Transform Your Company Culture and Develop Leaders

“The best test of a good leader is how well their organization runs after they are gone,” says David Marquet, retired U.S. Navy Captain and author of “Turn the Ship Around!” Marquet earned numerous awards after transforming the troubled nuclear-powered submarine, the USS Santa Fe, into a top-notch vessel. By challenging everything he had learned about leadership in the Navy, he developed a unique philosophy, best summed up as “give control, create leaders.”

CBO interviewed Marquet and successful construction firm executives about their leadership philosophies to determine which strategies they have in common. What we learned is that effective leaders invest the time to develop the leader within each and every employee.

Give Control

Marquet spent 28 years in the Navy. Initially influenced by the Navy’s traditional “leader-follower” approach to management, he had always thought that if you give good orders, then you will have a good organization; if you give great orders, then you will have a great organization. During his career, he was abruptly transferred to take command of the USS Santa Fe—a nuclear-powered submarine that had a history of low morale, poor performance and the worst retention in the fleet. He believed that once he improved productivity and performance, morale would follow. “I now think that’s wrong,” Marquet says.

On his first day at sea commanding the Santa Fe, he gave orders as usual, and everything went as planned. The next day, however, he gave an order that the crew knew didn’t make sense. (With an abrupt transfer to this sub, Marquet did not have the benefit of the usual time to learn the vessel.) Although the crew knew the order was not sound, the officer ordered it anyway. Marquet was disturbed by this, realizing that, though employees are “told” to be thinkers, most leaders really want them to “do what they are told.” This model, he explains, creates employees who are motivated by avoiding mistakes, which, in turn, causes organizational inertia and low morale.

David Marquet, Captain, U.S. Navy (Retired)

Marquet knew he had to change something. “For me, it was a matter of life and death. I was not the technical expert on each piece of equipment on the submarine, so I was not always going to be right about how we should operate it,” he says. So he changed the model, pushing authority as far down the chain of command as he could. For example, in the Navy, a submarine executive officer who is second in command typically approves vacation time for the crew. But Marquet transferred that authority three levels lower to the senior enlisted man on the sub. “Once employees know that they are making decisions that will actually be implemented, it changes everything,” he says.

Ask Questions

Many leaders make the mistake of thinking that, in order for employees to be happy, the executive staff must simply communicate what’s going on behind the boardroom doors. While it may be true that this type of openness fosters trust and motivation, many miss another, perhaps more crucial, point: Communication should flow freely in the other direction. Perhaps one of the most important ways leaders can promote this exchange of ideas is to ask questions. In Stephen Covey’s words, “Seek first to understand, then to be understood.”

In his early days aboard the Santa Fe, Marquet spent the majority of his time asking questions. He advises owners to “have a mindset of curiosity.” Though you may—and oftentimes should—know the answers, acting as if you don’t know can convey humility, openness and a willingness to learn from others. The same principle applies to meetings that are held to arrive at a decision. “Research indicates that 85 percent of meetings are theater,” Marquet says, referencing the fact that many meetings are called after the boss has already made a decision. When meetings are held only to give legitimacy to a decision that has already been made, employees are demoralized.

Look Inward

When Marquet sought to make changes aboard the Santa Fe, he had some tough lessons to learn. The thought of pushing authority down the chain of command was antithetical to what had been ingrained in him. “My picture was like Russell Crowe in the film ‘Master and Commander,’” he says. Because it had been drilled into him to focus on giving great orders, pushing authority down the chain of command was uncomfortable. It meant giving up control and being quiet, even when he thought he knew the answer. “The biggest problem is it’s always going to feel wrong. I tell people all the time, ‘This will feel wrong; your instincts will tell you this is not the way to go.’ You have to act against these instincts—you can’t change the fact that you want to eat the doughnut, but you can change whether you reach out and eat it,” Marquet says.

Mark Fernandes also had an eye-opening experience in regard to leadership. The chief leadership officer of Luck Companies, a 90-year-old, Virginia-based firm that includes an aggregates, architectural stone, real estate and tennis surfacing business, Fernandes was president of Luck in 2002. At that time, profits were strong, but company leaders recognized that the culture needed to evolve. Between 1995 and 2002, Luck quadrupled in size from 300 to more than 1,200 people. “We were continuing to grow, but when you lifted the hood, it wasn’t pretty,” Fernandes says.

In 2003, the Luck Companies team enlisted the help of outside consultants. The consulting officers asked the executive staff to write down everything they wanted to change about the company. “I was three pages in like everybody else, and he said, ‘Stop. Put your pen down.’ Then he asked us, ‘How many of you wrote down yourself?’ That’s essentially the moment that changed the company,” Fernandes says.

That’s when Luck started what Fernandes describes as their “values journey,” a purposeful effort to change the culture of the company, starting at the top. They developed Values Based Leadership, a philosophy with an emphasis on the fact that everyone has the potential to be a leader and the capacity to do extraordinary things.

“We define this (Values Based Leadership) as living, working and leading in alignment with your personal core values and purpose to, in turn, ignite the extraordinary potential in those around you,” Fernandes says. The idea is that “doing good” (making a difference) is the path to “doing well” (exemplary business performance). “Your training and development—whether you are on the quarry floor or in the C suite—is still going to be 70 percent how you do what you do and 30 percent what you do,” Fernandes says.

Seek Outside Assessment

As important as it is to be introspective, seeking outside validation can also improve employee morale. Mike Novakoski, president and CEO of Elzinga & Volkers Construction Professionals, a Holland, Michigan-based firm, explains how applying for awards has revitalized their company culture and kept them focused on important goals. This year, the company was an Elite Award Recipient of the “101 Best and Brightest Companies to Work For in West Michigan,” by the Michigan Business and Professional Association. The 2013 winning companies were assessed by an independent research firm that reviewed a number of key measures, including employee enrichment, engagement and retention; employee education and development; communication and shared vision; and more.

Elzinga & Volkers examined their specific category scores to determine which areas within the company needed improvement. They also compared these scores to those of previous years when they applied for the award. “We started a program of really looking at how we communicate and how we engage employees,” Novakoski says. In the last six years, their communication scores have gone from 78 to 96 percent of employees being pleased with how they communicate.

The impact of the recognition doesn’t stop there. “The mindset that we have around here is that we want everybody to do an award-worthy job,” Novakoski says. He encourages every person to strive for “an award” every day, whether it be how they interact with coworkers, architects, subcontractors, CPAs or even building inspectors. They even send out letters of appreciation to building inspectors thanking them for helping make their project successful. “For us to just say we want to impress the heck out of the owners—no, that doesn’t cut it. It has to be everybody we touch,” Novakoski says.

Novakoski acknowledges that most managers are not trained to focus on relationships—especially in a traditionally masculine field like construction. “If you take care of the relationships within your business, the business can take care of itself,” he says.

Take Time to Savor Successes

Many construction firms spend a great deal of time working to land a contract but never really take the time to celebrate it once it is secured. Novakoski explains that the entire mood of Elzinga & Volkers changed once they began to allot more time to celebrate accomplishments. For example, the company instituted a regular Friday meeting when they post successes on a giant whiteboard. “It’s actually broken into four quadrants, and each quadrant is each quarter of our business year. We fill up one of those quadrants with successes that we’ve had, and these are not only business, but they are personal,” Novakoski says. For example, if someone ran their first 5K, they post it. “It really became this cultural shift,” he adds.

Many companies turn to empowerment programs to develop leadership skills within their organization. Marquet believes this is a mistake. If there has to be a designated program for something, it’s not the normal way of doing business. “We are naturally empowered as humans,” Marquet says. Many companies who attempt to change their culture become hung up on change management and give countless speeches; however, that old adage is true: Actions speak louder than words. “All you need to do is change the policies, and you can imagine what an impact that would have,” Marquet says.