Culture as a Competitive Advantage

Posted on April 13, 2021 by Silvia Coulter


A strong, powerful and constructive culture has a significant impact on a business’s ability to differentiate, to offer top-shelf client service, to attract and retain talent at all levels of the organization, and to reach new levels of profitability. Regardless of how technology continues to help the legal industry reinvent itself from a mature industry to an updated and thriving industry, culture and people will remain a key driver of any firm’s long-term success. As a strategic imperative, creating a constructive culture of success takes much more than words on a strategic plan, or words at a retreat with then no future actions. The very fabric of firms’ cultures is being frayed through the disruptive and changing climate. The leaders who effectively manage change and underscore those values and beliefs that drive culture will find their firms still standing long after many others have failed.

The question is, can firms transform?

William (Bill) Lee, well-known for his former leadership role as Co-Managing Partner at Wilmer Cutler Pickering Hale and Dorr comments, “Thomas Edison said, ‘Vision without execution is hallucination.’ Bill added, “Execution without a strong, coherent and well communicated and understood culture is impossible. The values and culture of an institution are what allows people to meet challenges, innovate and create and execute.” There is so much to say about culture and its impact on the organization, it is difficult to know where to begin. What we know is that firms must focus on this very key strategy. And while lawyers test high in risk aversion, the risk is significant if we rely on old cultural norms to get us to the next level of success.

Since the days of Maslow and his introduction of his hierarchy of needs (motivational theory), many experts have studied human needs and the impact individual people may have on an organization’s cultural effectiveness. To align people with the organization’s goals requires leadership and communication, elements necessary to create a strong culture. Organizational culture has been defined by many experts as a system of shared assumptions, values, and beliefs, which governs how people behave in organizations. These shared values have a strong influence on the people in the organization and dictate how they act toward peers, leadership, direct reports and clients. These beliefs guide people in how they perform their jobs. Every organization develops and maintains a unique culture, which provides guidelines and boundaries for the behavior of the members of the organization. Cultures are deep seated, pervasive and complex. Yet we know firms with strong, supportive cultures outperform firms with misaligned cultures. To understand culture and especially to implement cultural change, requires reading and learning from the experts.

One of the foremost authorities on the subject of culture is Edgard Schein, Professor Emeritus with MIT Sloan School of Management, and author of many best sellers including the Corporate Culture Survival Guide and, his most recent book, Humble Inquiry – The Art of Asking and Not Telling. Schein’s famous model and definitions are below:

Schein's organizational culture model

 

 

 

 

 

 

Illustration of Schein's model of organizational culture

Schein's model of organizational culture originated in the 1980s. Schein (2004) identifies three distinct levels in organizational cultures:

  1. artifacts and behaviors

  2. espoused values

  3. assumptions

The three levels refer to the degree to which the different cultural phenomena are visible to the observer.

  • Artifacts include any tangible, overt or verbally identifiable elements in an organization. Architecture, furniture, dress code, office jokes, all exemplify organizational artifacts. Artifacts are the visible elements in a culture and they can be recognized by people not part of the culture.

  • Espoused values are the organization's stated values and rules of behavior. It is how the members represent the organization both to themselves and to others. This is often expressed in official philosophies and public statements of identity. It can sometimes often be a projection for the future, of what the members hope to become. Examples of this would be employee professionalism, or a "family first" mantra. Trouble may arise if espoused values by leaders are not in line with the deeper tacit assumptions of the culture 

  • Shared Basic Assumptions are the deeply embedded, taken-for-granted behaviors which are usually unconscious, but constitute the essence of culture. These assumptions are typically so well integrated in the office dynamic that they are hard to recognize from within.

From Concept to Reality

Many law firms will describe their firm as “a collaborative culture,” or “an entrepreneurial culture,” or a “unique culture.” Each of these descriptions beg the question, what does this mean? How might we use the model above to unravel the meaning of “unique culture” in any firm’s organization?

Tools are available today to measure organizational culture effectiveness. Simply put, assessments can be used to “assess both a firm’s operating culture in terms of the behaviors and personal styles that are expected (i.e., behavioral norms) and its ideal culture in terms of the behaviors and personal styles that should be expected (i.e., espoused values).

With the pressures of the maturing legal industry before us, many factors contribute to a potential disconnect between a firm’s ideal culture and a firm’s operating culture. Human Synergistics will call these “causal factors” and suggest that when the causal factors are in alignment with organizational values the profile of the firm is in alignment with the ideal. However, when the causal factors are not in alignment with the organizational values, they suggest there occurs a “cultural disconnect.”

We interpret this disconnect and speculate on identifying some of these factors which may include: external factors such as continued erosion of client share of legal budget; continued competitive pressures; the war for good legal talent and the evolution of new competitors in the market including legal startups and accounting firms’ expansion of legal services offerings. These bridge directly to internal factors which include: a drop in financial resources and continued decline of profits; talent retention; client retention and growth, emerging technologies; the need for innovation; and many other pressures affecting the traditional law firm management model and thus the members (owners and staff) of the firm. Firms that take the time to assess their cultures with appropriate diagnostic tools will find they will be better at defining their ideal culture, understanding their current culture and those factors impacting the culture. Using the data and implementing change over time, starting with small groups, will help firms to thrive in new ways.

For some firms the answer has been to run leaner and smarter—re-examine allocation of firm resources and expenditures; promote the best and brightest; meet regularly with clients and other effective strategies to combat the shrinking market. Other firms the answer has been to cut costs across the board—downsize support staff; vote out unproductive partners and offer fewer the chance for advancement to equity partnership. Others yet will rely on a strong lateral integration strategy. Some of these firms have made the right decisions, but how many will have made the wrong decisions, the results of which are only to be seen in the not-too-distant future?

To what extent have these changes impacted an otherwise successful culture?

Firms focused on culture may reap unseen benefits including an uptick in client service. When client service is high, strong financial results are likely to follow. When the culture is such (outstanding client service) versus (we need to cut costs; promote less; cut budgets) people tend to hunker down. They are less inspired by the message of doom and gloom than by moving toward a common goal of the “great place to work” or “best client service.”Culture is fast-becoming one of the most challenging tasks facing Managing Partners. This due to a number of factors: COVID-19 has changed the rules of how we define the “workplace;” firms are growing and whether it’s across floors, or across states or countries, maintaining a strong culture and driving that culture throughout the organization is, and will continue to be a top priority.

In summary, amidst a changing and challenging environment, law firms will have a stronger chance at a healthy (financial, talent, and clients) future when they better understand their culture as it exists today—what makes it great or what needs to change.

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Silvia Coulter is a founding principal with LawVision Group. She is certified in leadership and culture assessments and assists firms with strategic client growth and client retention initiatives. She is the co-author of the recent book, SAM-Legal: Turning Key Clients into Strategic Accounts, and may be reached at scoulter@lawvision.com.


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