How Important is Culture?: An Inside Look at Keller Williams Realty
8 Pages Posted: 21 Apr 2015 Last revised: 9 Jun 2015
Date Written: April 16, 2015
Corporate leaders pay considerable attention to the strategy and finances of their organization but often less attention to organizational features that impact whether their strategy is successful, including the decision-making structure and the incentives, values and culture that motivate individual employees to act in the interest of the firm.
How important are these elements in contributing to financial results?
We examine this question in detail through the example of Keller Williams Realty. Keller Williams is the largest real estate franchise in the world, with over 115,000 agents. It is also a company with a unique economic and cultural model, embracing organizational concepts such as profit sharing, shared decision making, open books, and extensive employee training.
We review the company’s operating model in detail and ask:
• How important is culture as a determinant of economic outcomes? • Are culture and incentives the same, or is culture something greater? • Are some elements of culture “more important” than others? • How are the values and behaviors within an organization influenced by “tone at the top”?
The Closer Look series is a collection of short case studies through which we explore topics, issues, and controversies in corporate governance and executive leadership. In each study, we take a targeted look at a specific issue that is relevant to the current debate on governance and explain why it is so important. Larcker and Tayan are co-authors of the books Corporate Governance Matters and A Real Look at Real World Corporate Governance.
Keywords: Corporate Culture, Organizational Structure, Corporate Strategy, Strategy Implementation, Competitive Advantage, Organizational Culture, Corporate Governance, Culture Models, Organizational Leadership
JEL Classification: G30, G32, G34
Suggested Citation: Suggested Citation