How Important is Culture?: An Inside Look at Keller Williams Realty

8 Pages Posted: 21 Apr 2015 Last revised: 9 Jun 2015

See all articles by David F. Larcker

David F. Larcker

Stanford University - Graduate School of Business

Brian Tayan

Stanford University - Graduate School of Business

Date Written: April 16, 2015

Abstract

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

Larcker, David F. and Tayan, Brian, How Important is Culture?: An Inside Look at Keller Williams Realty (April 16, 2015). Rock Center for Corporate Governance at Stanford University Closer Look Series: Topics, Issues and Controversies in Corporate Governance No. CGRP-48 ; Stanford University Graduate School of Business Research Paper No. 15-27. Available at SSRN: https://ssrn.com/abstract=2597215

David F. Larcker (Contact Author)

Stanford University - Graduate School of Business ( email )

Graduate School of Business
518 Memorial Way
Stanford, CA 94305-5015
United States
650-725-6159 (Phone)

Brian Tayan

Stanford University - Graduate School of Business ( email )

655 Knight Way
Stanford, CA 94305-5015
United States

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