A business’s culture defines it and ultimately determines its success. For healthy, growing law firms, the relationship between culture and revenue are inextricably linked.
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What Do I Mean by Culture? Defining Core Values
I define company culture the same way Gino Wickman does in his excellent management book, “Traction: Get a Grip on Your Business.” Your culture is the core values that define “who you truly are as people.”
Which raises the question: What are core values?
Wickman defines it simply as “a small set of vital and timeless guiding principles for your company.”
At my company, Level Legal, our four core values capture our identity as an organization:
“Give a damn, get it done right, show respect, and deliver delight.”
We believe culture is crucial to consider when it comes to potential partners or employees. While it’s tempting to hire based only on job skills, adding people to the team who don’t share our values will only eat away at our culture instead of supporting it.
Strong Culture = Strong Revenue
Companies with a strong, well-defined, positive culture outperform their peers by 202%, according to a Business 2 Community Report. And that performance level translates directly into revenue; Forbes notes that companies with strong cultures generate four times more revenue.
The importance of culture is seen annually on Fortune’s “100 Best Companies to Work For” list; those companies post cumulative returns as high as 495% instead of the 170% seen in companies listed on the Russell 3000 Index and the 156% seen in companies listed on the S&P 500 Index.
In short, culture is the hidden source of revenue.
A healthy and strong culture is a force multiplier.
Companies with healthy cultures operate at high levels of performance even in the face of adversity. For instance, Sprout Social went public just three months before much of the country closed down due to COVID-19. But because Sprout had not only been building momentum in its social media but had also been boosting internal morale with active community service programs, its team ably fielded the challenge posed by the pandemic. The company quickly pivoted to help customers and team members adapt. And the company’s revenue continues to grow.
Zappos is well-known for the impact its culture had on revenue creation. While it focused on providing above-and-beyond customer service, the company culture explicitly aimed to keep its team members engaged. “We bet that by being good to our employees we would be able to offer a better service than our competitors,” late Zappos co-CEO Tony Hsieh wrote in his book “Delivering Happiness.” The result was rapid revenue growth.
How can we explain this relationship between culture and revenue? It’s simple. In today’s hyper-competitive market, employees expect a lot more from their employers. When companies deliver on these expectations, they see more loyal and productive employees — and those employees improve business outcomes and propel growth.
Curating Your Law Firm’s Culture
If your firm isn’t yet seeing that level of performance, where should you begin? Follow the lead of high-culture organizations.
1. Hire based on your values.
Look for clues that job candidates would feel at home at your company. We look for a culture fit right from the beginning of the interview process.; we’re looking for clues that the candidates would feel at home here. As a concierge legal-services company, we look for people with a hospitality mindset, the kind of people you’d find serving in an excellent restaurant or hotel; ours just happen to be reviewing documents. We believe so strongly in hiring for values that we pass on candidates who don’t share ours purely for that reason.
Of course, that means you must identify and articulate your organization’s values in a meaningful and memorable way.
2. Reinforce your values through consistent action.
Think “Values, rinse, repeat.” We reiterate our values internally in several ways. For instance, our annual review template kicks off with our four core values. Any team member who falls short in even a single value receives mentorship or guidance out of the company. We also hold a virtual, quarterly meeting called “Level Set Live,” where we remind each other of our core values and recognize team members who’ve displayed outstanding behavior related to those values. But we don’t stop there; we recognize all those nominated by their peers to receive the values awards, then match them with their nominators to build a spirit of appreciation.
3. Establish trust.
Establishing trust between your leadership and employees is crucial for growth. If you want your team to support your mission, you have to support them. People need to know you believe in them and value them. If you don’t consistently provide active support, they’ll feel expendable — and your revenue will suffer.
So, we work to provide attractive benefits, working conditions and amenities. We also ask incoming team members specific questions about their backgrounds and preferences and act on their answers with personalized welcome gifts to make them feel like they’re already part of the team. Finally, we follow up on the findings of our twice-annual team member surveys with action. In the most recent survey, we strengthened our communication approach and began reviewing our total compensation to ensure market parity. These practices build trust and peace of mind for our team.
Cultural Transformation: The Goal Is to Keep Improving
Living out your values as a culture isn’t a bottom-up strategy but rather a social norm established at the top. But it can’t just be leadership that walks the walk — everyone on the team needs to align their actions with the culture. Real trust is built through consistent actions, genuine interest and care for your employees.
Cultural transformation will only take place with practice, training and consistent action. You’ll know when you’re making progress.
Healthy companies operate at new levels of performance even in the face of adversity. Team members continuously show up and deliver for each other and all their stakeholders. Engagement, innovation, Net Promoter Scores, loyalty, morale, customer service — whatever metric you’re tracking, the goal is to keep improving.
Cultures that reach for real health inevitably improve internal morale and external engagement. They also generate revenue.
Image © iStockPhoto.com.
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