What is Cultural Dilution and How to Avoid It

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What is Cultural Dilution and How to Avoid It

Guest writer Jay Lucas highlights some of the risks of rapid corporate growth in, “What is Cultural Dilution and How to Avoid It.”

We’ve all heard the expression, “too much of a good thing ain’t always good.”  Can this really be true when it comes to corporate growth? Can too much growth be a bad thing? Not only does rapid growth put strain on systems and processes, but it can also have an impact on the very thing that is often central to a company’s success, its culture.

Definitions

  • One definition of culture is, “The set of predominating attitudes and behavior that characterize a group or organization.” 
  • Dilution also has a couple of definitions, “1) The process of making weaker or less concentrated. 2) A dilute or weakened condition.
  • Cultural Dilution then can be defined as making predominating attitudes and behavior that characterize a group weaker or less concentrated.

I coined the term “cultural dilution” over a decade ago to describe the effect rapid growth can have on a culture. We’ve been fortunate to have worked with numerous clients experiencing significant growth. In our observation, the challenge hardest for them to manage has been the impact that growth has on culture. Does this mean that a company must put a governor on growth to protect its culture? Or does it mean that it must sacrifice its culture to achieve its growth objectives? The idea that it is one or the other is a false dichotomy. Below are a few suggestions to help protect the culture of a team or organization during times of rapid growth.

Purpose

Clearly define and live the vision, mission, and values. Sounds easy, but the truth is many companies have them but fail to use them when solving problems, hiring, terminating, selecting clients, among others. These are not simply platitudes that adorn the halls and walls of a company or its website. Vision, mission, and values are the foundation and without them no company can withstand the stresses, good or bad, that it will certainly face.

Planning

Commit to long and short-range planning. Long range planning allows for greater vision and is a moving target. The plan should allow anyone at any point in time to stop and lift their head from their immediate task and remember why they are doing what they are doing. Having said that, it has been said that Vision without execution is hallucination. Therefore, short-range planning is also important. The long-range plan is the elephant. The short-range plan is how you make eating the elephant one bite-at-a-time possible. The company should have a regular cadence for re-establishing or creating new objectives. We suggest quarterly. Annual is not frequent enough, and monthly is too frequent.

Systems

Don’t wait to scale until the machine begins to fail. The best way to conduct preventative maintenance is through regular review of your key performance indicators. If KPIs are suffering, then the people, process and/or systems likely need some maintenance. This often comes in the form of re-configured or implemented technologies, training & development, (re-)development of policies, procedures, and even KPIs. We have learned that a balanced scorecard approach to planning helps ensure that goals in one area of the business don’t sacrifice goals or objectives in another. Competing objectives or goals is symptomatic of organizational misalignment.

People

I can’t emphasize this one enough. There are no sacred cows! It makes no difference who the person is. If they are undermining the vision, mission, and values they must get on board, or they must go. Teams and organizations must not allow tenured and even founding members to hold the company hostage as they resist necessary change. As employees are added to keep up with growth, oftentimes legacy employees resist the fresh perspective of new staff. Phrases like, ‘this is not how we do things,’ or ‘this is the way we’ve always done it’ are the kiss of death. If these resistors are allowed to stay, regardless of their inability to evolve, then you have a sacred cow.

Communication

Communication is critical. This can’t be emphasized enough. Great leaders must reinforce the vision, mission, and values of the organization. Additionally, they must ensure that everyone knows their purpose and position on the team and its importance to achieving the objectives. Change is hard but getting buy-in and frequently communicating the “why” behind the “what” is critical when managing rapid growth.

Flexibility

Cultures are living organisms. They must be given room to grow and evolve. The only aspect of the business that should remain constant is the vision, mission, and core values. Pardon the expression, but we’ve all heard the phrase, “there is more than one way to skin a cat.” There are many paths to the destination. Make sure not to hold too tightly to the past. Inflexibility will suffocate the change necessary to stay relevant and alive.

If you are experiencing rapid growth and the resulting cultural challenges, we hope this article is a benefit to you. If you need help augmenting your hiring process, we can help. Our proven process, world-class recruiting tech stack, and our seasoned recruiters are an ideal blend of resources to improve any recruiting process.

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Proactive Inventory Management Can Make Or Break You

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Proactive Inventory Management Can Make Or Break You

Our new guest writer Jay Lucas makes his debut today with his blog post, “Proactive Inventory Management Can Make Or Break You.” Jay has been in the recruiting industry since 1995, beginning his career with a multi-national technical & engineering staffing company.  Later he started his own recruiting firm supporting a variety of industries and clients in Texas.  In 2018 he acquired Jordan-Sitter Associates (founded 1978), a well-established heavy equipment recruiting firm specializing in helping manufacturers and dealers of heavy equipment, as well as equipment rental and remanufacturing companies.  Jay’s predecessors were all retired heavy equipment executives looking for an opportunity to leverage their industry knowledge and networks in retirement.  With more than 40 years recruiting in the industry, Jay brings a deep expertise in recruiting process and technology that couples well with JSA’s deep roots in the heavy equipment industry.  JSA is a divisional brand of Reputable Recruiting, LLC, an assembly of specialized recruiting brands.  The name Reputable Recruiting was established because of our consistent performance and growing collection of Google and Online 5-Star Reviews.

We’ve been recruiting heavy equipment talent since 1978, so we are no stranger to executing searches across a broad spectrum of jobs. Our clients are OEMs, dealers, independent rental companies, and re-manufacturers with a wide spectrum of product applications. It has been said, “Sales sells the first, and Service sells the rest.” I’d argue that it’s hard to have a high-performing service organization if your parts organization isn’t functioning at a high level. If you have a superior product, exceptional sales team, and talented service crew, but you can’t get the parts needed to support the equipment then your path will likely lead to unhappy customers and eventually customer churn.

There are a couple of facets related to parts operations that I’m referring to. The first is the spare parts operations (sometimes referred to as service parts operations) at the manufacturer. This job is largely a supply chain position with a heavy planning and analytics function. Unlike production parts planning, which supports the production of whole goods, spare parts planning has a level of complexity due to the difficulty in knowing exactly when a part will fail. In addition, OEMs carry parts for equipment models that are no longer in production, further complicating the parts planning/supply chain. That said, there are several data points that can be useful in helping manufacturers set their stock levels and re-order points.

Telematics, warranty, and historical demand are key data points to determining the assumptions needed to effectively stock spare parts to ensure an industry-acceptable fill rate (95%+). While telematics data is helpful in stocking spare parts for preventative maintenance, warranty data is helpful in providing insights into specific parts failures and the underlying root cause. As an example, understanding that a machine’s undercarriage can be impacted by soil conditions/types can help planners adjust the expected life of a part by region. Sandy soils are hard on an undercarriage, so the life expectancy of the related parts may be shorter in specific areas. Warranty data may also prove that product design, part design, or part quality could be the cause of premature failure. In addition to telematics and warranty data, lead times have made inventory planning a moving target (as evidenced since Covid), so frequent tweaking of the inventory planning models is necessary to address these challenges.

Dealer agreements with parts stocking expectations can also be a contributor to ensuring machine up-time (and customer satisfaction). Suffice it to say, a strong spare parts operation at an OEM will leverage all the data points needed to help improve spare parts availability, machine up-time and ensure good dealer and customer satisfaction.

On the other side of the equation is the dealer parts operation. This position does have some planning elements to ensure proper inventory levels but also includes high levels of sales and support given the direct relationship with the customer. That said, if the OEM is struggling to keep parts in stock there will be a likely trickle-down effect. Strong communication between the OEM and the dealers is essential to ensuring the dealer parts operation runs smoothly.

As mentioned earlier, if sales sell the first and service sells the rest, you must be sure that your OEM and Dealer parts operations are working well together and sharing the necessary information to keep the spare parts inventory flowing and fill rates at an acceptable level.

If you are having a heavy equipment parts supply issue and need to evaluate making staffing changes in your parts operation, give us a call. We can leverage our extensive database of contacts and a world-class blend of recruiting technology and experience to find you the talent you need. We are so sure of our performance, we guarantee it!

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