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October 18, 2010 TALKING POINTS

Building Company Culture For Long-Term Value

By Bob O'Hara

The trade of former New England Patriot Randy Moss to the Minnesota Vikings may have come as a surprise to many fans, but chances are Pats’ management has known for some time that the receiver was simply not a “good fit” for the team, creating chemistry that was toxic to the organization’s culture.

Business owners today must stay ahead of the game in order to maintain the strong competitive edge to secure the future successful sale of their company. And the importance of a company culture that engenders a positive business vibe cannot be overstated.

Defined by the values and practices shared across-the-board by staff, company culture is essentially the manner in which an organization exhibits behavior. And while every company culture contains some elements of uniqueness, all have two basic qualities — character and personality.

Company character comes down to a reflection of the commitment and engagement employees have to an organization’s value system and presents itself in numerous areas including customer responsiveness, innovation, team interaction and daily job performance.

The less tangible company personality is the not-so-subtle sister of company character and is exhibited through the attitude and tone of employees. While some organizations are known for their open and friendly aura, others are best described as competitive. One is not necessarily better than the other, but in order for a business to possess, convey and maintain a successful personality, it must be built upon the right character foundation.

Defining or re-defining company culture does not happen spontaneously; specific steps must be taken to build the type of high performance character that will play a significant component to a future company sale or succession.

Targeted results must first be identified, beginning with the way in which you want your company to be perceived. Isolate the potential obstacles that could blindside your vision of company culture and work toward their elimination, all the while establishing the strengths upon which you can build right now.

Communication is key throughout the culture creation process. Your entire executive team and all other employees must understand and embrace your vision in order for it to develop successfully.

High performance cultures can translate into company value that can exceed that of competitors and often of your own expectations. But this cannot occur in the absence of commitment and engagement from everyone within your organization.

Consistent building of monetary and market value are other essential elements of business succession planning.

Even in the early stages of business, it’s important for owners to ask the hard questions about their future and the potential of the enterprise they are creating. A road map to an eventual exit plan will provide focus and direction; it will also allow an owner to develop plans to motivate and retain key employees in consideration for top seats in the event that the business is transferred to the management team or sold outright to a third party.

Owners should decide early on who will run the business if and when he leaves. It makes no difference if the plan is to someday transfer ownership to executive management or to sell outright — as owner you must take measures to include key individuals on decisions that will affect the business’s future and provide incentive to those crucial employees to work with you toward the goal of building business value.

This “leadership pyramid” shouldn’t be on paper only. The individual who oversees finances should accompany you to bank meetings. And the person in charge of operations should be allowed to set policies. By sharing authority and decision-making responsibilities, you can build upon the equity of your business, not only positioning it for the future in terms of management but also increasing its potential value.

Planning for the eventual doesn’t begin and end with a succession team roster; you need to spend as much time if not more working on other aspects of your company’s future as you do being involved in current daily operations.

To create value, you have to drive it. It takes time, planning and effort to increase cash flow, develop and improve operating systems, pay down debt, implement growth strategies and build that strong management team. These fundamental elements are vital to ensure a smooth and lucrative exit plan.

The time spent now to develop a positive company culture and increase your company’s value will pay off … in both the short and the long runs.

 

 

Bob O’Hara is president and CEO of O’Hara & Co. PC, a Chelmsford, MA, firm that helps entrepreneurs create a comprehensive exit strategy from their businesses. Reach O’Hara through the company’s website at www.oharaco.com.

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