COMPANY CULTURE PART 2: The Necessary Work That Facilitates the Essential Work

The GRAMMYs (the Recording Academy of Arts and Sciences signature event) started making headlines for all the wrong reasons leading up to its annual trophy-dispersing event at the end of January. Deborah Dugan, the Recording Academy’s CEO, was ousted six months into the job for speaking out against harassment. She said the former CEO was accused of rape, she claimed GRAMMY voting processes are “ripe with corruption” and she accused a “boys club” of putting “financial interest above the Academy’s mission.” 

What all this means legally is yet to be determined. But what it represents is yet another toxic culture—the kind that has become all too common in today’s professional world. This will likely cost the Recording Academy – financially and with its reputation—and the same is true for any organization that finds itself condoning or turning a blind eye from such behavior.

A report released in September from the Society of Human Resource Managers (SHRM) begins to put a number on it, quantifying the cost of a toxic workplace. The report reveals that one in five Americans have left a job in the past five years due to bad company culture. The turnover cost to businesses is estimated at $223 million.  

The Recording Academy surely isn’t the only organization singing the blues about a broken culture. A fractured culture is simply a form of dysfunction, and it’s not a question of whether or not dysfunction exists (Patrick Lencioni devoted an entire book to team dysfunction, so you know company dysfunction exists), but rather if businesses recognize the dysfunction and address it so it doesn’t prevent the company from achieving its goals. 

As I outlined in my previous post on culture—every organization has a culture either by design or by default. It’s difficult to say if design or default is at the root of the Recording Academy’s culture, and certainly we can learn what not to do based on what’s unfolding. But our efforts are better focused on traits and actions that help to build a strong culture, which in turn help organizations to flourish.  

Strong cultures facilitate stronger business performance

Obviously every for-profit business is in business to make profits—and nobody argues this. We all understand the desire of every business is first and foremost to stay in business and ideally grow the bottom line. But it’s how it happensthat companies get tripped up on. The hyper-focus on profit, growth, getting ahead, and winning at all costs are stumbling blocks that fatigue employees and fracture a culture. That kind of company is not sustainable. When leaders and managers care solely about metrics and outcomes and not the people who ultimately provide those outcomes and the environment in which they operate, trouble is bound to ensue. Employees will check out mentally if not permanently in search of work that is more rewarding. Great employees will start to take recruiters phone calls they would otherwise ignore. Long term, all other things being equal, that kind of company has less of a competitive advantage.

If the stated—or even unstated—purpose behind a business’s existence is just to make money, it will struggle in the long term. As Simon Sinek stated eloquently in his book Start with Why, people don’t buy what you make, they buy why you make it. That also goes for employees. They won’t be buying what leadership sells them or continue to show up without a convincing Why either. Companies that are “all about the money” tend to end up with mercenaries instead of patriots. 

How do you know if you have a strong culture? 

While this isn’t an exhaustive list of what can be done to build a great culture, these five points are common when it comes to fostering strong work cultures. 

• Look to leadership’s example. Vision and values are only honored and respected when employees see leaders genuinely modeling the behavior they want to see from their people. Leaders set tone and behavioral example. For instance, if risk-taking and innovation are important, is the culture safe enough where it’s okay to fail while trying? A culture of innovation mattered at Apple under Steve Jobs. A culture of performance mattered to Jack Welch at GE. These represent vastly different leaders and company cultures, but both were clear about what mattered to them and the company. The point is, language and action must go hand in hand.  

• There’s consistent action. Culture sticks when the actions that are valued get repeated, reinforced and acknowledged, especially when living those values comes at a financial cost. If leaders say one thing is important, yet reward something else, trust erodes, values just become words on paper or a wall, and a cohesive culture never solidifies. Bad company cultures don’t thrive among good leaders, just as great companies don’t continue to thrive under bad leadership.

• It’s in the stories that are championed and emulated. Companies with strong cultures have an attitude and a legacy that lives on in the stories that are told and the challenges that were met. Because business is cyclical, storytelling becomes critical in helping employees navigate common business challenges effectively and in the context of how the business values problem-solving. These stories reinforce not only what companies stand for, but also how they address their biggest challenges in a consistent and affirming way. And remember, people love to hear the legends that have built the company’s culture.

• The ability to attract and retain talent. There are plenty of great sports franchises that have the ability to attract and pay great talent. But once they arrive, do they perform? Do they make their teams better? Do they have the right leadership guiding them, making them better? Do they stay for the long haul? If you’re a Dallas Cowboys fan, you’re following my point. Most large companies can pay for great talent. It’s another thing to maximize their contributions and have them stay for the long haul. Salary and benefits are only part of the equation. After the negotiations are over, money takes a back seat to the daily work experience. And if the experience isn’t right, if the culture doesn’t work, they won’t stay. People come for the pay, but they’ll stay for the culture.

• Growth is managed well. Growing too fast can destroy a company if leadership and its top talent aren’t grounded in a culture rooted in its values and purpose to help guide them. Growth is often a signal of good talent who are worth retaining. But when it happens too fast, it can cause problems. It’s often said that, “Growth covers up a myriad of sins.”  By reinforcing leadership’s examples, consistent actions, and telling stories that validate how the company chooses to operate, the talent stays and indoctrinates new hires into a company and culture that people want to be a part of. Great companies build apostles for the culture beyond the executive team.

What companies have a great culture?

Any discussion about “great cultures” needs to begin by reminding ourselves that a great culture is not necessarily one that attracts and inspires us. A great culture is one that makes it simple and easy for the people who work in that company to behave in a way that is consistent with their business model and values. Not all of us would want to be part of Google, Tesla or Walmart. But that doesn’t mean they have a bad culture. A truly great culture can feel toxic to people who don’t want to be there and shouldn’t be there. 

Any list will be debatable as we can pick apart any company for its misgivings. While some people would feel right at home in the Jack Welch era of GE, others might feel completely alienated. Netflix is recognized as a company with strong culture and appetite for innovation that helped it disrupt home entertainment and pioneer a new era of online streaming. Zappos, Chick-fil-A, LinkedIn, Southwest Airlines, Disney and Starbucks are also well-noted companies that have built admired cultures—by design. 

In Let’s Be Clear, I point out how United Airlines had all the right messages and values written down. The problem was it didn’t live them out. United’s We Fly Right and We Fly Friendly values actually flew in the face of all that was right or friendly in 2017 when a passenger was dragged off a sold-out fight so an employee could take that seat. The employees, confronted with a difficult situation, didn’t act in accordance with the written values. They didn’t seek to find a solution to what We Fly Right means in this scenario, which cost their reputation dearly. Contrast United’s image with that of the no-frills carrier Southwest Airlines, whose “warrior spirit, servant heart and fun-LUVin’ attitude” are more than words on paper, they generally are attitudes exemplified by employees for all to see and experience. This comes down to culture and how strong cultures make it easy for employees to find solutions and want to give their best every day.

Fixing a fractured culture

If the large companies I’ve mentioned can grow and still maintain a culture where people love to come to work, then any company of any size can do it. There’s no doubt that the larger an organization gets the harder this becomes and the more intentional leadership must be. 

Companies with less-than-ideal cultures can change them, step by step and with intention. But culture change is also long, hard work and there must be an appetite for the journey (if you want to read a great turnaround story on company culture, check out American Icon detailing what Alan Mulally went through to turn around Ford Motor Company). There isn’t a quick fix to culture change. It typically takes at least a year for each layer of management (e.g., four layers of management, four years of change) for a new culture to take fully root and become permanent. But it will be worth it. The alternative is to accept the obvious inconsistency and frustration that, otherwise, everyone will experience.