture through a number of tools including a cultural survey of employees’ views and an audit of the causal factors in the cultural mix. This can be enhanced through Focus Groups and one to one or group interviews if desired. The survey is tailored to your business and in particular to the desired behaviours and values to which the Company aspires. The results enable the business to assess the gap between its desired culture and reality as experienced at the “shop floor”.
   
   The parameters can be analysed by department, demographics or location. In this way the culture can be linked to other relevant performance indicators. If the Company uses a “balanced scorecard” approach to measuring its results, the culture survey will provide a powerful and measurable metric on the people/knowledge side of the model.
2. Focus on results at local level
   Who is the customer for the results? Responsibility for changing the culture lies not just with top management, although they may have the greatest responsibility and impact, but with everyone in the organisation.
    
   We have developed a number of IT tools for displaying results at local level and comparing them with other parts of the business. A Store level example for a retailer is shown below. This tool allowed decision makers within the business such as Area, District or Regional Managers to look at specific or groups of stores under their jurisdiction.
    
   

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   In the example shown on the right, the Company was comparing Stores within an Area and Region on a number of factors including the application of Company Values, the level of focus on personal development and the degree to which continuous improvement is practiced.
   
3. Research and convert Company performance data to a common format database
   Most companies have a vast array of undiscovered potential, hidden in information collected for different purposes - financial, marketing, sales, customer, employee etc., which is not “owned” by any single person but spread throughout the Company’s formal organisation structure. Often this data is held by different software applications and in different formats.
   
   We can take in and convert a wide range of data from different IT systems into a common and usable format. This allows us to explore all the various correlations and impacts between data sets and advise on their implications.
4. Identify key change levers
   Over the last 15 years, we have conducted detailed statistical studies covering data from industry, commerce and government. We are able to use the data to identify the impact of specific change initiatives and their effect on performance, based on the strength of correlations and the nature of the relationships found.
   
   This allows the Organisation’s leaders to take more informed decisions on a wide range of possible matters such as:
   • how important local management skills actually are in influencing staff turnover and results and the opinions of customers
   • what impact additional training will have on results
   • the impact of employee involvement, communication, recognition, etc. initiatives on performance and staff retention
   • the impact of management style on the level of employee suggestions
   • the effect of movement or change in key managers on employees and performance
   • the value to the Company, as a result of such issues as above, in making investments in specific HR strategies or changing reward systems.
5. Presentation on CDR tool
   The report will be provided in its final form on paper together with an electronic CD-R format using HTML with hyperlinks to associated data files. This is intended to provide access to and searching of key areas or parameters across the whole report. As the report itself will be too extensive to include all combinations of analysis by sub-functions, the searchable CD-R will facilitate ease of reference and use internally by the Company and, if desired, can be incorporated into your own organisation’s intranet.

How do we go about it?

There are seven stages to our work:

1. Understand the values and strategic aims of the business and customise the cultural survey to your needs. This normally involves a top level planning day with the Executive team or Board of Directors so that clear objectives and deliverables can be agreed.
2. Conduct a cultural survey and, if required, other research as specifically commissioned on customer and other performance indicators. Our aim is to achieve a 70% return on these surveys and we will help you to manage sample size, distribution and collection of returns in such a way as to maximise the level of return. The survey can be designed to be web-based if this is preferred over the usual paper format.
3. Bring together existing data from different sources in the business and convert it to a common format. We will also identify gaps in data and provide an assessment of reliability of the data sources.
4. Conduct advanced statistical analysis on the data collated using leading edge software and techniques.
5. Identify the relationships and strong change levers among the various factors examined.
6. Agree the action plan with the Executive team/Board of Directors. This usually involves the presentation of a fully detailed report in a workshop environment where the data can be related directly to existing, planned and potentially beneficial change programmes in the business.
7. Provide user-friendly interrogative tools for use within the business on an ongoing basis.

How long does it take?

This depends on many factors but normally all work should be completed within six to nine months. Repeated surveys or analytical studies should be shorter once a process has been established.

How do we get started?

We will arrange to call and explain the approach in more detail and establish an initial view on the feasibility of conducting the research given the availability of current data in the organisation. This is a free consultancy day and will result in a brief executive summary incorporating a proposed approach and approximate costs of the work.