The Value of Culture to an Employer Brand

What is the value of culture in employer branding? Brian Evje helps people and organizations lead change and growth by aligning leadership, change, and organizational health. With his intense experience working with startups and high-growth companies, he knows a thing or two about the importance of corporate culture.

Listen to our chat below, keep reading for a summary, and don’t forget to subscribe to the Employer Branding Podcast.

What is the value of culture to an employer brand?

Culture is a competitive advantage. Culture is intrinsically tied to competitive advantage. If a company wants a competitive advantage, it will diligently understand how to perceive, address and leverage culture to its best advantage.

It has never been as crucial for organizations to understand their cultural advantages because it’s also connected to their shared purpose, and shared purpose is the reason that everyone comes to work every day. There is a great need in many businesses for this more profound sense of meaning and shared purpose. A startup that doesn’t have a history, past, legacy, or structure must demonstrate its viability; it needs to understand the shared purpose and the reason for everyone to be moving in the right direction. It’s essential for a high-growth company’s survival to get to grips and become a cultural expert.

How does an organization go about understanding culture?

It’s essential to start with the definition of corporate culture, which goes back to a guy named Edgar Schein, a brilliant organizational psychologist from MIT who coined the term “corporate culture.” In a nutshell, Schein calls culture the past. It’s the residue of your history as an individual, a group, and a company, and it’s a shared set of assumptions that have allowed you, me, the group, and the company to learn how to solve our problems. It’s intangible, an abstraction, and you can’t touch it, and yet it is constructed of many elements of assumption and expectation.

There are many invisible things, such as What is our motivation for doing what we do? But there are also many visible things, and these are the languages of organizational psychology when we talk about rituals, patterns, and norms. Many people view culture as an element of climate, which is how we do things around here. That’s an essential part of it and a good place for companies to start: Thinking of weather and how fitment affects individual and collective intent in behavior. Because ultimately, what you want to see is the behavior that reflects the culture you wish; you don’t want that disconnect.

What’s your step-by-step guide to evolving culture?

Step 1:  Start with its definition and the recognition and absolute acceptance of the necessity for becoming a cultural expert. So that starts with defining values. It’s an easy place to start for a founder/CEO and to ask, “What do you want this startup to become?” And think of it very aspirationally. Think of the core values.

There’s a very topical example from the United States. I’m from San Francisco, and the Golden State Warriors (basketball team) are in the playoffs, and they have a fantastic coach who just gave an interview talking about his journey as a leader and coach. He was conversing with a more experienced coach who asked, “Give me one of your core values.” And this coach of the Warriors, Steve Kerr, said, “Joy.” Great, that has to be reflected in your practices every single day. So Coach Kerr values joy just like a founder/CEO. That means that pleasure has to be threaded through all of the elements of the company in the same way that this basketball team threads joy and their other values, which happens to be competition, compassion, and mindfulness. They weave all of these through everything that happens. So the system of this team and the whole organization reflects these values.

Step 2: How to evolve a culture based on certain elements. I mentioned climate before, and these are certain areas of weather that you can focus on. Think of the environment that will embody the results of the behaviors of the outcomes you want. Companies can look at areas like flexibility, where free employees can dig into their work and innovate. Areas like responsibility – Many organizations talk about having a sense of responsibility among the employees. Still, they don’t have command and control because they’re afraid of giving too much responsibility.

Things like standards – What are the standards that are set for all elements of the company? Especially as the company grows and changes over time and expands, measures have to stay fixed. Whether they’re high, medium, or low, they will start to slip unless they’re defined, monitored, and enforced to a certain degree.

Another one that’s getting a lot of conversation right now is safety. What’s the belief in the overall safety of a company to have the ability to take risks, make mistakes, look foolish, and say things that don’t make sense? What is that level of psychological and emotional safety?

Step 3: Test culture, and you test culture most clearly under stress. For example, when there are inconsistencies or unfairness between groups of people who have power in a startup versus groups that don’t have the ability, let’s say the leadership team and maybe the founding team versus everybody else. If there are two sets of rules, written or unwritten, two sets of practices or two sets of treatments, that will be a real test of the actual culture, and if there’s a discrepancy in how those two groups behave, that’s a real problem.

You have to look at how organizations face and resolve conflict. Startups are usually bad at it; they are very fragile environments. Most startups and founders/CEOs I work with have a reasonable degree of fear around what they’re doing, and it’s an excruciating process. So sometimes, when confronted with a problem and an actual conflict on the table, it’s very natural for them to want to pull away from it and let it drift off to the side. It’s a natural reaction, but it’s not very useful.

I would say finally – bad news. The healthiest environment is one where insufficient information can be shared. Create a culture where that’s expected, where the assumption is when we have a problem, we’ll get it into the open to do something about it.

What are some of the typical cultural pitfalls that you see?

The most common mistake around culture is they ignore it. They think, “We’ll deal with it later.” Or “We’ll get to it when we have more structure.” Or, “It’s unimportant now because everyone sitting around this table is so tightly linked. We don’t need to have anything that’s formal or anything that’s put together.” The problem is it can prevent a company from growing; the problem with pushing this aside is that you never get ahead of people’s issues. Once you start to get behind, it’s like reverse compound interest. The challenges mount.

So if you’re a founder/CEO and you’re looking around your company of 10 – 25 people, and you have much growth ahead of you, be honest with yourself. Write down the most incredible people or culture problems you have right now, and then think about what those problems will look like when there are two – four times as many people, products, or locations within your company. It just keeps growing, so I think that’s the biggest problem.

The second one is that founders assume that everybody gets it. That is, the founders say, “This is our culture. We’re doing well; everyone understands and is passionate and committed.” They think that it happens by osmosis. Often founders don’t outlast the earliest stages of a company, mainly because they fail to recognize how they are supposed to grow before the company grows.

Usually, when a founder or a founding team doesn’t continue to evolve with the company, they haven’t been out in front enough. They get left behind, and then you hear, “The role has outgrown him.” Or “She’s just not big enough for this role as it’s expanded.” It’s half true, but the other half is that the organization has to look out for these people and put them in a position to learn so they can stay and thrive and connect the company to its genesis.

What is the return on investment in culture?

The ROI is closely tied to competitive advantage. Any organization with a position of competitive strength or leadership can take the old General Electric model, which is we’re either going to be number one or number two in every business we’re in. For a startup, it’s not that broad, but the startup should be able to define the thing it will have a competitive advantage. And suppose there are indications of that efficiency. In that case, it could be accelerated revenue growth, it could be accelerated productivity, or it could be areas around either employee retention or shortening time to either market from a product perspective or shortening the sales time. These things are usually achieved only when there is a strong sense of culture that pushes people to do more while pulling them ahead to do more.

When I have conversations with finance directors or CFOs, they say, “Well, what’s going to be the return on this investment of talking about culture?” I usually ask them first to talk about the areas of competitive advantage they’re not succeeding, and then we can unpack it from there. So if they take a long time to close sales, for example, I can usually draw a pretty straight line between those process challenges and the leader, organization, and culture ingredients that make up that process. If you take them as generic activities, you will have generic results. The opportunity to get ahead requires greater cultural attention and more excellent cultural expertise; those are the added elements that will allow a company and individuals to realize where they could be, not just where they should be.

How does the employer brand fit into the culture?

I defined a brand as a relationship; the best relationships grow and deepen because of trust. The employer brand and the employer value proposition are relationships. An employer or a startup should understand that its people are the only source of its competitive advantage because we have many examples of great, change-the-world technologies that fell flat on their faces. After all, the company couldn’t execute; that’s almost always a people issue. So when a startup understands this, then the actual exchange of this relationship, all of the things that the company offers employees, becomes much more meaningful because they’re tied to this sense of competitive advantage, this sense of purpose, and this sense of culture.

When companies think about their brand, they should think of this internally as externally because you can’t have a disconnect. You can’t say, on the one hand, “We’re incredibly customer-focused; we will always do what’s right by the customer,” and then mistreat your employees because that’s a huge disconnect. There’s a quote from Richard Branson around, don’t treat your customers right first; treat your employees right first because then they will treat the customers directly. So the idea is that if you have employees who feel well taken care of and have high levels of cultural buy-in and alignment, they will pass on that sense.

Have you got any examples of companies that have nurtured culture?

A terrific example coming out of Silicon Valley is Netflix. I was fortunate enough in 1996 to do an executive search for Netflix, back when it was figuring out how to automate the mailing process of DVDs to people. They were using assembly lines and micro-processing manufacturing technologies because a penny here would affect the margins. So they were figuring out how to industrialize this. From the very beginning, Reed Hastings built the organization by looking at the best business model for the internet, and he came up with this way to distribute product DVDs to people.

Alongside that, from the beginning, as part of the mission, we developed a culture that would always look to create fanatic customers who loved Netflix. Looking back at how they started to do this, it was intense attention to the customer experience and serving the customer. Before digital media and streaming technology, Reed knew he could take this devoted customer base, make it portable, and move it from platform to platform, and that’s precisely what happened. I don’t think in the early days of Netflix; he was talking about becoming a production company or a movie studio. Yet, he has done that because he already has an audience and a customer base.

The company can continue to create new platforms and ways of experiencing relating to Netflix because of this excellent customer loyalty and devotion. And that comes down to the fact that the employees of Netflix have perfect cultural alignments. There’s a pretty famous deck talking about how Netflix looked at culture, and everyone should look at that because it’s an exciting blueprint. It doesn’t mean you can copy it directly. However, there are some useful ideas and good insights into a way forward that many companies can adopt.

It’s excellent stuff, and of course, a lot of that thinking has led to the organizational work of other prominent Silicon Valley companies. So indeed, the world’s Googles and Facebooks have taken things to greater or lesser degrees of success.

Netflix is also famous for the higher slow and fire fast mantra. What does that mean for the employer brand?

I’m indeed very aware of the principle. I know that many startups try to adopt it, and I don’t think most startups do it well because they missed an extensive section in the middle; what do you do with a person once you hire them? How is the company organized? How do the teams form? How is the conflict resolved? How is performance measured? There are all these things in the middle that most startups, especially in very early stages, are rapid to fire someone; they’re swift to say, “Ah, well, they can’t get it done. They don’t understand it.” And yet there’s much more to it than that.

I think Netflix has probably, over the years, refined its model very well, again, in the same way, that General Electric has refined its model of firing the bottom 10% of performers every year because they continually want this churn; they always wish to the peer pressure as well and high performance. It’s a pretty sophisticated thing to do. I think it’s something that if a startup wants to embrace, they should look at it pretty seriously because the trade-offs go a long way in that when you get it wrong, it has a ripple effect through the organization and especially a startup that’s fragile that needs people to be aligned. There has to be high trust, honesty, and fairness. And if people sense that it’s not being implemented relatively, that can be detrimental to many things.

What’s the next big thing with culture?

I hope it is heading on an adjacent path to the evolving understanding of leadership and the models around teams. And how can organizations be business conscious and socially conscious, and how will the operating styles, structures, and leadership perspectives embrace a renewed sense of – how we go through our work to be the best we can be and be people at the same time? I’m reminded of a quote from Dwight Eisenhower, who said that leadership is about persuasion, conciliation, education, and patience. There is so much in that quote about being a steward, a servant leader, humility, insights, and a great deal of emotional intelligence.

The best organizations, primarily as they compete for the best venture investments and talent as they scale, will recognize that it is about elements of persuasion, conciliation, education, and patience. And not about top-down driven hierarchies, ego, or founders. Many founders give us good examples of flawed founders; it’s not about being ego-driven or someone who seems to take the most oxygen out of the room and the most attention from every event.

Leaders who can embrace different styles will imbue their companies with the same kind of culture and will ultimately be better positioned to perceive and understand it and act on their challenges.

Follow Brian on Twitter @bevje, and subscribe to the Employer Branding Podcast.