September 23-26, 2018 CORPORATE CULTURE SEPTEMBER 25, 2018 JAMES J. KENNEDY, CPCU your asset 24/7/365 ultimate or invisible strategic liability? asset weapon corporate culture 2018 NAMIC Annual Convention - Kennedy Page 1 of 71 our journey 1. intro to culture 9. summary 2. what is culture 8. management 3. financial impact culture 7. board accountability 4. winning culture 6. refining 5. dysfunctional culture questions Small Company CEO Control Bad Management Why does this even matter to How can a CEO control the How much is just bad a small company with only a culture when so much is management? few employees? driven by the employees? 2018 NAMIC Annual Convention - Kennedy Page 2 of 71 Intro to culture 1 your asset 24/7/365 ultimate or invisible strategic liability? asset weapon corporate culture 2018 NAMIC Annual Convention - Kennedy Page 3 of 71 “You“You nevernever getget aa secondsecond chancechance toto makemake aa goodgood firstfirst impression”impression” will rogers ~ will rogers 2018 NAMIC Annual Convention - Kennedy Page 4 of 71 2018 NAMIC Annual Convention - Kennedy Page 5 of 71 first impressions first impressions 2018 NAMIC Annual Convention - Kennedy Page 6 of 71 corporate culture It exists – and pervades all aspects of organizational life. You cannot see the…. X-ray Music Smell Taste …yet, you don’t doubt they exist! building blocks of organization success why exist culture future view purpose vision culture success culture mission values culture today’s view how to behave 2018 NAMIC Annual Convention - Kennedy Page 7 of 71 what is culture? ? 2 ? culture multiple definitions Comes from social anthropology and the term represents the qualities of any specific human group that are passed from one generation to the next. Standard The totality of socially transmitted behavior patterns, arts, beliefs, institutions, and all other products of human work and thought characteristic of a community or population. Dictionary Corporate culture is the amalgamation of values, vision, mission, and the day-to-day aspects of communication, interaction, and operational goals that create the organizational atmosphere that pervades the way people work. Corporate The set of shared, taken-for-granted implicit assumptions that a group holds that determines how it perceives, thinks about, and reacts to its various environments Academic 2018 NAMIC Annual Convention - Kennedy Page 8 of 71 Cultural norms It shapes attitudes define what is Culture is the tacit and behaviors in encouraged, social order of an wide-ranging and discouraged, organization. durable ways. accepted, or rejected within a group. corporate culture “The Culture Factor” - Harvard Business Review – January /February 2018 Boris Groysberg, Jeremiah Lee, Jesse Price, J. Yo-Jud Cheng Why Company Culture is So Important? Organizational culture refers to the general internal atmosphere cultivated by a company…and it is often driven by their corporate mission and values. 2018 NAMIC Annual Convention - Kennedy Page 9 of 71 culture vs. brand culture Culture is how you take care of your internal customers - your employees. brand Your brand is your reputation. You cannot say what your brand is - your customers say what your brand is. What is Corporate Culture? Can be thought of as a “company’s personality” Good cultural DNA = a well managed company A key strategic asset 2018 NAMIC Annual Convention - Kennedy Page 10 of 71 survey says!!! 82% 10% Believe that Believe they had the culture is a 7,000 Executives Participated right culture in competitive their advantage organizations “Purposely develop a culture” “A company’s culture is either created organically or through deliberate and consistent planning and action. Like a lawn, if you just “let it happen”, it will be mostly weeds and not very pretty. To have a lawn that is the envy of the neighborhood, however, takes a lot of time, effort and purposeful planning. Douglas Fincannon Great companies not only develop a culture that makes it a President and CEO great place to work, but they purposely develop a culture that Alamance Farmers Mutual Insurance Company provides a strategic advantage over its competition.” Graham, North Carolina 2018 NAMIC Annual Convention - Kennedy Page 11 of 71 human and chimpanzee DNA very similar, yet that 2% difference is huge 2018 NAMIC Annual Convention - Kennedy Page 12 of 71 “very few have been able to emulate” “Looking back, developing our corporate culture was like working a puzzle and putting the pieces in one at a time which sounds simple enough. However, experience has taught me that it takes much more than just a written document to change the corporate culture. This has been evident by the 18 to 20 insurance Art Meadows companies who have visited our office over the years with the President/CEO thought of emulating what we achieved. I’m sure many good Panhandle Farmers Mutual Insurance takeaways have occurred for those companies but very few have Moundsville, WV been able to successfully emulate what we have built.” pure joy! no culture is organizational “glue” politics Helps people come together with a common purpose and values. alignment Creates a sense of “team” throughout more the company. results 2018 NAMIC Annual Convention - Kennedy Page 13 of 71 “Our work suggests that culture can be managed. The first and most important “the culture step leaders can take to maximize its value and minimize its risks is to factor” become fully aware of how it works.” Harvard Business Review – January / February 2018 Boris Groysberg, Jeremiah Lee, Jesse Price, J. Yo-Jud Cheng 7 2018 NAMIC Annual Convention - Kennedy Page 14 of 71 “the culture factor” Harvard Business Review – January /February 2018 Boris Groysberg, Jeremiah Lee, Jesse Price, J. Yo-Jud Cheng Culture is a group phenomenon – it cannot exist solely within a single shared Culture permeates multiple levels person. and applies very broadly in an It resides in shared behaviors, values, organization. and assumptions and is most commonly It is manifest in collective behaviors, experienced through the norms and physical environments, group expectations of a group rituals, visible symbols, stories, and legends - that is, the unwritten attributes implicit of culture pervasive People are drawn to organizations An important and often overlooked with characteristics similar to their aspect of culture is that despite its own; organizations are more likely subliminal nature, people are to select individuals who seem to effectively hardwired to recognize enduring “fit in”; and over time those who and respond to it instinctively. don’t fit in tend to leave. It acts as a kind of silent language. So culture becomes a self- reinforcing social pattern “Culture provides a platform” ”Culture also provides a platform to set up the idea that “this is a great place to work, but only for those who share our values”. At this point, the quality standards are so deeply imbedded at Mutual of Enumclaw that people who come to work here who don’t share these values quickly Eric Nelson, CPCU, ARP President and CEO self-select or are managed out.” Mutual of Enumclaw Enumclaw, Washington 2018 NAMIC Annual Convention - Kennedy Page 15 of 71 “Culture needs to be protected” “Culture needs to be protected as one of the organizations most valuable assets. Steadfast commitment to the core values of the culture, address any undermining of the Larry Shaw, CPCU culture immediately, and assist those that work against the President/CEO culture in their “next job” search.” MMG Insurance Company Presque Isle, Maine key impacts on culture Regardless of organization type, size, industry, or geography, culture is impacted by: people’s response to reactions change 2018 NAMIC Annual Convention - Kennedy Page 16 of 71 key impacts on culture Regardless of organization type, size, industry, or geography, culture is impacted by: An organization’s orientation toward people interactions and coordination will fall on a spectrum from highly independent to highly interdependent. people’s Cultures that lean toward independence place greater value on autonomy, reactions individual action, and competition. Those that lean toward interdependence emphasize integration, managing relationships, and coordinating group effort. key impacts on culture Regardless of organization type, size, industry, or geography, culture is impacted by: While some cultures emphasize stability, others emphasize flexibility, adaptability, and receptiveness to change. Those that favor stability tend to follow response to rules, use control structures such as seniority-based staffing, reinforce hierarchy, and strive for efficiency. change Those that favor flexibility tend to prioritize innovation, openness, diversity, and a longer-term orientation 11 “The Culture Factor” - Harvard Business Review – January /February 2018 Boris Groysberg, Jeremiah Lee, Jesse Price, J. Yo-Jud Cheng 2018 NAMIC Annual Convention - Kennedy Page 17 of 71 “the culture factor” “By applying this fundamental insight about the dimensions of people interactions and response to change, we have identified eight styles that apply to both organizational cultures and individual leaders.” 8 culture styles No style Plus, while better than one style another – all may be depends on dominant, it organization likely will be type, size, a blend of industry, purpose order caring safety results enjoyment learning authority styles geography, present. etc. caring purpose learning enjoyment results authority safety order 2018 NAMIC Annual Convention - Kennedy Page 18 of 71