What is culture and how to create a good one

Culture has a direct impact on your productivity and the productivity of everyone that works for you and with you, for better or worse. Many founders are not aware of the importance of culture and therefore let culture develop randomly and inconsistently, resulting in lost profits and higher chances of failure. Savvy founders craft a culture that focuses everyone’s efforts on delivering what the founder feels will be the business’ competitive advantage.

What is culture?

A simple and useful way to think about culture is to realize that it is created directly from how people sense they can be recognized and rewarded by the organization. Culture is created and propagated far more strongly by the informal ways people are recognized and rewarded than any formal set of rules or written descriptions of culture. As most recognitions and rewards, both positive and negative, are given by people of authority and influence within an organization, what they say and do matters most. The founder often has the most authority and influence, so he or she usually plays the most important role in creating culture. But he or she does not play the only role. As an organization grows, people will start to report other than the founder and how these people offer recognition and reward becomes important. If it is very different in style or content, then the culture will be diluted or become chaotic. To create consistent and strong cultures, founders need to make sure EVERYONE with responsibility and authority for other employees, contractors and suppliers doles out recognition and reward with similar repercussions.

How does culture align with productivity?

How promotions and bonuses are given shape culture, but not always how founders may think. If the reasons for the promotion or bonus are not clear to everyone, people will make their own guesses (or listen to rumors) of why that happened and start acting to increase their chances for positive recognition, which might be different from why the promotion was actually given. A common rumor would be, “She got the promotion because they are good friends.” If this becomes widely accepted, even if it wasn’t true, the founder and the leadership team lose their ability to motivate employees to want to improve their skill sets, and the culture will move towards being nice and saying “yes” rather than constantly improving competitiveness.

Informal recognitions matter a great deal because they revolve around how much and what type of personal initiative can be exercised in performing one’s responsibilities. Do you get praised or yelled at? Taking personal initiative to act in the best interest of a customer can be important to a company’s reputation as having great customer service, but if personal initiative can result in public shaming, then initiative won’t happen, and customer service will never be better than mediocre.

Similarly, are unsolicited improvement ideas accepted and acted on, or ignored? If they are ignored, then improvement ideas will dry up and people will only do what they are explicitly asked or expected to do. Although reacting to improvement ideas takes time and slows the instantaneous pace of improvement, rewarding good ideas offsets that cost. If the founder and leadership team are themselves not creative in their problem identification and solving, then the company will not be viewed as innovative by customers or employees.

Little things matter

How you direct yourself and lead your life will play a big role in shaping the culture of your enterprise. Here are some characteristics we all have that will send a message of what the founder will recognize, for better and worse. Everyone around the founder will make adjustments to be more favorably recognized in these subtle ways—it is not that their personalities will change and they will suddenly always be on time, but they will start being less late and they will start their meetings on time if you do and you say time is important to the success of your enterprise.

Are you on time? What do you say or do when somebody is late to a meeting?

Do details matter or are founding principles more important to get right? People will learn how to present ideas to you that impress you and in turn structure discussions so that the details or founding principles are even more clearly articulated.

Are you neat; are your clothes and desk always clean and organized? If you are tidy, then some people will be even tidier to get noticed by you.

Do you like meetings? How you run meetings will influence how everyone runs meetings.

Do you say “hi” to everyone or only people you know or only people that are important to you? If you know everyone’s names, everyone will consider that important.

What sort of culture is best?

It depends upon both: 1) what you want your competitive advantage to be, and 2) how much time and effort you are willing to invest in creating AND KEEPING ALIGNED the culture you feel is important.

If your business succeeds based upon being the lowest priced alternative in the market, then you need to create a culture where nobody wastes time, especially you, and the entire staff are made to feel good about themself based upon how much product or service they deliver day in and day out, even just with an offer to share a drink after work whenever a new productivity record is set.

A business that succeeds based upon influence and glamor will be more successful with a culture focused on supporting any and all efforts to identify and correctly forecast fashion trends, finding new influencers as well as maintaining social relationships with the leaders of critical suppliers. Employees that are not influencers themselves can be recognized and rewarded for their sense of fashion and fashion trends as well as being offered opportunities to meet influencers.

Some businesses succeed based upon team efforts, for example many service establishments where exemplary service requires highly coordinated efforts of many individuals. It would be important for such a culture to recognize and reward team over individual efforts. The rationale of any individual recognition or reward would have to be carefully explained to everyone or else it could lead to people feeling they should act more independently, at the expense of teamwork, to be rewarded.

Loyalty and turnover of key individuals will be impacted by founders’ decisions on how much to emphasize promotion from within, versus hiring people with special skill sets from the outside, perhaps even firing individuals whose skill sets are no longer required. While promoting from within creates more loyalty and longevity, it requires investing in almost constant training and development of new products and services to ensure advanced skills have ample opportunity to contribute to company success.

Our coaching delivers more personally relevant examples.