There’s no doubt that culture matters.
Staff turnover at organisations with a poor company culture, compared to those with a well-defined, engaging culture, is over three times as high. That’s three times the HR costs associated with replacing and retraining staff, and vastly more in the accumulated disruption and lost opportunities. Productivity in firms with happy employees is considerably higher – shown by the fact that companies with happy teams outperform their competitors by 20%. (https://www.entrepreneur.com/article/238640).
But as firms grow from small to medium and beyond, culture can take a big hit. As they scale, I think there are three key challenges that every business will face at some point.
Culture challenges as you scale:
1. Drifting away from ‘the mission’
Authenticity of purpose drives a business forward. It keeps ambition alive, gives your team a sense of purpose in their role, and it’s an increasingly important way of differentiating your brand in a saturated market. But amidst the day to day pressures of selling and delivering, that mission can easily be forgotten.
Business owners tend to start with a clear mission to deliver some product, service, or outcome, but as more people join the team, their influence invariably becomes diluted. More levels of hierarchy as the team grows and the founder becomes less involved in the day-to-day of the business, means communications become harder to manage.
2. Disengagement in the team
Great company culture ensures staff are motivated, productive, stay for the long term, and attracts the best new recruits. Just as customers are attracted by purpose and mission, staff are also looking for some meaning in their work.
But while in a small business, where every team member can clearly see how their input translates into results, where it’s much easier to understand their role in the business, in a larger business, there’s a risk employees start to feel like a cog in the machine. That’s demotivating – why put the effort in when you can’t see the output – and it leads to disengagement, which increases the likelihood they’ll start to look elsewhere.
3. ‘Culture terrorists’
While disengagement and demotivation amongst your team will depress growth, some individuals can be actively catastrophic for your growth. If you have employees who are actively disruptive to other employees: disrupting their work or badmouthing the company, losing customers or not delivering on their promises, that can lead to whole swathes of employees and customers leaving, and your brand being seriously damaged.
The faster the company is growing, the more rapidly it needs to recruit, and the harder it is to find the right people and onboard and manage them in the right way.
What can be done?
There are no silver bullets to culture management. It’s about implementing processes that integrate the right culture into the everyday running of the business: ensuring that everyone feels a sense of purpose, recruiting people who buy into and can support that purpose, and communicating values and mission to the whole team on a continuous basis.
To facilitate a sense of purpose across the whole company in a deep sense, get everyone involved with making policy around purpose and culture. Ask people how different processes should flow, or how communications should be managed. You should also be seeking to build a company history and folklore – take photos of all company trips and create a collage of each to go up on the wall, for example. And celebrate success wherever you find it: bring in smoothies or buy the team a drink, or take them for dinner after a successful project. It’s the little touches that make the difference.
However, finding people who fit your culture is also important. I would always advise recruiting on culture first, skills second. If they’re not a culture match, their skills are useless, regardless of how talented they are – and they can even end up being disruptive to the flow of the team. Think what are the attributes of someone who is successful in your company? Stick firmly to that, if their values clash, they won’t be right. In the interview ask potential recruits to give examples of how they would cope with certain situations, to assess if that fits your way of behaving. Ask for examples of past experiences rather than hypothetical questions. When you take on new people, induction should be as much about understanding the culture as understanding the role – both are key to success.
Underpinning everything is communication. Culture cannot be systemised so you need to continually articulate and communicate with the team what it is through values and mission statement. Remember too that that leaders and managers do set the tone, people will follow what you do, not what you say. So, embed your values into your junior managers as a priority as they will be the first influence on your staff throughout the lower levels. Does everyone understand your core values as a business? Explain what each one actually means with examples. And entrench that behaviour through incentives - for example, many of our members link bonuses or pay rises not just with hitting targets but with showing the right behaviours in their work.
Mission, or authenticity of purpose, comes through in the communications between your customers and sales team, marketing, delivery experience, etc. Creating and maintaining a great company culture is about understanding your mission and values, and continually communicating and reinforcing those to your team in their everyday work.