Article | World Financial Review | September – October 2011

Manage the Culture Cycle

by James L. Heskett

Abstract

Organizational culture—the shared assumptions, values, and behaviors that determine "how we do things around here"—can be measured and shaped. In organizations with large numbers of customer-facing employees, it can account for up to half of the difference in operating income between two organizations in similar businesses. It can be measured by the "Four Rs" of referrals and retention of employees, returns to labor, and relationships with customers that foster customer referrals and retention. An organization relying primarily on financial measures to signal the need for change puts itself at a distinct disadvantage to one that tracks the Four Rs along with indicators of learning and innovation.

Keywords: Organizational Culture; Value; Behavior; Retention; Customer Focus and Relationships; Change Management; Learning; Innovation and Invention; Labor;

Citation:

Heskett, James L. "Manage the Culture Cycle." World Financial Review (September – October 2011): 2–7.