Building a strong corporate culture could be the most important thing you do as an entrepreneur. Yet some believe that execution is the most important determinant of success. I would argue, however, that execution is a given and should be a baseline expectation and there is no acceptable excuse for ignoring culture. Obviously, you get nowhere as an organization if you cannot execute, so this isn't a one or the other conversation, rather, both need to be tended to. The problem with ignoring culture is that your most effective people start to flail, lose interest and seek other opportunities when culture is unclear or non-existent. This creates a revolving door for talent - even when you are lucky enough to accidentally get an "A" player you will not be able to retain them. This will prevent you from growing and creating new profit centers. A strong culture will attract good people because everyone talks about "great" companies and they will gravitate towards them. On the other hand people hear about companies with poor cultures and are repelled by them.
My belief is that some leaders truly don't know how to create a strong company culture, yet it is one of the single most important jobs as a company leader. It takes practice, deep insight and willingness to be open and honest. Many companies rely on tokens of culture, such as ping-pong tables in the break room, beer in the fridge and snazzy furniture - these things aren't necessarily bad, but they are just tokens and fail to capture the critical importance of creating a solid company culture. A much deeper dive is required and for some discovering cultural meaning is too touchy-feely and is not an intuitive or comfortable exercise.
Some misguided companies fail to build strong culture because they feel that they have adequately implied the culture. The problem is that when you ask 10 different employees they will come up with 10 different answers as to what the company culture entails. How does a company know if an employee is a good fit or not in an implied culture? How does a company hire "the right person" if the company doesn't hire for a match in Core Values (good luck)? How does an employee know if they are doing a good job or not when they do not know how to act or how to be in a company? When does a manager let go of an employee (and why) if they aren't matching the reviews for an employee against an established value system?
I have seen first hand companies who have an implied culture, which is very dangerous. The best performers do well for a while and tolerate the ambiguity briefly, but over time they feel they aren't recognized for their contributions. They have performance reviews that are surprisingly negative or get little positive feedback for their positive contributions. They start to feel confused, lost and even start to lash out at others - corporate back stabbing begins! Over time your "A" players quit out of frustration - they say things like "this is not what I signed up for." Once this starts it doesn't stop until something is done to fix the culture. The exodus will have severe impacts on both short term and long term profits. Ultimately, company valuation will erode and you will be left with "B" and "C" players who are willing to tolerate lack of culture just to get their paychecks.
Ineffective management thrives in companies who lack properly defined culture. They will socially engineer their teams with people who simply do as they are told and don't rock the boat, which halts innovation and makes it impossible to have an open, honest culture where issues are solved with regularity. The "B" and "C" players do not dare challenge management and this allows for the management to run around doing whatever they want whether it is good for the company or not. This satisfies the ineffective managers need for control even if it isn't healthy for the company. We will talk about ego another day. This subservient, compliant culture falsely makes ineffective management feel as though everything is in control and they will communicate this false sense of security to ownership - and ownership typically accepts it at face value. The more disconnected ownership is from the business the longer they will allow this to go on and the worse the problem will be.
So how can a company overcome cultural deficiency? The first and most important task is for companies to recognize they have a problem and decide to fix it (isn't this just a universal truth in life?). Are they only providing cultural tokens and mistaking this for creating a true culture? Are they implying culture, such as hard work and long hours, but failing to crystallize their true nature?
Secondly, companies need to establish a value system, typically referred to as Core Values. These values must be shared by everyone in the company, communicated regularly and reinforced consistently. New hires should fit the Core Values and employees should be removed who do not fit the values. Employees should be given regular reviews according to their Core Value fit and should be rewarded for strengthening the company Core Values. It isn't always easy to establish and communicate Core Values, but it might just be the most important thing you can do as an entrepreneur. The result of focusing and strengthening your company's values will be:
Employee retention & satisfaction
Attract new "A" talent
Eject problematic employees
If you would like to discuss establishing a strong Core Value system, please contact us! We can help. We have amazing tools and real-world, practical methods to solve this issue forever.
Looking forward to the conversations to come. Do people have examples in support of strong company culture or the result of not building a strong culture and values system?
Our Recent Posts
4 Behaviors of a Great CEO According to Harvard Business Review