Company Culture | Right Recruiting

Culture Capture Can Kill Your Company

One of the things that I like about my job is the broad nature of our client base. In the last 3 months, we’ve worked on projects for a small machine shop, a $13,000,000,000/year aerospace firm, a growing CPG company, 2 retailers, a regional home builder, an advertising firm and a national chain of consumer services providers. Salaries and disciplines vary from entry level to a $300K C-level position with job locations all over the country. We’ve visited most of those clients and have grown to understand their business models and cultures. Magnify that by my 30+ years in recruitment and I think I can honestly say no one has filled more positions in more different disciplines than I have. 

Company culture is a common topic. Candidates ask, “does your client have a good culture?” Clients also always want a good cultural fit. These questions are important, and we try to both understand our clients’ cultures and accurately express that culture to potential candidates. Since culture is subjective, it’s a difficult concept to precisely describe. To one person, a culture may be consensual but to someone else, that same culture may be tedious. We try to be accurate in our descriptions and screening process.

 

However, the topic of this White Paper will put a twist on culture and, to some business owners and executives, may come as a warning. It’s something that I have never seen discussed elsewhere so maybe it’s something we should bring to your attention. I call it Culture Capture.

 

Culture Capture is when employees take ownership of culture to the detriment of the company. If you stick with this discussion to the end, you might have some new things to think about. Let’s begin with a few premises.

  1. The company exists to generate a profit.
  2. To do that successfully, they need to please clients.
  3. To do that successfully, they need to have a strong work force.
  4. To do that successfully, they need to be a good place to work.
  5. Along with compensation, company culture is a part of the equation that makes a company a good place to work.

I don’t think that anyone can argue with any of those statements. Sure, there are start-ups that exist to be sold before they generate any profit. Sure, there is an entire sector of the economy that is composed of charitable and non-profit organizations. I concede there are exceptions, but I still think the above principles apply to 95% of employment situations.

Pleasing clients (#2 above) is important. An undue focus on company culture and the internal workforce to the exclusion of any concern about clients can lead to a potentially fatal issue with generating a profit (#1 above). In the end, culture must please the customer, in other words, the culture should appeal to a work force that will support customer needs. It is not an independent entity.

There are two variables that one must consider when regarding companies and culture. The first is:

INDUSTRY

Your culture needs to serve both your industry and the clients it represents. Here are some contrasting examples:

 

1)    IT vs. Heavy Manufacturing

 

Companies in IT and software are known for their loose cultures. Ping pong breaks, communal get togethers, flexible work hours are consistent with a positive corporate culture. Writing code can be a tedious process and any break to refresh is appreciated and can lead to more productivity. Work rules are loose because that fosters energy and creates fun out of a mentally tough job.

 

Take that culture and put it into a steel mill and you have a recipe for disaster. Mix ping pong breaks with dangerous working conditions and gazillion dollar capital equipment and mayhem will ensue. A positive culture in a steel mill is one that focuses on employee safety, equipment maintenance and any issue that will increase productivity. It is detail-oriented. A happy employee is one that goes home after a safe day’s work and earns a good pay check. Work rules are strict because safety requires thought before action in any heavy manufacturing plant.

In the above example, it is clear that the internal business needs of companies in those two industries will require two very different definitions of a positive culture.

 

2)    Retail vs. Business Services

We’ve all been in supermarkets and seen how they have changed over the years. Customer expectations have changed. Many supermarkets try to create a consumer experience that is more than just a transaction. Beer gardens, outdoor food patios and specialty areas have all become common experiences for the consumer – they are expected now. To support that customer experience, supermarkets have tried to create a more positive employee culture. They pay more attention to training, team building exercises and employee attitude than they did 20 years ago. In a retail environment, in order to make the customer happy, they know that the employee must be happy, or at least appear to be happy.

 

Now let’s take a B2B law firm. As a business owner, I have a pretty good idea of what I want in a law firm. I want competence. Unlike my experience in a supermarket, I don’t need a positive emotional experience with my legal representation. In fact, it would freak me out. I want a solution to a problem. I don’t expect the legal equivalent of a smiling cashier. I expect bright, serious people who can solve any problem I bring to them. To support a demanding client base, B2B law firms create a competitive culture that heavily rewards skills and aggressiveness rather than cultural happiness.

 

In the above example we have two different companies whose external business needs (clients) require two very different definitions of a good culture.

 

The definition of a good culture can obviously vary depending on the needs required by that specific industry and the client base it represents. To properly evaluate an employer’s culture, you need to see it through the lens of their specific industry. An HR person or executive who drives a mismatch between a new culture and business needs is driving off a cliff. I think that is common sense. But it’s the second variable that we must consider when considering culture that creates a trap for owners and execs. Size of company….

 

SIZE

It is in the evaluation of the relationship between culture and size that Culture Capture rears its ugly head.

 

I think it is obvious that a large, international company like Merck can’t have the same culture as a small, 50-person company, even if both are pharmaceutical firms. Something as simple as an open-door policy for the CEO at a small firm is not practical for a firm employing 1,000’s of people at multiple locations. Small companies rely on personal relationships to move things forward because at a small company it is easier to have personal relationships. After all, you usually see the entire company at least weekly, if not daily. Larger companies, for obvious reasons, need to rely on formal policies and procedures because to do otherwise is impractical. The larger a company, the more structure it requires. I don’t think anyone would disagree with that.

 

But a company’s goal is to grow. A company exists to change its size. Most companies want more clients, more revenue, more business. There used to be “lifestyle companies” that were the exception to that. A lifestyle company is one that grows only enough to support its owner’s lifestyle. An owner whose lifestyle goals end with a place in Avalon, NJ will grow his or her firm to support that. A similar company whose owner wants a place at St. Bart’s will grow larger to support that choice. Lifestyle companies are more interested in maintaining a lifestyle than taking risks for growth.

 

There are fewer lifestyle companies now. Why? Business is more competitive. There are fewer barriers for competitors to enter a market. Technology makes vendors accessible to people globally where there were once regional barriers. The truth is that if you are not growing, you are shrinking. If you are the Avalon, NJ lifestyle company, the St. Bart’s company will steal your business eventually.

 

Hence the rub… as you grow you need to change your culture. As size changes so should culture. Why? Because your clients demand it. Your open-door policy becomes impractical because your CEO has more issues in front of him or her. Your loosie goosy vacation policy becomes problematic with 200 employees to monitor rather than the 20 you had 3 years earlier. Twenty people who work in the same location can cover for each other when a client has a question. Two hundred people, not so much. The comfortable, non-challenging personal relationships your company shared among its 20 employees can’t scale up to a company with 200 people and growing. I think you may see the glimmer of Culture Capture now.

 

Here is what happens. Zenith Company (fictional) is a 40-person manufacturing company. They employ 10 professionals, 8 out whom have worked together for at least 10 years. They share the same inside jokes and have an established way of getting things done. To the workers, it’s a good culture. Everyone knows their place.

 

Ownership sees an opportunity to grow by taking their existing product and selling it into a new industry. That’s good. Growth creates prosperity. But it also creates complexity. It requires new skills and usually brings with it the need to professionalize areas that are just administrative in a small firm. New people must be hired and, of course, the default goal is to have the new people fit the culture. The problem is this — the tendency is to have them fit the culture of the 40-person firm, not the 100-person firm that will exist after a year’s growth. Here is what happens…

 

Zenith Company has a buyer who has been there for 10 years. His only experience as a buyer has been at Zenith and he is very knowledgeable about their specific suppliers and products. But we are now adding new products, suppliers and increasing the level of complexity of our entire supply chain function significantly. Mr. Buyer is a good guy he has no experience in these new areas and our new clients will expect us to make and deliver a good product from Day 1. They don’t expect to subsidize any errors along the way.

 

You can see where this is headed. We need a Supply Chain Manager who can identify new vendors and create new systems to monitor deliveries and quality. This person knows that supply chain in a 100-person company needs to be structured in a certain way. Why? because that is the only way to deliver a good product TO THE CLIENT.

 

But, those changes impact on today’s culture. Here is where culture gets captured. The interviewing team composed of long term employees is so focused on the person fitting in today that they ignore the business needs of tomorrow. An owner/exec starts hearing from the interview team about candidate cultural mismatches and never hears about new talent or skills being brought into the firm. No one fits. The aggressive person eager to generate new ideas is exactly what they need. Sadly, it is the last thing the current employees want. The current culture is anything but that.

 

A shrewd person then realizes that his or her culture has been captured. The current employees have essentially held the company’s growth hostage to their desire to maintain a culture that fits their personal needs. It’s the reverse of a “lifestyle company”. The employees are actually limiting the growth of the company, not the owner’s lifestyle.

 

Please realize that your employees are not evil. They are basically scared. They may not recognize that but, at the end of the day, they fear change because change affects them in a potentially negative way. They sincerely believe that their judgments are fair. Their reaction is a normal reaction. Human nature.

 

You deal with Culture Capture by preventing it in the first place. As a business owner or executive, it is your responsible to set the culture. You do this through education about expected growth plans and you do it in a supportive, positive way. You do this early and often.

 

Your staff will separate into two groups. Some will see opportunity and some will see danger. I’ve seen dozens of situations like this in my career. Change is not really the enemy. Surprise is the enemy. An early dialog with your team that reinforces YOUR needs as well as theirs is the best starting point for change. Ninety percent of your team will jump on board. The other ten percent will self-select to leave. That will be better for all parties.

 

Pay attention to signs of Culture Capture and react to them. They are a warning signal to larger potential problems that you may face any time you want to change your business. Candidly, one of your best allies in this is an HR person who aligns themselves with the business needs and is not a kneejerk employee advocate. Those people exist. I’ve met quite a few and they can be very, very helpful in driving positive change.

 

As ever, thanks for getting this far and, as always, please consider Right Recruiting for all your recruitment needs.

 

-Jeff

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