The Business Case for Culture

Company culture is essential for every business

There’s one question that you can ask virtually any person in any organization of any size and get an answer: “What’s the culture like around here?”

Whether it’s a potential new hire, an early customer, or an investor asking the question, the answer matters…and it matters a lot.

Culture determines which behaviors are acceptable or unacceptable and which processes will work and which won’t. Culture reveals assumptions, beliefs, and values. Culture determines whether a company succeeds or not. Great cultures are the foundations of great companies.

Heed these truths that every CEO needs to know to build a corporate culture that creates business success.

Truth: Building and living the right culture is fundamental to running and growing the business.

Culture is not a snap-on tool. Culture permeates every aspect of a company. Culture is the walk—not the talk. It starts with the CEO and has an immediate and daily impact, even on companies at the concept stage when the CEO is the only employee.  True values aren’t a set of lofty aspirations; make them actionable and visible in every action.

Tip: Begin the foundational work of defining company culture Day 1. 

Write down an initial outline of 5 to 7 values for the business and stakeholders. Snap a photo of the list. Make it the screensaver and wallpaper on all your devices. Pin the list to the wall.

Truth: Culture is impacted and influenced by every human interaction that touches the business.

The founder can make lists and have intentions, but ultimately company culture is all about how people interact. Culture fit is not limited to founders and employees. It impacts every stakeholder—employees, advisors, Board of Directors, investors, partners, vendors, and even customers. In return, those individuals influence and shape the company culture through interactions, small or great. Every time the company adds a new stakeholder, the equation changes. No person who has anything to do with the business is exempt.

Tip: Mind the stats.

Companies with rich cultures experience about a 14 percent employee turnover; for companies with a poor culture, turnover exceeds 48 percent (Columbia University).

 An engaged workforce leads to a 21 percent increase in productivity. Unhappy, disengaged employees take on average 15 more days of sick leave than average. Managers are the #1 reason employees take or leave a job. A startup needs employees who are happily willing to make large sacrifices—long hours, low pay, more challenges in a day than many jobs have in a week. It’s hard enough for a startup to find the right people. The right culture helps keep them passionate and engaged. That keeps them on board.

Truth: Company culture is developed by intentionally defining and living your team’s intrinsic values.

Gather your group’s intrinsic values via survey or a team exercise. Who is your team, and what drives them? But collecting values is simply not enough – a survey does not a culture make. Beyond the survey, there may be other questions to ask: What values will drive customer engagement and key business metrics?  What values will rally the team? What values will inspire stakeholders? Be both thoughtful and intentional as you prioritize the values that will make your company and your culture stand out.

Tip: Commit time to discover what is important to your team.

Try this small group exercise. Ask “what lights you up?” Then ask, “What shuts you down?” Have employees list both. Do the values expressed match up with the core values of the founder and the company? For example, if work/life balance is a high priority for a potential hire, a startup might not be the right fit. If the startup founder envisions a more hierarchical organization, an employee who cares less about “moving up the ladder” and more about increasing contribution and growth might grow dissatisfied over time. If an employee requires structure, a flat or matrixed management style might not be the best environment for that employee to thrive.

Truth: Culture can be an asset or a liability.

It’s a leap for anyone to join a startup. An inclusive, rich culture helps key hires, advisors, strategic partners, and even investors take that chance. Each of these stakeholders is taking a calculated risk to join your mission. What is going to keep them with you when times get tough? Finding stakeholders that believe what you believe and are aligned with your team’s values significantly improves the odds that they will stick with you.

If you ignore your culture, if you fail to direct your culture in a way that drives your business forward, or if you don’t ‘walk the talk,’ you are suffering a self-inflicted wound.  Nearly one-fifth of the American workforce is actively disengaged in their job.  You don’t have time for this nonsense at a startup.  If you don’t define and live up to your culture, you don’t have a baseline to measure engagement.  If you have defined your culture and you have team members working against the rest of the company, cut bait.

Tip: Recruit and filter for culture fit.

Ensure that the culture discussion is a deliberate part of the company’s recruiting process, but before you do, describe your company’s culture to an advisor or mentor. Does that advisor or mentor agree that your culture is as described? Ask existing employees to describe the company culture in a few sentence. Are those descriptions aligned with what you think the culture is? If you hear the same point from three different people, even if you don’t like it, it’s probably reasonably accurate.

Truth: Conflict is normal, healthy, and exists in every environment.

Company culture determines whether healthy conflicts and disagreements lead to higher levels of trust or create divisions. There will always be conflicts, but they don’t have to be destructive.  A team that is aligned around a common cause and mission has healthy arguments. No matter how passionate the conflict, a good team will disagree, debate, decide, and move on.

A struggling or misaligned team may stew on a disagreement for days or even weeks.  This can paralyze a team, destroying productivity and shifting focus away from key goals or even meeting customer needs.

Tip: Don’t set it and forget it.

 Make culture a regular topic with the management team, advisors, and Board. Take an engagement survey of your team once or twice a year, publish it, and take action based on the results.  A team built on the foundation of a strong culture maintains passion and engagement. That keeps them on board, but it takes consistent effort to grow your culture with your team, and keep a high level of engagement.

Culture will always evolve as your business evolves. Like water, culture always flows downhill.

When you read the word culture, what image comes to mind? Tell us what you see and why.