Culture drives performance

Organizations on most admired cultures list outperform TSX 60 by average of 600 per cent
By Shannon Klie
|Canadian HR Reporter|Last Updated: 01/20/2011

Co-operative organizations are, by their very nature, collaborative, said André Chapleau, senior director of media relations at Desjardins Group in Montreal. As such, the Lévis, Que.-based financial co-operative of 450 credit unions prides itself on its culture of participation and democracy, he said.

“We’re made of a group of credit unions that are all autonomous, all independent,” said Chapleau. “It’s not a top-down organization, it’s bottom-up. We need to consult our base to make sure they have a good knowledge of the issues we are faced with, they agree with the solutions proposed or they propose other solutions, and we decide together the route to follow.”

This consultative approach ensures that once a decision is made, everyone is on board and the work is accomplished quickly and efficiently, he said.

In organizations where decisions come down from on high, often the people who have to implement them don’t fully ­understand the reasoning behind them and implementation can be slower and less effective, said Chapleau.

Desjardins' co-operative culture, which also sees every account holder owning a voting share in the company, is one of the reasons the financial institution was named one of Canada’s 10 Most Admired Corporate Cultures in 2010.

As a company that has been around for more than one century, sustainable development and giving back to the community are also integral parts of Desjardins' culture, said Chapleau. In fact, the company gave $80 million in donations and sponsorships last year.

Canada’s 10 Most Admired Corporate Cultures program, founded by HR consulting firm Waterstone Human Capital, recognizes organizations for having a culture that has helped them enhance performance and sustain a competitive advantage.

Only those organizations nominated through the Canadian Corporate Culture Study, which surveys executives on the Financial Post 500, can make a submission to the program.

“It’s recognition by the Canadian leadership community of organizations that have cultures that actively have an impact on performance,” said Marty Parker, CEO at Waterstone in Toronto.

An organization’s culture is then judged on five criteria: vision and leadership; cultural alignment, measurement and sustainability; rewards, recognition and innovative business achievement; corporate performance; and corporate social responsibility.

The Canadian Corporate Culture Study found 90 per cent of respondents said leadership drives corporate culture and 85 per cent said corporate culture drives performance, said Parker.

Link between culture, stock performance

And there’s evidence a good corporate culture pays off. The 10 organizations on the 2010 list have outpaced, in terms of a three-year compound annual growth rate, the 60 largest companies on the Toronto Stock Exchange (TSX 60) by an average of nearly 600 per cent. This is double the 300-per-cent difference in 2009, said Parker.

Culture definitely plays a role in Desjardins' financial success, said Chapleau. Desjardins was ranked 25th on a list of the world’s 50 safest banks by Global Finance magazine and 91st on a list of top 1,000 world banks by The Banker.

Also, Desjardins reported $464 million in surplus in the first nine months of 2010, compared to $378 million for the first nine months of 2009.

“What we used to think of as the soft skills, how people behave, those are really what are driving the hard results,” said Parker.

Lessons from Maple Leaf Foods

This was exemplified by how Maple Leaf Foods handled the listeriosis outbreak in 2008 that contributed to 23 deaths, he said.

CEO Michael McCain immediately and publicly took responsibility for the outbreak, recalled all at-risk food and issued the following statement on the company’s website: “Tragically, our products have been linked to illness and loss of life. To those people who are ill, and to the families who have lost loved ones, I offer my deepest and sincerest sympathies.”

This was followed by television commercials featuring McCain talking directly to the camera and then full-page ads on the one-year anniversary of the outbreak remembering those who died.

McCain’s public communication, full transparency and full accountability during the crisis weren’t anything new for the company or the CEO, who regularly communicates with employees and measures leaders on how they live the organization’s 22 values, said Parker.

“How they act obviously matters in good times but, as we’ve seen through the unfortunate circumstances of what they had to deal with and live through, it’s really who they are,” he said.

So, despite the crisis, 2009 was one of the best financial years for Maple Leaf Foods, said Parker.

“There’s a perfect example of leadership representing the values of who they really are and it having an impact on results,” said Parker.

Cool cultures

Canada’s 10 Most Admired Corporate Cultures of 2010

In the sixth year of the Canada’s 10 Most Admired Corporate Cultures competition, nearly 400 organizations were nominated and more than 90 went on to make a final submission, up from 72 in 2009.

• Aeroplan Canada (Montreal)

• Blinds To Go (Montreal)

• Canadian Western Bank (Edmonton)

• Desjardins Group (Lévis, Que.)

• Discount Car and Truck Rentals (Toronto)

• Flight Centre (Vancouver)

• HOOPP – Healthcare of Ontario Pension Plan (Toronto)

• Maple Leaf Foods (Toronto)

• Procter & Gamble Canada (Toronto)

• The Home Depot Canada (Toronto)

Two special categories:

Best emerging organization: Clearly Contacts (Vancouver)

Broader public sector: The Princess Margaret Hospital Foundation (Toronto)

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