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June 8, 2012
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Corporate Culture Counts

Companies whose leaders encourage and support innovation gain the competitive advantage

By Debra Gibson

Your company’s newest offering is like nothing else in the marketplace – today. Fast forward a few months, however, and in all likelihood, another company will offer a similar product or service. That too-familiar scenario compels an important question: Is it possible to maintain a sustainable competitive advantage present-day in business?

Absolutely, says Kathy Miller Perkins, Ph.D, president of Miller Consultants in Louisville. But, business executives might not find that sustainable advantage where they once looked, she said.

“Business has to think differently about innovating,” the Ph.D in psychology said. “We have to think not just about innovating products, but about innovating the way we do business.”

For nearly 30 years Perkins has helped clients such as Toyota, IBM, Brown-Forman, Shell Oil, Rohm and Haas, and Kawasaki Rail Cars deal with the leadership and organizational performance challenges of an ever-changing competitive arena. She cites a 2011 study involving 600 business executives that compared investment in research and development to investments in corporate culture.

“The thrust was on innovation,” Perkins said. “Innovation is what growth and competitiveness is all about. Companies that innovate do well.”

That’s no surprise to most business people, but this finding was: Innovation really is about corporate culture.

“It has to do with the way people look at the world, how companies contribute societal value while making money,” said Perkins, who also has offices in Florida. “Innovative companies look at the world through a different lens.

“Traditional companies tend to be introverted. Companies with a sustainable advantage are engaging with their competitors and looking at issues that they can’t solve alone. They put together teams in ways that can solve problems. It is very different.”

And perhaps not surprisingly, company leaders have to be first to don that new thinking cap.

“To make it really effective, leaders have to be committed,” Perkins said. “Leaders generally either have a personal commitment or are driven there by movements such as Occupy Wall Street. Companies can’t hide anymore. Society is pressing companies to be ethical and provide value. Some leaders get that.”

Joseph Steier III is one of those leaders. Steier is president and CEO of Signature HealthCARE LLC, a Louisville-based long-term-care provider that moved its headquarters from Florida to Louisville in 2011. Signature HealthCARE has 72 facilities and revenues last year of approximately $695 million. Provider magazine lists it as the 12th largest long-term-care provider.

Beyond the Information Age

“The workplace has gone through three cycles,” observed Steier. “In stage one, the most successful companies were those who had the best information. Information is still big today, but it is not a competitive advantage now. With the Internet, very few things are proprietary.“

In stage two, he said, competitiveness was about employee longevity. Our father’s generation lived through the lifelong-employment phase, Steier said. Now the employment cycle is shorter and more fluid.

“Today, sustainable competitiveness is about the ability to build a company culture. That is one of the only things you can do now that is sustainable,” he said.

Steier defines company culture as the attitudes, beliefs and ideologies of people with a common interest.

“What is more sacred? The powerful thing is to get those aligned. Work becomes more purposeful when we can build that,” he said.

At Signature HealthCARE, Steier began building that culture by removing some of the literal and figurative structures of the past.

“We have taken off all the doors to the boardroom,” Steier said. “All levels of people in the company have same information. The staff gets the same information as the board. Nothing is propriety. Everyone can see inside the boardroom. Stakeholder transparency is huge.”

Much of that is accomplished through monthly updates, which come in the form of company lunches, podcasts, webinars and roadshows that put executives face to face with personnel outside corporate headquarters. Signature HealthCARE has 74 locations, so the process can be complex, but is worth it, according to the executive.

“People will trust if they have all the facts,” Steier said. “They will assimilate the information themselves, but they have to have complete information. At our luncheon today, our employees heard about our cash flow, how we are doing financially, which locations are struggling, where we are investing, what we selling, and what we are acquiring.”

His company’s new culture is being built upon three broad pillars: intra-preneurship, learning and spirituality, he said.

Intra-preneurship is based on the belief that great ideas can come from anywhere.

“We encourage everyone at all levels of the organization to be vocal about their ideas to improve the lives of residents and elders,” Steier said. “The result has not just been just new programs. Recently, new companies have come from those ideas, including a construction company and a furniture company.”

Learning at Signature means, among other things, that everyone acquires the skills to do what the company considers the most important job – that of the certified nursing assistant (CNA).

“We are the first company in America to have every employee earn a CNA,” Steier said. “This breaks down a lot of walls, and the perspective that comes from it is important.”

Add to that a website, SHClearn.com, that offers job-specific Continuing Educations Units (CEUs), management training and even more generalized 21st job competencies. Some courses are delivered via online modules, while others are taught at Signature’s headquarters.

Spirituality can have a payoff

Pillar three focuses on an area most companies deliberately shy away from: spirituality. Signature HealthCARE has a Department of Spirituality.

One of the programs in that department is a compassion fund. The idea came when Steier’s third son was in the neonatal intensive care unit (NICU) for a long time. The experience had such a profound impact on him that Steier wrote a book entitled “My God! Our God?” Proceeds from the book go to the company compassion fund. Employees are eligible to apply for assistance when they have experienced an unexpected, catastrophic event beyond their control and are unable to meet everyday needs.

“The experience changed our workplace,” Steier said. “It is much more warm and compassionate. As a company, we need to be there in a timely manner. We need to be very family friendly and we are.”

Collectively, these changes have had bottom-line results at Signature HealthCARE, particularly in the area of job turnover, a persistent issue for long-term care providers.

“Most of our industry runs close to 60 percent in staff turnover, but our line staff runs 35 to 45 percent,” Steier said. “Half of those leave in the first 90 days because they realize the work is not for them. After that, people are staying. You can’t do that without a great company culture.”

Culture change is not just important for large companies such as Signature either, according to Perkins.

“A sustainable, innovative culture should be a big advantage for small companies,” Perkins said. “Smaller companies can be quick on their feet and often have fewer layers of decision makers, so innovations are easier to implement. The issue for small companies is whether they look outside of their own world or not – and the extent to which they look.

“We help companies look at the criteria for success in a new way,” she says. “Small business, large business, everybody. It is absolutely a new world for everyone. This is a new kind of capitalism.”

Debra Gibson is a correspondent for The Lane Report. She can be reached at editorial@lanereport.com.

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