Balancing act

Frank C. Sullivan realizes that strategy is a vital part of any growing and successful business. But if you think strategy is the most important, he’ll have to disagree with you.

“One of the things we try to keep in mind is the saying that, ‘Culture eats strategy for lunch every day,’” says the chairman and CEO of RPM International Inc., a holding company with subsidiaries that manufacture and market coatings, sealants and specialty chemicals, primarily for maintenance and improvement.

The strategy needs to be supported by a free and autonomous culture.

“You can have the fanciest strategies in the world, and if they are in contradiction with the culture, the culture is going to win,” he says.

Sullivan breaks down culture at his company, which posted $3.37 billion in fiscal 2009 revenue, into four groups. First, there is the group that buys in to the culture and also puts up good numbers.

“Your best leaders don’t need direction day to day,” he says. “Your best leaders already get the culture. They are innately performance-driven. They are people that like to win, and they are people that really don’t like to lose. So they don’t need to be motivated to perform. They are people that celebrate organizational accomplishments. They recognize other people. They’re all about building something great, which is different from somebody that is all about me.”

Second, there is the group that doesn’t get the culture and isn’t producing.

“That’s easy, too,” he says. “You get rid of them. As soon as you identify them, you get rid of them. When you do that, the flip side of that is, pretty soon, you get a culture that starts rejecting the nonperforming naysayers.”

It’s the two groups in the middle that tend to be the most challenging for leaders.

“You’ve got folks that aren’t performing but are trying their best to live the culture and get it,” he says.

“Then you’ve got the people that are putting up the numbers, and despite their performance, they are what the Army would call toxic leaders. They don’t get the culture. It’s all about them. As long as they are making their numbers, it’s, ‘Get the hell out of my way. Let me do my thing.’”

Here’s how Sullivan handles those two middle groups at RPM.