Why Your Company Should Invest in a Positive Organizational Supply Chain Culture

What is Your Supply Chain Culture? Why Knowing Matters.

Have you ever thought about switching job functions or leaving your company? We all have. However, most of us in supply chain are so busy that we rarely pause from the hum of sending emails to think in earnest about why these thoughts cross our mind and why they matter. A better question to ask would be, “why is knowing this even important?”. After all, aren’t words like “culture”, “work-life balance”, and “joy” just empty motivational concepts thrown around by HR departments for the purposes of recruiting or to ensure compliance?

But what if culture does matter? We all know that competing on cost alone is a tough road, so if there’s more to organizational culture than incentives for employment, it could potentially offer a competitive advantage for manufacturers.

Why Culture Matters

According to pioneering researcher Wayne Baker PhD, a Professor of Management and Organizations, the Faculty Director for the Center for Positive Organizations at the University of Michigan Ross School of Business, and Co-Founder and Board Member of Give and Take Inc, knowing what your supply chain culture is provides “a lot of value!”. Baker says, “the science of positive organizations has produced empirical research showing that a positive culture (inspiring vision, positive practices, positive relationships) improves operational efficiencies, increases job performance, and boosts innovation”.

So, one could argue that a positive supply chain culture at a company saves it money. Expanded, supply chain professionals who love what they do have lower turnover, are more productive at reducing transaction costs, and better pull innovation into their organizations from supply partners. All these benefits from an organization’s positive values and atmosphere directly contribute more savings to its bottom line.

“People stay where they feel valued and heard. Retention is a big benefit to creating positive culture, not just actual physical retention. Many times, in toxic cultures people leave without leaving. They mentally check out, give less than their best, even run a side business during their job. People are looking to balance the equity equation and if they aren’t feeling valued by the company they will give less to balance things out”, says Sandy Fiaschetti, PhD and Co-founder at people engagement advisory firm Magnet Consulting.

We spend countless hours benchmarking industry salaries, which is important, but there’s a strong argument that organizational culture plays as important of a role as, if not more than, salary.

All else equal, today’s professionals will accept a slightly lower compensation package if the culture is superior, which is why culture is being used as a strategic talent acquisition and retention tool.

How to Counter the Pushback Against Investing in Culture

Aside from reflecting on company core values at quarterly town hall meetings and some lip service applied to chosen suppliers during biannual supplier advisory councils, a “grind”, “macho”, “authoritarian”, and/or “adversarial” culture seems to be rooted within the supply chain departments of many well-respected companies (as described by internal team members and external suppliers).

Why is this despite so much light shed on manufacturers, such as SRC, who use tools like Open Book Management to foster positive, high-functioning teams that deliver exceptional business results?

“The easiest and most effective way to kill a new idea is to say, ‘prove it’, and then refuse to be convinced by any empirical findings. Any significant change is probabilistic. Nothing is 100% guaranteed. Investing in a positive culture requires a leap of faith, an experimental attitude, and resilience in the face of setbacks. Some executives are just too risk averse to try,” says Baker.

Pushback often centers around doing the real work to improve culture. Things like Casual Fridays, putting a ping pong table in the break room, allowing employees to bring dogs to work, and having a company barbecue can be helpful perks on a journey to developing a positive culture, but they’re not be-all and end-all.

From Fiaschetti’s perspective, “executives sometimes don’t want to explore the tougher areas like creating real development opportunities for people, teaching leaders to truly empower others to make decisions, and building personal accountability within their workforce. Organizational culture isn’t created by a few cool perks, by instituting a quick program, or by reading a book and tasking your most enlightened line leader to ‘run the culture committee’. Sometimes the pushback is around trusting the experts, trusting the process, and being patient and consistent”.

Fringe benefits are wonderful, we all love a good temporary distraction to reboot our minds, but ensure you put in the time to reflect deeply about your leadership style. Are you a micromanager? Have the tough conversations and roll up your sleeves to do the hard tasks that’ll result in lasting positive culture change for you and your team.

The ROI of a Positive Culture

You’re skeptical and your leadership team doubts the ROI, this is understandable. “Isn’t culture the type of mushy stuff only HR should care about?”, you might ask. Yes, a talented HR team should proactively be working to enhance the culture of the supply chain team, along with the entire organization. That’s part of their job.

However, each of us is a leader. Whether you’re a buyer that has only been with a company for one month or a seasoned Chief Procurement Offer, we can all shape our organization’s supply chain culture for the better. As Gandhi put it, “you must be the change you want to see in the world”.

Although organizations have placed lots of focus on outward-facing functions, such as sales teams creating positive relationships with customers (CRM), a general company approach seems to have been broadly applied to the functions of procurement, supplier quality, production control, and logistics.

One way to look at the value a positive culture can have is lean – removing waste from the system. “This applies to a technical system and a social system”, says Baker, “a negative culture is a social system that produces a lot of waste in the form of disengaged employees, de-energizing relationships, lack of purpose and vision, ineffective bureaucratic processes, and so on. A positive culture removes this waste from the social system”.

Start with you. What motivates you? Is your team happy? Work to improve your individual outlook and interactions. Then expand to your team and outward to other functions and suppliers from there.

Tips for Leaders Striving to Improve Culture

The talent market favors job applicants so companies need to be doing anything and everything possible to flex to them, including a providing a positive organizational culture. At some point in the future another recession will hit, and that balance will turn. When this turn happens, it’ll be tempting to cut training and/or perks. Don’t be shortsighted and revert to old patterns by skimping on the importance of culture. Keep investing in what’s right and the employees you have will perform better, and you’ll be in a much stronger position during said recession, and when you’re through to the other side. Culture, as with continuous improvement, is a journey not a destination.

“It can be tempting to read a book and feel like you’re a ‘people person’ but people engagement, like supply chain management, has more to it than a lay person would think of on their own. That isn’t meant to insult a good leader, but to reinforce the point that we all have our fields and we studied and gained experience in them that is different from people in other fields. Let’s rely on each other’s strengths”, explains Fiaschetti.

Often a little adjustment in the communication delivery, both internally and externally, can go a long way toward improving your company’s culture. Take the extra 1-2 minutes to ask someone in accounts payable how their day is going the next time you follow up on a supplier invoice payment. This small act of kindness will plant the seeds of a culture shift.

Yes, every company would like to reduce costs, but communicating that you’d like to partner with a supplier long term, then asking them to reduce their costs 30 seconds later, tends to fall on deaf ears. Focus instead on your relationship with the people at the supplier, and what you and your company can do for them. You might be surprised at the results you can generate together with a collaborative approach.

Act Now to Improve Culture

There are many resources available today for those supply chain professionals looking to make a culture impact. The Center for Positive Organizations at The University of Michigan offers a host of proven tools and practices that can get you and your team started, many of which are summarized on their blog and available to the public for free. There are also many proven quantitative ways to rate your leadership style and company culture, and two great free assessment tools on both topics can be found on Give and Take’s website.

Culture is hard to quantify, but it’s also hard to copy. A positive supply chain culture offers the potential for a massive, lasting competitive advantage for those manufacturers daring enough to take the plunge. Life is short, and we all deserve to love our careers, so act today to improve your individual happiness, and your supply chain team’s positivity, by investing in your company’s culture.

-William