Event Recap | A CFO's Role in Shaping Company Culture
The June panel featured Jason McCarthy, CFO, Arbor Pharmaceuticals and Leslie Kurtz, CFO, Jackson Healthcare. The discussion was moderated by Grant Thornton's Ken Cameron. Ken kicked off the discussion with Grant Thornton’s study, in conjunction with Oxford Economics, titled “The Return on Culture. Proving the Connection Between Culture and Profit”.
DEFINING CULTURE
When we talk about culture, we would probably get a different answer from everyone on what it means. Culture can be driven by rituals, beliefs, the way things are done, an organization’s physical attributes, stories and legends, etc. Culture is built from the behaviors of each employee across the infrastructure of an organization. Each system influences culture differently depending on the strategy and effectiveness of the organization. Aligning culture with strategy enhances organizational performance and increases results. The most successful organizations can align their company culture with their mission, vision and values.When we think about culture, do we think of a dynamic or construct of a large group? If we drill down, we can think about sub-cultures. Sub-culture comes to life in each interaction by employees. Each employee experiences and influences an organization differently, as it is built on the different ecosystems based on their role within the organization. We ask ourselves, “What is the impact of the individual”? The employee perspective differs based on each individual and how those individuals choose to show up in their 20 square feet™, which starts and grows from each team, department, and the entire organization. The “shadow” that we cast, should reflect our culture and support the company mission. Every interaction an employee has with colleagues in their organization influences their perception of the culture.The study concluded that the Executives are focused on culture but are not taking enough (or potentially the right) action on what investments are best. Ambiguous ROI on culture investments and uncertainty about what employees want hinders investment in culture. 93% of Executives say they are attuned to or focused on culture, but 38% of Executives cite “understanding employee wants and needs” as the greatest impediment to building a strong organizational culture. Surprisingly, only 13% of Executives survey their employees to measure their satisfaction and again 38% of Executives say they are unclear which culture enhancements are most effective. The study reveals which inputs drive financial return:How do we make the most of this info? Some of the results were not surprising. 49% of employees were willing to take a lower-paying job in exchange for a better culture. 54% of employees were more likely to do more than is required of them to support their manager and co-workers. The study concluded: What Matters Most:
The people they work with (more than compensation)
The nature of their work What Matters Least
Ability to work remotely
Pleasing physical environment
Result: Only 10% of employees say they are “highly engaged”•
50% of employees cannot articulate their company’s mission or vision.
As you can see, leadership plays an important role in this process. Typically, we may think of the CEO as playing the most important role, but we certainly understand that CFOs play as important of a role.
COMPANY VALUES
Leslie describes the company culture at Jackson Healthcare to be rather complicated. The founder and CEO, Rick Jackson, is very involved but handed some of the day-to-day responsibilities off to his son Shane Jackson, President. The company is a family business and focused on adventure philanthropy and giving back to the community right now. Rick was a foster child and spent time at different orphanages. The values at Jackson Healthcare are the values Rick wished he would have had of a family growing up. His organization is his family.Culture is everything. If culture is a deeply held belief of an assembled workforce, we must ensure the employee’s values are in line with the company. Competency is the price of admission at Jackson Healthcare. If you get enough competent people, then hire first and foremost based on fit for company culture. This is how Jackson Healthcare protects and fosters its culture.Jackson Healthcare’s three values are intentional and in order: Others First, Wisdom and Growth. Ironically, through “others first”, you satisfy your most selfish business need. Humility is extremely important at Jackson Healthcare. As for wisdom, Leslie proclaims that most of today’s decisions are not between right and wrong anymore but being wise. Wisdom and good judgment are strong core values. The last core value is growth. If you are not growing, you are dying. There are 17 companies under Jackson Healthcare, each entrepreneurial, and some directly compete. Each of them needs to be growing. Underneath growth, Jackson Healthcare supports failure – just fail fast. We believe you cannot grow unless you fail.Ken touches on how rituals can be an important cornerstone of company culture. Leslie agrees and reveals Jackson Healthcare has a Senior Vice President of Community Impact because you resource what you believe. At Christmastime, the President writes a heartfelt letter to his employees, stuffed with $100. The employees typically take this money and do good for someone else - a simple example of an “artifact of the culture” because love is looking out for the value and welfare of someone else. There are many beliefs below the values, but those are malleable. Each of our companies may focus on different beliefs, but if you have a Jackson in front of your company name you share the same core values.Jason describes that the entrepreneurial spirit is at the core of Arbor culture and summarized by the acronym “SPEED” (speed of execution, passion for patients, entrepreneurial spirit, embrace accountability and dedication to teamwork). These are the core tenets that drive belief system today. At the forefront is the entrepreneurial spirit that manifests itself in numerous ways. Arbor Pharmaceutical empowers reps to feel like their territory is their business. When home office must communicate information, they come at it with “we are here to support you, here is how we can support you”. Communication is key, and it does get hard when you go from a company that everyone is doing everything. You do have to put policies and procedures in place and fight growing pains but value the entrepreneurial and instill it.
LEADERSHIP’S IMPACT ON CULTURE
Executives play an important role in forming and maintaining culture. When we think of who the leader is, most often you think of a top leader in the organization, CEO or even HR. Per the CFO Forum survey, 75% of respondents replied with the CEO. Ken asks Leslie to tell expand on the role of Executives shaping the culture. Leslie affirms “culture is ultimately a reflection of your leaders”. When people see culture, they see their boss. At Jackson Healthcare, actions as leaders are never neutral – you are either reinforcing the culture or diluting it. Your words, deeds and actions are always being observed and as leaders, we must focus on values. Make sure they are written down, taught, in new-hire information, and in conversations between you and direct reports. Focus on selection in hiring. Hire individuals that are aligned with your values. When everyone is rowing in the right direction, you achieve the results you want. Rather than a mis-hire, let’s spend money developing our people so they stay. Focus on developing leaders and associates. An Executive’s job is to lead and positively impact lives.Ken discusses how Grant Thornton administers surveys, have touchpoints, and obtain performance feedback. Jason believes the most effective way to impact culture is communication. One on one, constant communication, and CEO touchpoints to the staff. Arbor Pharmaceutical has a large field force so they must constantly push out interactive sessions. Communication is the absolute key to maintaining the pulse on your company and to help reinforce your employees. The surveys are great for pointing out issues but ultimately lead to further communication with the individual. Internally at the executive level, we constantly meet and talk about where are we heading as a company and how are we maintaining who we are? If something changes at the company, how do we maintain who we are?
MEASURING YOUR RETURN
Grant Thornton developed an intentional toolkit to better understand strengths and weaknesses. This allows Grant Thornton to impact thinking and behavior of those that go through the session. It teaches employees how they can be a better teammate, better serve clients, and be more effective in their relationships at home as well. It is a common toolkit for everyone in an organization to be able to provide their thoughts and see the mission of the organization and follow the mission of the company. After the first measurement period, Grant Thornton saw a double-digit increase in retention and in acceptance of offers of first-year associates. Ultimately, the unique culture attracted them to the organization. Grant Thornton has seen a large return by putting emphasis on culture.Leslie adds in terms of measuring the return on culture, retention is the number one measure. Are your people staying? Do they want to be there? There is significant turnover in the recruiting and staffing industry, greater than 50%, but Jackson Healthcare is at 15%. The return on culture is significant. Another measure is growth. You must invest in the development, especially of your leaders. At Jackson Healthcare, every leader must go through a 12-week “Fostering Leaders” program. Turnover percentage for leaders that have been through the class is 6% - strong statistics with Leaders truly buying into the culture.
IMPEDIMENTS AND ROADBLOCKS
Jason has experienced a company where culture was preached; however, at the end of the day, was managed through revenue. This essentially permeated everything and impacted every area of the company. Everyone was on edge and it killed the culture.Leslie believes the biggest roadblock is when executives don’t believe in culture. Also, many companies believe the customers should come first. At Jackson Healthcare, we put our people first; in turn, happy engaged employees will better serve customers. A few other roadblocks include company’s that are not willing to invest in training and learning as well as moving too slowly to eliminate non-cultural aligned people within an organization.Ken asks how to successfully maintain strong culture long term? Jason responds by quoting Brad Herring, “create an environment where people are comfortable communicating what is good and bad”. You won’t know where problems are and will be unable to adapt and grow if you are afraid to speak to employees. An open-door policy helps maintain culture.Leslie preaches that you need to keep listening and find out what is important to your employees. Keep it current and relevant for everyone. TWO WAY COMMUNICATION!
Q&A SESSION
How do you keep employees and leaders on track and aligned with company culture?Jason candidly states, if we do see veering off the path, it’s a quick and respectful conversation. We are not afraid to have these conversations because we are in the trenches together.Leslie credits Jackson Healthcare’s “Others First” mentality, and that they are more focused on what’s best for the employee versus the company. We would be doing them a disservice if we didn’t provide feedback. We must give them the information to succeed and improve.How do you motivate Millennials?Jason responds by noting Pharmaceutical reps are younger by nature. millennials are not hung up on the 9:00-5:00 PM day. They are more interested in “why am I doing it?” and “is this interesting to me?”. The more you engage millennials, the more effective the workplace will be.Jackson Healthcare millennials are socially conscious. There are many different peer groups employees can join so employees can associate, network, and socialize with their peers. Leslie points out that the Oxford survey had conflicting views from the CFO Forum survey regarding environment. Jackson Healthcare puts much emphasis on its environment. They recently built a Coliseum, a 3-story employee amenity building, because employees think it's "cool". Jackson Healthcare believes a strong environment leads to employee happiness, in turn, making them want to stay. How do you retain the people you need for results? Or what if results are more important than values? Leslie states that it is obviously different between a public and private company. Growth is a core value; our 17 companies compete, and we have highly competitive Presidents at each company. When you hire people that believe in winning and believe in growth, it makes it easier to focus on financial investments to help long term. You need to know there are values beyond financial performance and find people that want to stay. The longer they stay, the better performers, the better production. Jason replies that is can be a very slippery slope to lose culture. The second the tone at the top becomes “we are only about sales” then the organization will manage as such. What if your company does not have the capital to spend on culture? Cash is important, but what matters is how well you play together and that everyone is on the same page from a cultural standpoint. Take the aligned team and to try and work out a way to get cash together. Focus on the vision and how values can help move the team forward. Values of the leaders will empower others. Jason affirms honest, direct communication keeps everyone aligned. Even on a downside, you can have a good culture. Communication is so critical to culture. How do you track performance? Jackson Healthcare conducts an annual peer review which is written based on the company’s core values. The survey summarizes the feedback gauged against the core values. Grant Thornton has operational values, that drive behavior, that ultimately lead to outcomes. The outcomes are how we measure performance.
ABOUT THE SPEAKERS
Jason serves as Chief Financial Officer for Arbor Pharmaceuticals, a $300M+ private specialty pharmaceutical company marketing prescription products for the cardiovascular, hospital, neuroscience and pediatric markets and developing its own branded prescription products. Jason joined the company at start-up and works hands-on with the CEO and executive management team to deliver strategic financial initiatives that enable growth and profitability. Arbor has seen over 2,000% growth in valuation since he started. In addition, Jason has over 20 years of progressive accounting, auditing and finance experience from a mixture of public and private companies. Prior to Arbor, Jason managed the accounting function and was responsible for all SEC filings at Lodgian, Inc., an owner and operator of franchised hotels. Jason also successfully founded his own company specializing in Sarbanes-Oxley implementations and internal control consulting for some of the top public companies in Atlanta. In addition, Jason also worked for PwC in their audit function specializing in real estate and manufacturing.
Leslie serves as Chief Financial Officer for Jackson Healthcare, the third-largest U.S. healthcare staffing firm by revenue. She is responsible for coordinating all financial and accounting operations for the organization, including treasury management, prospective acquisitions, the start-up of new businesses, risk management and relationships with the company's lenders. With more than 30 years of progressive financial and operations experience, Leslie has deep domain expertise in creating systems and processes to support rapidly growing businesses and a proven track record driving top-line growth, operational excellence and sustained profitability. Kurtz is the successor of prior Jackson Healthcare CFO Douglas Kline, who serves on the CFO Forum Advisory Board.
The session was moderated by Grant Thornton Director of Human Capital Services, Ken Cameron. Ken has more than 25 years of compensation and human resources leadership experience in both the consulting and corporate environments. Prior to joining Grant Thornton, Ken was a senior consultant at Towers Watson and spent over 10 years as a global compensation, benefits and human resources leader for BellSouth. Ken has worked with a wide spectrum of organizations, providing insight and perspective on ensuring total rewards and supporting HR programs are effective and cost-efficient.Sources:CFO Forum AtlantaOxford Economics, Grant Thornton Study, Fall 2018
