A while back I was reading Bill and Dave (subtitled: How Hewlett and Packard built the World’s Greatest Company) by Michael Malone. He’s a great writer, and it’s an important legacy business story about corporate culture; I heartily recommend it.
Being an ex-HPer, I have tremendous respect, bordering on reverence for the “HP Way”, which was the basis for the corporate culture at Hewlett Packard for so many years. With the benefit of hindsight, it wasn’t perfect and there were definitely things I would have changed. But you can’t argue with the results. Bill and Dave essentially founded Silicon Valley and built an unbelievably successful company that grew like clockwork for nearly four decades. The HP Way is long gone and the two companies it recently split into are both nearly unrecognizable from the one I worked for. But to this day I don’t believe HP ever had a full year of negative profit results, which is pretty amazing.
The term “Corporate Culture” has been defined many different ways by a lot of people, some of them so complex as to be unreadable. Here’s a definition that I believe is probably as good as most:
“The specific collection of values and norms that are shared by people and groups in an organization and that control the way they interact with each other and with stakeholders outside the organization.”
Maybe you have a better definition, but this one’s probably adequate for our discussion here.
Anyway, Malone’s book got me to thinking about corporate cultures at tech companies and their effect on a company’s performance. It’s something that I think is really undervalued in too many of today’s corporations. It’s often dismissed as a squishy, “soft” issue that’s unimportant to analytical senior managers.
Regardless of my HP bias, there have been a lot of very successful companies that have been built with very different cultures relative to HP’s in its heyday. One notable contrast would be IBM, a peer and competitor which as an east coast-based company had a much more traditional, hierarchical, button-down culture than HP. But the IBM culture was revered as well, and the company was also wildly successful for a long period of time. As the saying goes, there’s more than one way to skin a cat (a very unfortunate idiom–who thought that one up?).
Cultures have been described many different ways including but not limited to “Work Hard, Play Hard Culture”, “Tough-Guy, Macho Culture”, “Process Culture”, “Bet-The-Company Culture”, and many more. In my mind, none of these characterizations matters all that much in the end. What matters, in my opinion is does the culture drive positive long-term corporate results.
So you might surmise from the previous sentence that the easiest way to define a great corporate culture is to look at financial results. That’s fine in the long run; with the benefit of hindsight, there probably is no better way to identify a great corporate culture than the decades of financial success such as HP and IBM enjoyed. But in the short run, financial results can be deceiving. It’s entirely possible to have a great short run of success even with a poisonous company culture.
So what’s the best way to measure whether you’ve built a great culture? The details vary at a variety of successful software and hardware companies, but what are the common ingredients of a culture that sets the stage for long-term success? Here’s my shot at a list of the key attributes of winning corporate cultures:
Employees want to stay
For me, this may be the best gross indicator of a winning corporate culture. I know, you might say “that could mean it’s a country club” with excellent compensation and low demands. But how often do you actually see employees wanting to stay in a long-term low-performing company? Very seldom in my experience. In reality there is a great propensity for employees to take the view that “the grass is always greener” and long to go somewhere else, than there is a tendency to appreciate where they are at.
The best people rise to the top
This is another really key indicator of a company culture “firing on all cylinders”. Particularly in larger organizations, political skills often are the dominant talent required to rise to the top of the org chart. There’s nothing wrong with this–it’s a skill set that’s very important to successfully influencing large, complex organizations and moving them in the right direction. The ability to connect with people and bring them to your position cannot be understated as a needed attribute of a corporate leader. But it’s important that these political skills are also paired with strong business savvy. The best leaders not only have the ability to “win the internal meeting”, but also the analytical and decision-making skills to drive the company to win in the marketplace. Sadly, all too often I’ve seen that those rising to the top are not exceptional in both these categories. A great corporate culture should facilitate the identification, retention and promotion of such well-rounded leaders who excel at both.
Employees speak well of the corporate culture to outsiders
Everyone loves to bitch about their job and the idiosyncrasies of where they work. But I find that in companies with the very best cultures, the word gets out about how great a place is to work because great places to work are frankly, very rare. This means that you’ve created such a great environment that your employees brag about it to their friends and external colleagues, overcoming that very strong human propensity to view their current jobs in a negative light.
Opinions flow freely without fear of retribution
This one probably isn’t a hard and fast rule. I’ve seen traditional hierarchical organizations that were very successful. In those hierarchical situations, you tend to see opinions flow down from the top much more often than you see them flowing openly from below. But I believe in most successful “modern” corporation cultures, this “two-way” flow of ideas is a pretty typical attribute.
Don’t have to overpay to attract talent
You might view this one as the downstream result of the positive vibe created from the previous four categories. If you’ve created a fair, stimulating, challenging and comfortable work environment, you don’t have to work very hard to restock it with exceptional new employees. In many cases you won’t even have to look for them–they will find you. In companies with the very best cultures, outsiders practically beat down the door to get hired. That means your pay packages won’t need to “set the market”, they’ll just need to be “in the market” to attract great talent.
So that’s my list–what’s yours? What’s your view on which companies today have the finest corporate cultures? Post a comment to expand the discussion.
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A company’s culture must resemble its brand, this is why organizations have an inherent responsibility to select candidates who are not only skilled in their fields, but fit the culture of the brand. When it comes to reflecting on employee-client relationships, there is a stronger connection between the two when employees are happy with their employer. In an extended client lifecycle, this is extremely important. Happy employees are more likely to equate to happy clients.
Jay Fulcher says
Interesting take on an important topic that nearly every company is rightly worried about. One thing to note IMO is that culture (“how we do things here”) is always evolving and changing based on size, scale, circumstance, etc. Values (“anchor tenets for how we operate and what we most value”) on the other hand are inviolate and unchanging.
Phil Morettini says
Jay, thanks for your take. I totally agree with your premise, although we probably have a slight difference in how we define terms. I include “values” in how I define “culture”.
Raamon Newman says
Great article Phil, felt you really nailed those five points…thanks for writing it!
A culture that supports and encourages each others work-life balance is also a powerful influence. This means being aware of this need and then knowing how to create the balance….most have the former but lack the latter.
Inc. survey of 500 CEO’s 2014 found 80% of the best ideas CEO’s come from non-work-related activities. This is because when they are not at work they have let go and allow their more powerful subconscious to come up with new ideas.
http://www.inc.com/magazine/201409/inc.500-2014-inc-500-ceo-survey-results.html This must also be supporting the fact that over 50% of companies had 75% plus revenues derived from products released in the last 3 years.
To creating even better winning cultures in all companies!
Phil Morettini says
Raamon, thanks for your addition to the discussion. -Phil
cynthia allen schenk says
“But it’s important that these political skills are also paired with strong business savvy. The best leaders not only have the ability to “win the internal meeting”, but also the analytical and decision-making skills to drive the company to win in the marketplace. Sadly, all too often I’ve seen that those rising to the top are not exceptional in both these categories. ” No truer words are spoken. This is why “Start -ups’ are doing so well and exactly what needs to be disrupted in U.S. Business today. Companies have so many “Political” leaders and so few skilled executives who can implement anything. I believe sound business plans and straight talk should be the top priority.
Phil Morettini says
Totally Agree, Cynthia.