Let’s first clarify the term “culture,” then let’s talk about how to make one great. It’s undeniable that at the root of what makes a great company great is a strong culture. This can be validated by the great quote that is believed to have originated from leadership guru Peter Drucker, “Culture eats strategy for breakfast.” Much has been written about this hot and timely topic. You can Google and find thousands of articles, data and consultants to help you build a great culture. There’s so much information, it starts to get overwhelming and quite confusing. It can twist you in a knot and make it unclear where to start. So, in this Clarity Break, I want to simplify it for you and, in your next Clarity Break, urge that you please give this some deep thought. What I’m about to share has been proven with thousands of companies. There is no theory here. Some companies are great at building a strong culture, most are terrible, and I’m going to give you five ways to help you become great at it. So, what is the definition of culture? Culture is defined by the way your people in your company act and how they treat each other. It’s how it feels when anyone interacts with your organization. If anthropologists studied your organization, its people, your leaders and how they communicate, what would the report say? That’s your culture. That’s the definition of culture. The definition of a great culture is defined by those anthropologists’ results being a direct reflection of your Core Values. Core Values are your company’s three to seven essential and timeless guiding principles. When your leaders define a clear set of three to seven Core Values that you want to build your company upon, and everyone in your company acts, speaks, and lives by them, you have a strong culture. So how do you do that? Well, first of all, you must know your Core Values. I’m assuming everyone reading this Clarity Break knows his or her company’s Core Values. If you don’t, please read pages 35 to 39 in Traction, which will walk you through the process of discovering your company’s Core Values. With your Core Values clear, you simply must (1) hire, (2) fire, (3) review, (4) reward and (5) recognize all of your people with your Core Values in mind. It’s truly that simple, and it only requires those five things. We’ve proven this thousands of times with our clients. Now, we could leave it right there, but we won’t. The following is a little deeper dive into each of the five, with some how-tos. Please know there are hundreds of ways to do each of the five. I’m going to give you the most effective how-tos in my experience. Let’s take them one at a time. 1. Hire After we help each client discover their Core Values, we have them create a Core Values speech. This is a simple document that helps every leader communicate your Core Values the exact same way. To learn more about how to create a Core Values speech, read pages 39 to 44 in Traction. Once you have a Core Values speech, you must deliver that speech with passion to every potential hire. You must prepare them for what they’re about to get themselves into. You must try to scare them away. The ones that light up and are drawn in are the right ones for your company. The ones that have a lack of interest or a blank neutral stare, you shouldn’t hire. 2. Fire If someone isn’t living up to your company’s Core Values, then you must free up their future. This does assume you’ve given them every chance, however—that you’ve clearly and specifically communicated where they’re falling short and you’ve coached, mentored and guided them to improve. And assuming nothing has worked, it’s time to let them go. You owe it to them, and all of your people. What builds a great culture is all of your people having your Core Values. If you have 50 people in your company and 25 don’t have your Core Values, you’ll never build a strong culture. Heck, if eight don’t have your Core Values, you’ll never build a strong culture. The good news is that when you have a strong culture and you make a hiring mistake with someone that doesn’t have your Core Values, they will be expunged. This means that they’ll usually quit before you have to fire them because they feel uncomfortable in your culture. For a powerful tool to determine if someone has your Core Values, use the People Analyzer. Read pages 85 to 89 in Traction. 3. Review You must review your people at least once a year. Even better, though, we urge you to have a quarterly conversation with your direct reports every 90 days. Assuming you’re doing one or the other or both, incorporate feedback on how they’re doing, living by the company Core Values. Give honest feedback and have them give you honest feedback on how you’re living them as well. You can use the People Analyzer as a tool to help this discussion, and for formal performance reviews we recommend incorporating Core Values in your performance review. For a simplified One Page Performance Review, click here. 4. Reward There’s no question that people will work harder for recognition than they will for money. Although the money is important and they need to be compensated fairly, there’s no debating this fact. It was said best by Napoleon: “No amount of money will induce someone to lay down their life, but they will gladly do so for a bit of yellow ribbon.” Knowing this, you must acknowledge when your people are exhibiting the company’s Core Values. If you aren’t good at coming up with good ways to do this, buy the book 1,501 Ways to Reward Employees. Here are two simple ideas for rewarding. The first is the traveling $50 gas card. The idea is to give a $50 gas card to an employee who exhibits one of your Core Values each week. The reason it’s a “traveling gas card” is that the person who received the gas card the previous week recognizes a new employee next week for exhibiting a Core Value, and that person earns the gas card that following week. The trick is that it must be someone in another department. And the icing on the cake is to let everyone know who received the gas card and how he or she exhibited the Core Values to earn it. The second idea is to do “Core Value Call-Outs” at your all-company meetings, where people just “call out” someone for exhibiting a company Core Value. We do this at our quarterly meetings with over 100 people and there are at least 10 or 20 “Core Value Call-Outs,” and it’s a powerful and quite emotional experience. As mentioned, there are over a thousand ideas and ways. For instance, one of my clients gives a $20 bill to anyone who can recite the Core Values on the spot. Incidentally, this client sold their company for very high multiples, largely in part due to their Core Values and their culture. Other companies pass a trophy each week to the person modeling the Core Values. With so many ideas, sometimes just a pat on the back is a great form of rewarding. Don’t overthink it. 5. Recognize When it comes to recognizing, there’s positive recognition and negative recognition. In the preceding point on rewarding, we addressed positive recognition. Just as positive recognition builds a great culture and habits, so does negative recognition. This means when someone is violating one or more of your company’s Core Values, you must deal with it immediately (within 24 hours), and if a person continues to have multiple Core Values violations, I urge you to apply the three-strike rule. This is where you hold three meetings with the person in question, spaced by 30 days. In these meetings, you explain and put in writing clearly what the Core Value violation(s) is/are. Give the person the chance to improve and live up to your expectations. If by the third meeting they aren’t living up to your expectations, you let them go. The good news is that with this approach you rarely have to fire anyone because they will typically quit by the third meeting, because you have done such a good job clearly communicating your expectations, and they realize they can’t live up to them. If you apply all five of the above disciplines, you will build a strong culture. With that said, there is one vital point: You must walk the talk. As Warren Bennis said, “A leader doesn’t just get the message across—a leader is the message.” If you don’t walk the talk, nothing will help you build a great culture. It might help you to People Analyze yourself in your next Clarity Break.