Culture is what guides and drives a business, for better or worse. The set of values, mission, attitude and atmosphere that shape your work environment has a significant impact on results. But if you allow your company culture to evolve organically without guidelines from executives, and without input from workers about what's important to them, you could wind up with exactly what you don't want: a toxic environment that no longer attracts and retains top talent and has difficulty functioning.
Here is a look at how you can shape and foster an organizational culture that aligns with your company mission -- and how to get it back on track should it falter.
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Own your culture
The first step in shaping your organization’s culture is to codify it in a culture statement -- and own it. Without one, your organization will be challenged in attracting the kind of talent you want.
"There's a huge difference between owning your culture and being able to point to it as a recruiting, hiring and retention tool, and having culture be a deterrent to the kind of people you want to hire," says Donna Levin, co-founder and previously vice president of policy, CSR and workplace solutions at Care.com, and now a senior lecturer in the Entrepreneurship & Innovation track at MIT Sloan School of Management. "One of the first things we did when starting Care.com was to sit down and describe the kind of workplace we wanted; the kinds of people we wanted to work for and with, and set to translate those into action. Then, we used those traits, those values and qualities to hire," Levin says.
For Care.com, Levin says the concept of “There for you” became the linchpin of the organization's culture, encompassing values like transparency, open communication, innovation, an entrepreneurial spirit, respect and humility.
Culture constantly evolves
It’s also important to realize that culture can -- and likely should -- evolve, especially as your organization grows. Here, having avenues for employee input are crucial.
"Not only do we use this clearly defined culture statement when we're recruiting and hiring, we use this as an evaluation tool for our yearly performance assessments," Levin says. "We not only evaluate how our people are aligning with the culture, but whether the culture is aligning with the people. For instance, we used to have 'Having Fun' as one of our major culture values. But after a while we decided to remove that -- so many people were saying that they felt pressure to have fun every day, and if that wasn't happening, it just added extra stress," she laughs.
The major danger in not codifying and regularly evaluating your corporate culture is that you'll make “bad fit” hires and end up with high turnover, says Levin, but there are other dangers in areas like reputation and recruiting.
"We found through Care.com's 2012 survey of our customers that turnover was costing, on average, 150 percent of each lost employees' salary -- dealing with the disruption, search, interviewing, all of that," Levin says. "If your culture's toxic, you're going to see this. And you'll also see your reputation take a hit as people turn to social media to tell everyone how awful their experience was," she says.
Since word-of-mouth is one of a company's best recruiting tools, this factor alone can have a huge impact on business success, says Levin. "If you have a company of superstars, wouldn't you want to pull in people like them from their personal networks?" she says. Without a solid culture, whatever that may be, you may be destined to bad hires and high turnover.
The “Glassdoor effect” is absolutely real, and it’s a major cultural influence that companies shouldn’t ignore, says Joyce Maroney, senior director of customer marketing and director of The Workforce Institute at Kronos. If you're not actively encouraging your employees to speak out about what's both good and bad in your organization and its culture, other outlets, such as Glassdoor, InHerSight, Indeed and Kununu, allow them to anonymously post their thoughts, feelings and experiences with your company, and, for better or worse, they will use them, Maroney says. The “Glassdoor” effect can either help you or hurt you, so try to make sure you're the “first responder” when it comes to issues in the workplace.
"It's really, really important to focus on culture issues and on listening to what your employees want and need and delivering that. Part of that is actively encouraging them to provide feedback to you and on public sites, without 'cherry-picking' people who will only post positive things," Maroney says. She adds that Kronos’ Glassdoor reviews are one of the major drivers of applicants for open roles because of the positive feedback from former and current employees, and it’s something the company actively works to perpetuate.
Culture comes in many flavors
The notion of a desirable culture will vary from organization to organization, and can be extremely different depending on geography and industry, says Levin; it's not a “one size fits all” proposition. An investment bank with wealthy, conservative clients will have a very different culture than, say, a company that manufactures snowboards -- one will necessarily be more buttoned-down than the other, and that's fine, as long as it's clearly stated and you're not misrepresenting your organization, says Levin.
"The great thing about establishing and owning your culture is you can guide the conversations and hire the right people for that culture. Some cultures don't work for some people, and that's fine, but you need to be upfront and truthful about who you are as a business so it works for both you and your employees," she says.
This is an area where many older, larger organizations get into trouble, says Sean Storin, who founded a job search site, One Degree, which used cultural fit to match candidates with their ideal employer, and who now serves as director of client solutions at the Ken Blanchard Companies.
"Culture's become such a huge buzzword over the last few years, and some organizations are trying to leverage that to get better, brighter talent to come work for them without understanding what it's really all about," Storin says. It's a great thing that these companies want to innovate and to learn how to adapt and change to be successful in an evolving marketplace, but too many don't understand how to go about it, he says.
The invisible hand
"The key to developing a culture is listening. There's an 'invisible hand of the market' aspect to this; employers want to drive culture, but employees are the ones who are actually going to build it. So if the company is deaf to what the employees actually want, what drives people's interest in an organization, then they're going to continue to be lost," Storin says.
Storin uses a conversation he had with two Stanford students as an example of the need for companies to go beyond paying lip service to culture. The students were each recruited on campus for internships -- one for a major investment bank and the other at a global consulting firm. After their internships, both came away disillusioned and disappointed that the experiences were far from what the companies claimed, Storin says, and now the companies missed the chance to hire two potential superstars.
"You can tell a great story on your website or have 'cool' people recruiting on college campuses, but if the culture doesn't match up, the candidates are not going to stay. Like these two Stanford students told me, ‘Regardless of how good it would look on my resume, I will never work there.' And when I asked why, both said the companies were too 'old' and 'conservative,' and that they just didn't fit in, even though the firms made it seem like they would," he said.
"In a tight labor market, the candidate or the employee has the ultimate say in what's important to them. And yeah, culture aside, no one's going to work for free, but when we look at why people are successful, why they stay at their jobs, why they make a positive impact on business and interact successfully with others -- it's culture. So, firms can emulate culture all they want, but if they don't really listen to what their workers want and what's important to them, they'll never make it," Storin says.
Nowhere is this more evident than in the recent examples set by Amazon and Uber, both of which have come under scrutiny for toxic cultures brought to light by former employees.
Culture can become a four-letter word if toxicity is ignored. Toxic cultures kill more businesses than recessions. And it is liable to kill Uber too, says Steven L. Blue, president and CEO of Miller Ingenuity and author of American Manufacturing 2.0: What Went Wrong and How to Make It Right.
“I’m always prepared to make a compelling case to convince CEOs that culture is every bit as important as strategic planning. I can cite all kinds of studies and dazzling statistics that prove that positive cultures create positive financial performance. But now I know I don’t have to thanks to a four-letter word: Uber. Uber’s toxic culture is front and center,” Blue says.
According to recent reports, Uber has engaged in everything from sexual harassment to stealing driverless technology from Google. Even some of its own investors claim the company fosters a toxic culture, Blue says.
Culture isn’t lip service to ideals
So, what went wrong, and how can you keep it from happening to you? It starts with recognizing the importance of culture and making sure everyone at your organization manifests your organizations’ values every day, Blue says.
“How can a company that claims, as Uber does, that its values are ‘making communities safer’ and ‘standing up for its driver community’ go so horribly wrong? That is because those are only what I call ‘bumper sticker’ values; values that look good in an annual report but have no real meaning inside the company. Wells Fargo is a perfect example of this. Two of Wells Fargo’s key, stated values are ‘ethics’ and ‘what’s right for customers,’ and yet they defrauded their customers by creating over two million ghost accounts,” he says.
There is often a difference between bumper sticker slogans and the real values that lie beneath, he adds. Value statements are always warm and fuzzy, but a company’s real values are manifested in how they act, not how they claim they act. And at the end of the day, the culture is nothing more than a collection of values, and those values dictate how employees will behave, Blue says.
Culture is intentional -- and impacts the bottom line
That’s a lesson Greg Besner learned early on, first at Goldman Sachs and then as an early shareholder of ecommerce site Zappos.com. Seeing the importance of a focus on culture and how it helped build employee engagement, loyalty and employer brand was key when he founded culture management software platform CultureIQ, and it’s the foundation of the entrepreneurship courses he teaches at New York University’s Stern School of Business.
“Watching Zappos grow from 70 to 5,000 people while still maintaining that inspiring culture focused on great service and wowing customers gave me great insight into how important culture is as a leader. And how important it is to branding, employee satisfaction, attracting and retaining talent -- and the huge impact it has on business metrics,” Besner says.
If you’re not intentional about your culture from the very start, it can quickly become a major liability instead of an asset, like what happened with Amazon last year or Uber more recently, says Besner. And that can affect a company’s business performance, morale, engagement and its ability to attract great talent.
“In our opinion, if a damaged culture leads to bad press, most likely this isn't news to the company's current employees -- we don't see a mass exodus from Uber. The real concern is the potential new hires who may not join Uber given this negative information. The only way to combat this is to change the culture as quickly as possible. Leadership must be intentional, active, transparent and potentially drastic about culture change,” Besner says.
All the way to the top
Culture can’t just be relegated to the human resources department, it has to be “a top-down, bottom-up, across-the-board, no-exceptions, everyone’s involved initiative,” Besner says.
“So many people mistakenly think of culture as just an HR problem, but when we speak to our customers today, we are speaking with CIOs, CEOs, CHROs, CLOs [Chief Learning Officers], CTOs -- this is a leadership topic, not an HR topic, and that is what can make or break a company’s culture. It can’t be siloed,” he says.
Can you fix it?
While leadership should identify a desired culture early on in the company's growth and ensure that hiring and performance processes are aligned with this desired culture, all is not lost if you’re looking to change toxic elements of an established and/or existing company's culture, before it lands you in an Uber-like situation, says Miller Ingenuity’s Blue.
“Have an outside professional survey company conduct an anonymous survey and ask every single employee in complete confidence what they think the company values are. You may be astounded by the results. Second, if you find your underlying values are not the same as the ‘bumper stickers,’ find out why. What is driving the difference? Chances are you’ll find operating managers are the root cause. Or you might be the root cause. As an example, many operating managers don’t give a hoot about anything other than results. Of course results matter -- no company can prosper without positive results. But results without appropriate values are often temporary, or in the case of Wells Fargo, only illusory,” Blue says.
Then, it’s time for a reality check. Does your company have the “right” values? By that, Blue means values that serve your employees, customers, community and shareholders equally. These are values that form what he calls a “culture by design, not default.” If not, it’s time to change them, he says.
That means being willing to remove employees who aren’t aligned with the values which, admittedly, can be tough, Blue says.
“Let’s assume you have the ‘right’ values (you may, but I doubt it). Start at the top of the organization and go down, management layer by management layer. Those that don’t believe in, won’t abide by, or don’t demonstrate the values have to go -- this is essential. This sounds simple, but it is not easy. If your top managers ignore the values, then everyone else will, too,” Blue says.
This process doesn’t have to happen in one fell swoop; it’s a multi-year undertaking that must be performed carefully and delicately so that the business doesn’t crash and burn, Blue says.
“Take it one step at a time, one manager at a time. And believe me, once you start replacing managers for values reasons, the whole organization will begin to behave differently, and people will applaud you for doing so. This extends to hiring, too -- don’t let anybody in the front door that doesn’t fit in with your values. Interview potential new employees with values in mind. Don’t just state the values and ask if they agree; of course they will, because they want the job! Ask them what their values are. Ask them what values they would admire in a company. If their values don’t match with company values, don’t hire them, no matter how good they are. Otherwise, they will be like an infectious disease on the organization,” he says.
You also should make values a key part of performance evaluations, Blue says. Don’t make this a “check-off-the-box” exercise. Make values the standard for promotions and compensation increases and a key determinate in terminations.
“By instilling the right set of values, you'll save your company from becoming a four-letter word too,” Blue says.