The Value of Culture to an Employer Brand

WRITTEN BY: Jörgen Sundberg

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 start-ups and high-growth companies, he knows a thing or two about importance of corporate culture.

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

What do you do?

I’m a management consultant, I help people and organizations lead change and growth for competitive advantage. This involves aligning leadership, strategy and culture, with an emphasis on leadership and management, coaching and developments, organization and culture change, and overall organizational health, which is strategy, design, and effectiveness.

I’m based in London and I work with established companies and startups that are usually navigating the growth and funding phases. I’m also an executive consultant to Astia, which is a global community that helps high growth, women entrepreneurs, and startups with gender inclusive teams with access to capital, leadership development and business expertise.

What is the value of culture to an employee brand?

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

It has never been as important 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 into work every day. There is a great need in many businesses for this deeper sense of meaning and shared purpose. For a startup which doesn’t have a history, past, legacy, or structure, they have to demonstrate their viability, it needs to understand shared purpose, and the reason for everyone to be moving in the right direction. It’s incredibly important for the survival of a high growth company to really get to grips and become cultural experts.

How does an organization go about to understand culture?

It’s important to start with the definition of corporate culture, which goes back to a guy named Edgar Schein, who is a brilliant organizational psychologist from MIT and he 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, a company, and it’s a shared set of assumptions that has allowed you, me, the group, and the company to learn how to solve our problems. It’s actually intangible, it’s an abstraction, you can’t touch it and yet it is constructed of many elements of assumption and expectation.

There are lots of invisible things such as What is our individual 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 and patterns and norms. Many people look at culture as an element of what’s called climate, which is how we do things around here. That’s a very important part of it and a good place for companies to start: Thinking of climate, and how the climate affects individual, and collective intent and in behaviour. Because ultimately what you want to see is the behaviour that’s reflecting the culture you want, you don’t want that disconnect.

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

Step 1:  Start with the definition of it and start with the recognition, and the real 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 as a coach. He was having a conversation 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 would value it. That means that joy 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 of the whole organization becomes reflective of the these values.

Step 2: Is how to evolve a culture based on certain elements. I mentioned climate before and these are certain areas of climate that you can focus on. Think of the kind of environment that is going to be an embodiment of the results of the behaviours of the outcomes you want. Companies can look at areas like flexibility, which is how free are employees able to dig into their work and innovate. Areas like responsibility – Many organizations talk about having a sense of responsibility among the employees but they really don’t have the 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 starts to expand, standards really have to stay fixed. Whether they’re high, medium or low, unless they’re defined, monitored and enforced to a certain degree, they will start to slip.

Another one that’s getting a lot of conversation right now is safety. What’s the belief of the overall safety of a company to actually 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. When there are inconsistencies or unfairness, for example between groups of people who have power in a startup versus groups that don’t have power. Let’s say the leadership team and maybe the founding team versus everybody else. If there are two sets of rules, written or unwritten, if there are 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 good degree of fear around what it is they’re doing and it’s a very painful process. So sometimes when they’re confronted with a problem, and there’s a real conflict on the table, it’s very natural for them to just want to pull away from it and let it drift off to the side. It’s a very natural reaction, but it’s just not very useful.

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

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

The most common mistake around culture is they don’t pay attention to it. They think, “We’ll deal with it later.” Or, “We’ll get to it when we have more structure.” Or, “It’s not important 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 really put together.” The problem is, it can really prevent a company from growing, the problem with pushing this aside is that you just never get ahead of people issues. Once you start to get behind, it’s like reverse compound interest. The challenges just mount.

So if you’re a founder/CEO and you’re looking around your company of 10 – 25 people and you have a lot of growth ahead of you, be really honest with yourself. Write down the greatest 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 just gets it. That if the founders say, “This is our culture. We’re doing really well, everyone understands, everyone’s passionate and committed.” They just 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 themselves are supposed to grow before the company grows.

Usually when a founder or a founding team doesn’t continue to evolve with the company, it’s because 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 of the truth is that the organization really has to look out for these people and put them in a position where they can learn so they can actually stay and thrive, and always connect the company to its genesis.

What is the return on investment on culture?

The ROI is closely tied to competitive advantage. Any organization that has a position of competitive strength or competitive 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 obviously not that broad, but the startup should be able to define the thing that it will have a competitive advantage in. And if there are indications of that efficiency, and so 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. All of these things are achieved usually only when there is a strong sense of culture that is actually pushing people to do more while pulling them ahead to do more as well.

When I have conversations with finance directors or CFOs and 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 at which they’re not succeeding and then we can unpack it from there. So if they’re taking 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 actually make up that process. If you just take them as generic activities, then you’re going to have generic results. The opportunity to really get ahead requires greater cultural attention and greater cultural expertise, those are the added elements that will really allow a company and individuals to realize where they could be, not just where they should be.

How does employer brand fit into culture?

I defined a brand as a relationship, and the best relationships grow and deepen because of trust. Employer brand and the employer value proposition are relationships. An employer, or a startup should understand that its people are really the only source of its competitive advantage, because we have many examples of great, change-the-world technologies that fell flat on their face because the company wasn’t able to 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 are really thinking about their brand, they should think of this as much 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 treat your employees badly, 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 right. So the idea is that if you have employees who really feel well taken care of, and if they have high levels of cultural buy-in and alignment, then they will pass on that sense.

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

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

Along the side of that, he also from the very beginning, as part of the mission, developed the culture that would always look to create fanatic customers, who absolutely loved Netflix. If you go back and look at how they started to do this, it was really intense attention to the customer experience and serving the customer. Before digital media and streaming technology, Reed knew he would be able to take this devoted customer base and make it portable and move it from platform to platform and that’s exactly what happened. I don’t think in the early days of Netflix he was talking about becoming a production company, or a movie studio, and yet he has done that because he already has an audience, he already has a customer base for it.

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

It’s really good stuff and of course a lot of that thinking has led to the organizational work of other major Silicon Valley companies. So certainly the Google’s and the Facebook’s of the world have taken things to greater or lesser degrees of success.

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

I’m certainly 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 I think they missed a very large section in the middle which is – What do you do with a person once you hired them? How is the company organized? How do the teams form? How is conflict resolved? How is performance measured? There are all these things in the middle that most startups, especially in very early stages, are very quick to fire someone, they’re very quick to say, “Ah, well, he/she can’t get it done. He/she doesn’t understand it.” And yet there’s much more to it than that.

I think Netflix has probably over the years refined their 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 continually want the peer pressure as well and high performance. It’s a pretty sophisticated thing to do and I think it’s something that if a startup really 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 really aligned. There has to be high trust, honesty, and fairness. And if people sense that it’s not being implemented fairly, that can be really detrimental to any number of things.

What’s the next big thing in with culture?

I hope it is heading in an adjacent path to the evolving understandings of leadership and the models around teams. And how organizations can actually be business conscious and socially conscious, and how the operating styles and structures, and the leadership perspectives will embrace a renewed sense of – how do we go through our work to be the best we can be and also 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 around being a steward, a servant leader, having humility, having insights, and having a great deal of emotional intelligence.

The best organizations, especially as they compete for the best venture investments and the best 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. There are many founders who give us good examples of being bad founders, it’s not about being ego driven or being 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 it ultimately will be better positioned to perceive and understand it and act on the challenges they face.

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


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