Image: Flickr user 周小逸 Ian
Hard-driving management with high expectations can be better for a growing business than a loosely defined set of values.
Organizational culture is meant to be a set of values, mission, and goals that are unique to each company. The quote “culture eats strategy for breakfast,” usually attributed to Peter Drucker, is often cited to show how integral culture is to a company’s success.
The bigger a company gets, the greater the need for a concerted effort from upper management to keep culture intact—weak infrastructure risks breaking it down. Victor Ho, CEO of FiveStars, a customer loyalty network for small businesses, thinks that having a well-defined culture—whether it’s good, bad, or ugly—is more important than not having one at all. Ho experienced the need to cultivate a strong culture in his own company about three years ago when the company raised a Series A round and his talent pool doubled in three months.
In the earlier days, Ho remembers his 40 FiveStars employees hunkering down in a warehouse, working “many, many hours,” six days a week—a demanding culture transferred from Ho’s and cofounder Matt Doka’s Wall Street days.
“I definitely brought a lot of that [culture] with me,” says Ho, who recalls that employees who worked extremely hard and were held to very high standards didn’t receive much praise. In fact Ho says, the typical Wall Street culture he became used to was more about “negative reinforcement” where you “chastise someone when they mess up.”
“That [Wall Street attitude] was a big part of our culture in the beginning,” says Ho. “Not all those parts. Just more the working insane hours and the expectations around that.”
Despite thinking a lot about culture in the beginning, the CEO felt it would be “cheesy” to actually define it. With such a small team spending so much time together, it seemed like the values, mission, and goals of FiveStars were broadly understood by all.
When the company went from 40 to 80 employees, the culture was still left undefined—and its initial, organic culture “got massively diluted by all that came in who had different beliefs, different ways of doing things,” says Ho, who remembers the time as “one of the hardest periods of the company.”
“I remember feeling very much like we had twice as many people, but had half as much output,” he continues. “And I also felt like I had to fight tooth and nail to win the culture back, and I didn’t know if I ever could.”
Eventually, the team was able to officially define their values:
1. Shared humility in that it takes a team to be in it together.
2. Authentic relationships, meaning bring all of your quirks to work, whatever they may be.
3. Warrior spirit, meaning no matter what, don’t give up. The team fights together and never alone.
4. Joy everyday, which according to Ho is really important because life’s too short to not enjoy what you’re doing.
Today, they regularly run team initiatives, such as doing community service work together every quarter, to remind employees of the company’s values, something Ho says is especially important as the team includes nearly 400 people and counting as the company recently closed a Series C round at $50 million.
If he were to do it all over again, Ho says he wouldn’t have left his company’s culture up to chance. Below are three reasons why a strong culture—whether it’s depressing and gloomy or happy and uplifting—is better than no culture at all:
1. Changes The Rrecruiting Process
When culture is strongly defined, the business has an identity and everyone who applies knows exactly the kind of environment they’re signing up for. Ho says he knew what would be expected of him in the finance world when he was still a college student.
As a result, even the interview process is transformed. In an earlier interview with Fast Company, Patty McCord, Netflix’s former chief talent officer, said that after Netflix’s culture was put on the web, conversations during interviews evolved from “Tell me about your life” to “How do you do productive work?” In this way, the company learns more about how the applicant works and how they define success during the recruiting process. This saves both parties from dealing with a bad match later on.
Part of Google’s success is based on its strong values and identity. Laszlo Bock, Google’s senior vice president of people operations, told Fast Company that its recruiters look for “Googleyness” in hires. This isn’t so much about hiring people who look like everyone else, but finding someone with traits that Google values: “someone different, offbeat, who can push and challenge the status quo,” according to Bock. These attributes jibe well with the overall culture at Google and can predict success at the tech powerhouse.
2. Reduces Employee Turnover
When you have a wishy-washy culture and you have no identity, employees don’t know what they’re working for.
“If you have a really strong culture, even if a lot of people think it sucks and they never want to join your company, there will be a segment of people who will think it’s perfect,” says Ho. “They’re going to find your place and call it home. And they’re going to be loyal and stick it out there for a long period of time.”
He adds: “All the best performing places I’d ever heard of have an extremely strong and well-defined culture, whether that’s in tech, Wall Street, and even the Army.”
3. Maintains Values As The Company Grows
As a tight-knit group grows, there are more personalities, beliefs, and values meshing with one another. Without a strong foundation holding everything together, it’s easy to forget what you’re fighting for while putting in those long, grueling hours needed for the business to survive. At FiveStars, every new hire goes through a two-day orientation to better understand the company’s mission and values.
“Every month we also celebrate people in our company who go above and beyond to live out our values and mission,” says Ho. This is sometimes work-related, he explains, such as when an employee goes above and beyond for a customer or client. It could be just personal, too, Ho says, like helping out a coworker who has been down. Ho says, “This positive reinforcement creates a culture where people understand and live out our mission and values often.”