Culture Eats Strategy for Breakfast

Legal

Franchise compliance programs can have many benefits. Reap the rewards of a culture of compliance.

 

By CFEs Cynthia Gartman, William Woods and Richard Morey

 

We’ve heard that saying, “Culture Eats Strategy for Breakfast,” which is believed to have been coined by business leader Peter Drucker. The saying implies that while strategies can be created for a business, the success or failure of those strategies will be determined by the culture that permeates the organization. We recently hosted a Fran-Guard class at IFA 2018 in Phoenix, and the students were actively engaged in discussing the best way to motivate employees and align them with the company’s vision/strategy. The students concluded that a bad culture would likely result in employees’ failure to effectively implement even a good vision or strategy, but a good culture often results in successful implementation of a business strategy, even if strategy may be weak.

 

So how do you know what your company’s culture is?  Let’s play a quick game! 

Which of the following are components of a company’s culture?

 

• Happy Employees

Mission Statement

Ethical Standards

Vision Statements

• Satisfied Customers

Values

Motivations

Best Practices

Organizational History

 

Would you be surprised to find out that only two of these items are NOT components of a company’s culture? Happy employees and satisfied customers are possible results of a company culture, but they are not typically components that created that culture. 

 

For clarification, let’s look at some definitions:

Mission Statement: A company’s purpose as defined through its goals and values.

Ethics: Rules and principles that govern behavior and directives about behavior.

Vision Statement: A company’s future goals, laid out in a time-relational format.

Values: Desirable qualities or characteristics.

Motivations: The reason you do or don’t do any particular action.

Best Practices: Patterns of actions that take values and ethics to a successful level.

Organizational History: A company’s key historical components that allow for identification of Best Practices, Values, and Vision or Mission Statements.

 

Do you know how a company, brand or community demonstrates its culture? Culture is demonstrated through the actions undertaken by the business unit or brand and its individuals, which result in activities, demonstrations of values, celebrations and traditions. What comes to mind when you think of the iconic brand Ben & Jerry’s, beyond the fantastic ice cream? Perhaps you think of social equality, economic justice or fair trade? Those issues are central to the mission and vision at Ben & Jerry’s, and the brand demonstrates that mission and vision by how it chooses suppliers, business partners, ingredients and even product names.

 

“Without shared culture, there is disconnect between the business and the community.”

 

Why is it important for businesses and communities to create a shared culture? The simple answer is that without shared culture, there is disconnect between the business and the community. Imagine if a burger chain placed a unit inside Delhi, India and produced the same menu that was used in Chicago or Dallas. That menu wouldn’t account for differences in culture, tastes or religious beliefs. What kind of message would that create for the brand in India, and how successful would that unit be? When your brand tries through mission, values and best practices to connect with the surrounding community, positive connections often result.

 

Do compliance issues interplay with culture? Compliance can mean anything from compliance with legal issues, accounting practices, or hiring practices, as well as the creation of the processes and procedures around those activities. Imagine that you have a company culture that values honesty. The value of honesty should create positive best practices in each of these compliance areas, and with positive compliance outcomes, it would follow that the company’s business results would improve.   

 

In the Fran-Guard courses, which are part of achieving your Certified Franchise Executive status, we show you how compliance can enhance business profits. We show you how higher profits are the business case for franchise compliance. For example, with more realistic expectations and more franchisee, employee and consumer satisfaction, each business unit in the system should encounter an increased level of productivity and profitability.

 

Be brave and reap the rewards for a culture of compliance. Franchise compliance programs can have many benefits. They can enhance the reputation of the franchisor as a professional and competent organization. They may decrease the likelihood that good prospects will be turned away or choose a different opportunity. Additionally, they may increase the likelihood that the prospects who are awarded franchises will be successful and therefore excellent brand ambassadors.

 

“Be brave and reap the rewards for a culture of compliance.”

                                                                                   

The rewards for compliance can be proven to positively impact a company’s and a system’s businesses. With a more accurate understanding, more realistic expectations and more satisfaction, each business unit in the system should enjoy an increased level of production and profitability. This should excite you! This means that brand operations will receive a thumbs-up from consumers, employee retention will improve (for both franchisees and the franchisor), and profits will improve at the franchised locations which will run upstream to improved profits for the franchisor. We in the franchise community must continue to educate and hold each other up to a higher standard, thereby protecting our great business model from within.

 

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Cynthia Gartman, CFE is Franchisee with Seniors Blue Book, Will Woods, CFE, is Partner at Baker McKenzie and Rick Morey, CFE, is Partner at DLA Piper. Sign up for a Fran-Guard class and join Cynthia, Rick and Will as we explore culture, compliance and profitability. For registration, email IFA’s Rose DuPont at rdupont@franchise.org.

Find out more about Fran-Guard at www.franchise.org/ifa-fran-guard-0