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A Culture of Loyalty

by

William M. McGee

April, 2010

Back in 2008, my firm was asked by The Lane Construction Corporation to conduct a survey of their employees on the topic of loyalty. The results of the survey, and the additional unanswered questions that were raised by them, have been the subject of much of my thinking time ever since. While I have formulated many theories on how Lane's culture of loyalty developed, the one conclusion that can be drawn is that the culture is unique and worthy of being documented.

Background

Prior to conducting the survey, loyalty had been extensively discussed and debated by Lane's management, primarily during planning sessions. Management felt that the company's culture was strong and formed the foundation for aggressive growth. The company had pursued growth through internal channels, as well as acquisitions, without a deterioration of quality or an undue strain on their infrastructure. The growth had led to improved financial performance, and it was only natural that management wanted to continue on that path. They felt that the company's culture was strong and able to support further expansion, but they wanted to be sure. In addition, they simply wanted to confirm that all employees felt about Lane the same way they did. Therefore, they decided to undertake a double-blind survey of all employees that would assess the strength of their culture and the loyalty of their employees. At the time of the survey, Lane had approximately 1,200 employees.

The survey was conducted online in a manner that completely preserved the confidentiality of the participants. All programs and databases were deployed on our servers, under a sub-domain web address that was secured. Participants were given unique user names and passwords, to ensure that there was no unauthorized access to the website. However, once access to the website was granted, there was no attempt to attribute answers to survey questions to specific individuals. No session data were maintained, and no cookies were set. In essence, all reasonable steps were taken to ensure that participants could submit their responses to survey questions in a totally anonymous fashion. The goal was to ensure that participants answered survey questions openly and honestly, without any fear of possible reprisal.

Survey Results

To some of us, the survey results were nothing short of astounding. A full 75% of all participants responded that they were totally loyal to Lane, and would not even consider offers from other companies under any circumstances, even if those offers were for better opportunities or higher compensation. Many of us feel a sense of loyalty to the company for which we work, but most of us would be excited for an offer of a better job or higher compensation. Not at Lane. Three quarters of Lane employees said they would not leave under any circumstances. The remaining 25% of employees said they considered themselves totally loyal to Lane, but would consider offers for better opportunities or higher compensation. In our experience, the views of this remaining 25% are more reflective of almost all employees at other companies.

The survey touched on several other topics related to loyalty, but it was the main results of the survey that caused us to pause and consider the implications for Lane. Immediately, we began asking ourselves obvious questions, such as:

  • How did this type of culture develop at Lane?
  • Does Lane's culture provide them with a competitive advantage?
  • Can the culture be sustained?

In the remainder of this document, we will try to explore each of these questions in a little more depth.

How Did Lane's Culture Develop?

No one at Lane seems to be able to answer this question, but employees seem to know that the culture is real, and that it has been there for a long time. The culture seems to be a natural assumed part of their everyday working life at Lane. The Lane Construction Corporation was founded in 1890, and it would not be surprising to us if it were learned that the company's culture stemmed from those early days.

One symbol of the culture is Lane's published Mission, Vision, and Values Statement. Care for People is clearly spelled out in the Values Statement. We believe that these types of corporate documents are important to defining and developing a culture. However, even more importantly, Lane seems to have lived up to their stated values over many years. When asked to provide examples of instances when Lane demonstrated their values to them, employees cited numerous times when the company continued to pay them during periods when construction projects were halted for various reasons. They also cited numerous situations when the company came to their aid during periods of personal tragedy. Therefore, it is our conclusion, that one element that has contributed to the development of Lane's culture is a clearly stated set of values regarding people. In addition, the company seems to have adhered strongly to those stated values, even though other decisions may have been easier and less expensive. In other words, the company has "walked the talk".

Legacy is certainly another element that has played a role in the development of Lane's culture. A high percentage of employees have been with Lane for many years, and in some cases, through generations of families. A case in point is David Benton. David is currently Executive Vice President of Lane's Southern Division, and he was the sponsor of the survey of employees that we conducted. David has been with Lane for over 30 years. His father was with Lane for over 40 years. His brother is currently with Lane, has been there for over 40 years. His father-in-law was with Lane for over 40 years. His brother-in-law is currently with Lane, and has been there over 20 years. David's legacy at Lane may be somewhat extreme when viewed against the average employee at Lane. However, there are numerous examples where multiple members of the same family worked at Lane for at least some period of time. Therefore, it seems reasonable to conclude that many employees view Lane as something more than just a place to work. The company is linked to the family history of many employees, and that has certainly contributed to the development of the Lane culture.

Does Lane's Culture Provide a Competitive Advantage?

There is no doubt that Lane's culture is a strategic asset. Most companies with which I am familiar would deeply covet such a culture. It is also easy to conclude that Lane's culture provides the company with operational strengths on a day-to-day basis that are just not present in other companies. However, for a strategic asset to become a competitive advantage, it must be able to be leveraged in the marketplace. It also must be visible and evident to customers, suppliers, and competitors. When viewed in this context, the answer to this key question is not so clear.

Lane currently acquires almost all of its business through government sponsored bids. In the bidding process, as long as all bidders can demonstrate the technical ability to do the job, the lowest bid wins. Having employees that are more experienced in the company's methods than those of competitors does not necessarily translate directly to lower costs. A highly experienced workforce would probably translate better to a company strategy of higher quality, rather than one of low cost producer. However, Lane's experienced workforce does lower costs of a project in an indirect way. The higher level of knowledge and experience on a project reduces the amount of rework that must be done, the processes are cleaner, and fewer mistakes are made. Nevertheless, these attributes do not necessarily lead to a low cost bid on a project, and any government entity that is choosing a vendor for a project would be hard pressed to select one that is not the lowest bidder.

It is our conclusion that while Lane's culture certainly provides the company with operational strengths and flexibility, it does not provide a strategic competitive advantage in the markets where Lane currently competes. This would likely change if Lane decides at some point to enter markets where quality of work is paramount to winning jobs.

Can Lane's Culture be Sustained?

Another obvious question that comes to mind when being exposed to such a unique culture as Lane's, is how long can this last? There is no way of predicting, but it seems to have lasted a long time at this point. One way that strong cultures get changed and diluted is through mergers and acquisitions. Yet, Lane has made many acquisitions over the years, and has folded them into the company and their culture very effectively. The Lane culture appears to exist everywhere in the company, regardless of how employees came to be part of Lane.

In fact, Lane's culture was probably a strength when integrating acquisitions. Seeing and meeting large groups of loyal, dedicated Lane employees would have to ease the anxieties of employees whose companies were being acquired.

Lane has grown significantly over the past several years, through internal growth as well as acquisitions. During that growth, the company has done a masterful job of maintaining the strength of their culture. However, the question at hand is can it continue? There is no doubt that the company wants to continue to grow, and more acquisitions seem likely. Logic would say that further growth over time, especially through acquisitions, will lead to dilution of culture, regardless of how strong that culture might be. Our guess is that Lane's culture will evolve over time, as is only natural, but most of the major attributes of the culture will be carried forward. The culture is so strong at Lane that it is impossible to believe it will totally disappear within the foreseeable future.

* * * * * *

The culture of loyalty is extremely strong at Lane. In our view, it is one of a kind. It took decades to develop, but was certainly guided by the company establishing values that it thought were right, and then living up to those values. While the culture provides a wealth of operating advantages to the company on a day-to-day basis, it does not necessarily create a competitive advantage in the market in which Lane currently does business. However, the culture is strong enough to be a competitive advantage should Lane decide to enter different types of markets. We believe the culture is so strong at Lane that we would not bet against it surviving over the long term. It has already survived through numerous growing pains, business pressures, and economic cycles. In our opinion, the culture and the company will go hand-in-hand for many more decades into the future.

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