Does Your Company Have a Winning Corporate Culture?

I was re-reading Bill and Dave (subtitled: How Hewlett and Packard Built the World’s Greatest Company) a while back, by Michael Malone. He’s a great writer, and it’s still an important legacy business story about corporate culture; I heartily recommend it.

Being an ex-HPer, I had tremendous respect, bordering on reverence for the “HP Way”. That was the basis for the corporate culture at Hewlett-Packard for so many years. With the benefit of hindsight, it wasn’t perfect. There were things I would have changed. But you can’t argue with the results. Bill and Dave essentially founded Silicon Valley. They built an unbelievably successful company that grew like clockwork for nearly four decades. The HP Way is long gone and the two companies it split into are largely unrecognizable from the one I worked for. But I don’t believe the original HP ever had a full year of negative profit results, which is pretty amazing.

Defining corporate culture

The term “Corporate Culture” has been defined in many different ways by lots of people. Some of these definitions are so complex they are unreadable. Here’s a definition that I believe is probably as good as most:

“The specific collection of values and norms shared by people and groups in an organization and that control the way they interact with each other and stakeholders outside the organization.”

Still a bit of a mouthful. Maybe you have a better definition, but this one’s probably adequate for our discussion here.

Corporate Culture and Performance

Malone’s book got me thinking about corporate cultures at tech companies and their effect on a company’s performance. It’s something that I believe is undervalued in too many of today’s corporations. It’s often dismissed as a squishy, “soft” issue. One that’s unimportant to analytical senior managers.

Regardless of my HP bias, many successful companies were built with very different cultures relative to HP’s in its heyday. One notable contrast would be IBM. This was a peer competitor that as an East Coast-based company had a much more traditional, hierarchical, button-down culture than HP. The IBM culture was also revered, and the company was also wildly successful for a long time. As the saying goes, there’s more than one way to skin a cat (a very unfortunate idiom–who thought that one up?). I realize that I’m going into the “way back machine” for these examples. But I believe they are classic ” work culture” case studies that stand the test of time.

Cultures have been described in many different ways. That includes but is 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 much in the end. What matters, in my opinion, is whether the culture drives positive long-term corporate results.

The Components of Great Corporate Cultures

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 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. You might say “That could mean it’s a country club”, with excellent compensation and low demands. But how often do you 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”. Many long to go somewhere else, rather than have a tendency to appreciate where they are at.

The best people rise to the top

This is another key indicator of company culture “firing on all cylinders”. In larger organizations, political skills are often 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 these political skills must also be paired with strong business savvy. The best leaders not only have the ability to “win the internal meeting”. They also have 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, as is desirable. A great corporate culture should facilitate the identification, retention, and promotion of well-rounded leaders who excel at both.

Employees speak well of the corporate culture to outsiders

Almost everyone loves to bitch about their job and the idiosyncrasies of where they work. But I find that in companies with the best cultures, the word gets out about how great the place is to work. That’s 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. This overcomes 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. However, I believe in most successful “modern” corporation cultures, this “two-way” flow of ideas is a typical attribute.

Don’t have to overpay to attract talent

You might view this one as the downstream result of the positive vibe created by 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 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 only have 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.