DOES CULTURE MATTER?

3 principles leaders need to accept about organizational culture

by Matt Thomas

Recently, I spent some time with two groups of business owners down in Dallas leading workshops on organizational culture and exit strategies. It was a blast. During a break, one of these executives pulled me aside after learning that a major focus of our business is talent acquisition. He lamented his company’s inability to attract top talent even though they have, in his view, an incredibly strong culture. In the other workshop, another executive complained that her company had no difficulty getting talented people in the door, but their retention rates were horrendous. I asked the first leader how well they pay their people. His response was familiar, “We pay okay, but we’re really after people who buy into our mission.” In my experience “okay” is usually code for below market. I asked the second executive the same question. She responded enthusiastically, “Our comp is at or near the top of our industry!” Wonderful. Follow up question: “Why do your people love working at your company?” Crickets. Here are three principles leaders need to accept about organizational culture:

CULTURE DOESN’T GET PEOPLE IN THE DOOR

But it will keep them there. Underfunded startups and non-profits tend to operate with the belief that their mission and vision are so compelling that top talent will take a haircut to be a part of it. In some cases they aren’t wrong, but for most this is a fallacy that can hold an organization back. We pay for quality. If you think that having a kegerator in the break room and flexible PTO will attract top talent at a discount I can’t help you. On the other hand, paying people well without creating a strong culture for them to be a part of and contribute to doesn’t work anymore. Your compensation could be through the roof, but if your culture is toxic, your best people aren’t sticking around. At the end of the day, compensation will get top talent in the door, and strong culture will keep them there.

CULTURE DOESN’T EAT BREAKFAST

It feels like every few years a “thought leader” comes up with a new tagline that becomes a book, that becomes a mantra, that becomes a conference, that becomes a training tool, etc. etc. In 2006, then CEO of Ford Motor Company Mark Fields attributed the following phrase to his friend Peter Drucker: “culture eats strategy for breakfast”. Even though it has never shown up in any of Drucker’s 31 books over the past decade, it is a favorite tenet for any CEO or management consultant “driving change!” Unfortunately, it is just the latest pendulum swing in company culture speak. It’s true, emphasizing strategy without prioritizing culture is unhealthy and usually leads to exploitation–viewing employees merely as resources to be leveraged for profit. It is also true that emphasizing a healthy culture without a coherent strategy is unsustainable. The end result will be suffering for both the organization and its stakeholders. Building a healthy organizational culture is incredibly important, but without a coherent and complementary strategy, it isn’t worth the cost of the paint you used to plaster your core values on the wall in the break room.

CULTURE CANNOT BE OUTSOURCED

A primary focus of our work is helping organizations identify what is working, what is missing, and what is broken in their culture. We use a homegrown tool we call a Culture Assessment to bring clarity to organizational health. Before these projects kick off, we make sure the leader of the organization understands two things: 1) we will likely surface issues tied directly to deficiencies in their leadership and 2) we will make recommendations, but it will be up to them to do something about it. Good leaders backfill their shortcomings with talented people. Strong leadership teams are a balanced mix of talent, experience, personalities, and passions. At the end of the day, the one thing you cannot outsource is culture. The leader of the organization is, and will always be, the gatekeeper for culture. It is your responsibility to model the behaviors you want to see in your employees. It is your responsibility to hold yourself and your people accountable to the organization’s values and vision. Operations, sales, accounting, and other core business functions can be outsourced to your senior leaders but culture is yours to own.

So, do you think culture matters? Is your comp structure at or above market? Are you prioritizing strategy and culture? Have you accepted the mantle of being the gatekeeper for your organization’s culture? In a forthcoming post, we’ll take some time to provide our working definition of culture, but for now, if you need help getting a handle on where your organization’s culture is today, we can help.