Why Company Culture Matters So Much For Growth

This week is one of my favorites of the whole year because it’s the week of our company retreat. This is the fourth year we’ve done it. I love getting to see everyone again in person!

For the first eight years of the company, everyone (or nearly) worked in the office together.

We would occasionally have a team lunch once a month or so in the office and at the end of the year we’d have an offsite lunch. We’d have donuts and bagels and get a cake and a card when it was someone’s birthday. I also used to have a once a week all hands meeting for about 30 minutes to go over whatever was new and other people would update the going’s on in their departments.

Like everyone else, things changed a lot in 2020 when COVID hit and everyone started working from home. For one thing, we stopped trying to hire people who could drive to the office and just looked for the best people we could find anywhere in the country.

This was great because we could hire people we never otherwise would have found. It also meant though we had a new challenge on our hands- how to make sure the culture we had in person would translate to people we would only see once a year for a few days.

But that isn’t the topic I want to address today. I want to start at a more fundamental level and ask what is a company culture and does it really matter?

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If you had asked me way before I started my first business years ago, I would have said this was just a silly HR concept and not something real-world entrepreneurial people worried about or spent time on.

As it turns out though I saw this impact in real life even before I was out on my own. When I worked as a restaurant manager in a multi-location concept I could see firsthand how the personality, work ethic, and priorities of the store manager were directly reflected in the entire crew of the location.

In one store, the manager was filing false reports every single month on his inventory so he’d get his full bonus. That store also had more employee cash theft than any other I’d ever seen.

In another store, the manager ran his crew like a drill sergeant, yelling at his assistant managers over every mistake but never offering a single word of praise. Guess how his assistant managers communicated with the staff? The turnover there was double anyone else’s.

In a third store, the manager was the kindest person you could imagine and they consistently got top ranks for customer service. But they also had 50% more payroll cost than anyone else and their record keeping was chaos and their profits upside down. Why? The manager never said no to anyone who needed more hours or wanted to stay and get overtime and she was terrible at scheduling to begin with- her employees loved her but also took complete advantage of her kindness.

Obviously, in each case, the store took on the culture of the person leading it and what they allowed or how they led by example. I am positive this is not what the company wanted from them. But how to fix it?

How do you get the company culture you want even as you grow? Here’s what I think is the answer:

How to Set and Maintain the Company Culture You Want

First, you have to decide what the company culture is. It’s going to be basically what the owner is so unless you intentionally think about this and decide what it is you want, you’re going to get something that just reflects who you are. Which is fine, unless you want to be more specific or make sure it doesn’t pick up your weaknesses as well as your strengths.

For example, in the store scenarios above, each store reflected the culture set by the manager. This came about because the manager decided who to hire and the hiring was based on who the manager thought they would work well with or was more like themselves than other candidates.

The guy who was stealing tended to hire people who had no problem with stealing (meaning they wouldn’t report him) and the result was a bunch of people who also stole.

The manager who communicated by yelling hired people who would accept yelling and negative feedback as the way things were done and they in turn yelled and berated.

The manager who was so kind would hire kind people, which isn’t bad, but never being able to say no and being disorganized and chaotic is a problem!

The problem is as you grow you get further and further from being able to see and encourage everyone on your team and be able to personally lead by example.

As you bring on managers and delegate some of the interviewing and hiring processes you want to ensure that the people who are doing it now are still looking for the right qualities and traits that you looked for in them and that they are in turn passing that on as they go.

This only happens if you hire right in the first place and make sure that you set clear expectations and hold everyone equally accountable. This is where business owners usually fall short.

They may have what they want in their mind and they may hire people with similar traits. But if it’s not spelled out the next level down may not have it as much and by the time you bring on your tenth or twentieth person the message may have been lost altogether.

So, step one is to decide what the culture is. For example, at my company, the overriding mantra to help anyone make any decision is “do what’s in the best interest of the client” and that means even if it’s not in our best interest or the company’s best interest.

Hopefully, those all align but if not for some reason, then that is the way to decide. And we let every single new hire know this. We also let people know that it’s OK to make mistakes, the goal is to figure out why and avoid them going forward. We strive for continuous improvement and don’t spend time placing blame or ruminating on errors.

Another thing we emphasize is to jump in and help out- we avoid the phrase “that’s not my job” and look for people who are happy to help out others in getting everything done even if it wasn’t on their plate to begin with.

When I first started hiring, I was looking for people who had these attributes. But I also tried to make clear specifically what I was looking for and why it was important and why it mattered to the business.

Now, when hiring happens, the people who do it are looking for the same things I looked for and are hiring the same people I would have hired. The culture I think is important to our business pervades the entire staff even as we approach having over 100 people here.

This only happens if you first decide what you want and then communicate it clearly and make sure you positively encourage people when they meet the expectations and course correct those who fall a little short with specific feedback.

If you don’t outline this, then you get what you get which may still be good but likely also morphs over time to be more of the average of the group and may stray in directions you wouldn’t approve of given the choice.

What happens as you grow is you start to hear about things happening you never would have allowed or should never have happened. The culture goes in a direction you didn’t want but it also becomes very hard to unwind without making big changes and removing people and it’s not even their fault but what you allowed to evolve by not specifically making it a priority.

I think the only way to ensure you get the culture you want and have a company that always operates in a way you can take pride in is to make sure you set it out explicitly, find people who will follow it, and then be sure you are leading by example. It’s not hard, but it makes a huge difference to making your small business into a much bigger one that still operates and feels like the friendly, personal small business you started with!