What has COVID done to Company Culture?

What has COVID done to Company Culture?

The effect of COVID on company culture is an issue for all business leaders to consider seriously. I see the following areas for examination:

  • Have you lived your culture during COVID?
  • How are you maintaining your culture and connections in a WFH world?
  • How are you instilling your culture into new hires in a WFH environment?

Have you lived your culture during COVID?

COVID has forced many companies to pivot, cut costs, and adjust strategy. However, did the leader and management team live up to the company’s culture while executing these changes? As everyone’s cultural values are different behaviors to consider.

  • Did you check in with your employees regularly to see how they were coping?
  • Did you communicate effectively and often with your employees, so they knew what was happening?
  • When making changes, did you explain why and where the company’s new direction was aimed?
  • When terminating people, did you do it in person or by email?

The above is just a sample of behaviors that maybe didn’t live up to the company’s values. If you didn’t, then you need to work hard to fix it. As with any crisis like this, there are a few key steps:

  1. Get in front of it. It has happened, so it is hard to get in front of it. However, do an audit of behaviors and values during COVID. Identify the lapses and then plan accordingly. Don’t wait for the Zoom cooler talk to destroy any belief in the companies values.
  2. Admit It. Let your employees know you recognize that you didn’t live up to your values in the identified situations.
  3. Own It. Say it was the leadership’s fault. The buck stops with you, and that is why you get paid the big bucks! Deflecting the blame will only weaken a fragile state and create further disbelief in any values you may have.
  4. Correct it. Layout a plan to correct the behaviors from happening again and what steps the organization will take to reinforce its values in the future. This plan needs to have SMART metrics tied to it so that employees can see the progress being made and it not just more “CEO Bingo.”

Maintaining your culture and connections in a WFH world?

For many, the move to WFH has gone well overall. Productivity is generally up, and work is getting done. Many CEOs and business leaders are considering to what degree they can allow WFH going forward, permanently, one to five days a week, etc. However, one of the reasons that WFH has gone so well is that before COVID, we had strong relationships with our coworkers. We knew them, had worked with them, and most importantly, had built some degree of trust. But the longer we don’t connect with them, the weaker these bonds grow. While we are connecting with them over Zoom, Teams, Slack, or email, that is not the same as in person. If we lose the culture or connections, it weakens the ability of the company to respond to other threats, and people will leave for companies where they see better relationships.

The more time we are remote, the bonds between us grow weaker. Long distant relationships have a 58% chance of success, basically a coin toss. There are stronger connections in a romantic relationship than a work one, so the chances of a “long-distance” work relationship working are less than 50%. So leaders need to figure out how to maintain the connections and culture among employees as they go forward with a WFH policy. If employees are only going to be in the office rarely, the company needs to increase how it builds connections between employees and promotes its culture.

Regular gatherings of employees at events where they can strengthen their relationships will be essential. Getting them to share personal information to build stronger bonds will also be a crucial part of the effort. Doing this will differ among companies, but figure it out and ensure that the events have a clear purpose that everyone understands and get feedback on to know if you are achieving your goals.

Instilling your culture into new hires

New hires are posing the most difficult challenges for companies. Historically we know that 70+% of people regret making the job change on the first day. Now we are in a WFH environment where there are fewer personal connections. If we cannot build those connections and get them to buy into the culture, they will shortly leave, which is expensive for the organization and poses new problems when people are hard to find.

The leader and leadership team need to work with their HR departments to figure out how to effectively onboard new hires and simultaneously install the firm’s culture and develop personal connections among the teams. Achieving this won’t be easy, but the effort will pay huge dividends.

Why Does This Matter?

It doesn’t take much to destroy the employees’ belief in the company’s values and attribute them to just words on a wall. If this is where you are, the road back to get alignment around values will be hard. Without core values, nothing connects the employees to a common bond and purpose, so they are more likely to leave.

If your employees are not connected, they are less likely to have a good friend at work. Without a good friend in an environment where they spend a third of their time, there is less keeping them attached. With demand for employees increasing, and thus wages, they will be tempted to move if there is no downside to leaving the tribe.

Those organizations that live their culture and whose employees have strong bonds of trust will outperform those that don’t. The work to achieve this is not always easy but very beneficial.

 

Copyright (c) 2021, Marc Borrell

 

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Hopefully, Your Firm Doesn’t Claim a Family Culture

Hopefully, Your Firm Doesn’t Claim a Family Culture

I am a strong believer that company culture is critical in its success. It defines who you are, who you attract, and how you behave. As Jim Collins says, the most important thing is “Who is on the Bus.” However, when talking to many clients and business owners, I often hear that they have a “Family” culture within their organization. I am always perplexed by this answer, but it has become a red flag in my book about the possibility of the organization’s performance.

What Does Family Culture Mean?

Drilling down, it would appear that it means that the organization is nurturing like a family. Mentally they envision a Norman Rockwell painting of everyone happy and getting along. However, most family gatherings are not like that. Rather it starts that way and then someone says something that leads to the usual conflicts arising. I know families where they always invite guests to ensure everyone remains on good behavior.

When I hear family, the first thing I think of is “dysfunctional.” Now everyone is pointing out that only my family is dysfunctional; however, we all have thought our spouses/partners’ families were dysfunctional when we met them because they didn’t behave like ours. But it is not just behavior; there is true dysfunction. As a friend reminded me of at my wedding, at every wedding, there is the equivalent of the “Drunk Uncle.” Let’s consider some of the cast of characters that can appear.

  • The matriach/patriach. They rule. All allegiance is to them. They were paramount in the family’s success, so their “rules” are lived to even when no one can remember how or why the rule came into being. I have seen families lose fortunes following such directives because the world had changed, but all that remained was the rule and not the intent.
  • Favored child. There is always one. They often perform way below par and everyone else, but the parents continue to make excuses for them and support them. They are the ones who believe they are owed everything under their “favored” child status.
  • Second Class Child. The one that was ignored as all the attention got lavished on the favored child. They often work harder, produce more, and die for the family’s success; only they are never taken seriously. Often they become bitter and seek the destruction of all.
  • Drunk Uncle. We all know him/her. Embarrasses everyone, totally inappropriate, starts fights, resented by all, yet tolerated because they are family. However, everyone hopes they will not make the next event.
  • Bitter Sibling. Was overlooked in the succession plan, so bitter forever. Points out how the others received everything on a plate, but they received nothing. They ignore the fact that they have lived off the families’ wealth for the entire lives.
  • The Outcast. Unable to fit in went on their own. Has done well, but resented because they had the strength to walk away and is enjoying life.

If we have a “Family” Culture, then we probably have some of these in the organization.

What is the Problem?

Employees leave organizations because they lose respect for their supervisors.  Why? Their supervisor tolerates “B and C” performers. “A” players want to be surrounded by other “A” players. In a high-performing company, if you don’t meet expectations, you are fired. There is no job security other than through performance.

However, we never fire relatives; we can’t. You are always my father, mother, son, daughter, etc. Thus, claiming a family culture, by definition, requires that you will tolerate poor performance. Knowing that there are “B” players on the team who are never going to leave because of the “family” culture will just driveway more “A” players. This is a negative reinforcement cycle that leads you into a future of mediocre performance as an organization.

My father gave shares in his company to his parents and siblings. When my aunt married someone who didn’t reflect my father’s values, she demanded that my father give him a job in the company as she was a shareholder and it was a “family” business. My father fired all his family members and reminded them that he had them sign undated sale agreements back to him when he gave them their shares. He dated them all and became the sole owner. From then on, he would only hire those that could perform.

So What to Do?

If one looks at successful family businesses, I see that they don’t claim a family culture. They emphasize those family values that they care about. They can say that their values are “nurturing and developing” e.g. they are a “pool” company. Or they can say that they train and develop their people to go on to better things, e.g. a “stream” company. In my father’s case, one of his values was caring. When one of his accounting staff’s husband was diagnosed with terminal cancer he sent her home on full pay until the husband had died. He made sure that the bonuses and gifts he gave made it to the employees’ families. When my father died, over three hundred Africans came from the townships in South Africa to pay their respects at his funeral.

Further, I have noticed that high performing family businesses often have rules, like those below, when a family member wants to join the family business they must:

  • Have worked elsewhere before joining.
  • Apply for an open position
  • Have the requisite experience and qualifications,
  • Be interviewed and selected by non-family members.
  • Report to non-family members and stepping over the chain of command to family members higher up can be a termination event.
  • Realize they will be fired for nonperformance. If they are, they are still in the “family,” just not in the company.

So if you want a culture of performance, don’t say you have a family culture. Focus on what part of the “family” culture you want to emphasize and say that.

Copyright (c) 2021, Marc A Borrelli

 

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Tony Hsieh, a Corporate Culture Icon, RIP

Tony Hsieh, a Corporate Culture Icon, RIP

Last week, we lost a great visionary when Tony Hsieh died from complications from burns and smoke inhalation sustained in a house fire that had occurred nine days earlier, on November 18. Among other things, Hsieh showed how that culture is the most important thing in an organization. He believed that by investing resources in its cultural commitment to customer service, the delighted customers then do the valuable word-of-mouth marketing.

For those that don’t know his background, Hsieh co-founded the Internet advertising network LinkExchange, which he sold to Microsoft in 1998 for $265 million. He then co-founded Venture Frogs, an incubator and investment firm, with his business partner, Alfred Lin. In 1999 following an approach from Nick Swinmurn to invest in Zappos, Hsieh and Lin decided to invest through Venture Frogs. Two months later, Hsieh joined Zappos as the CEO, and by 2009, revenues reached $1 billion, when it was sold to Amazon.

Hsieh stepped down as CEO until August of 2020, but his legacy at Zappos lives on. Hsieh learned how to make customers feel comfortable and secure with shopping online by offering free shipping and free returns. Hsieh’s belief in employees and their ability to self-organize let him rethink Zappos’ structure, and in 2013 it became for a time a holacracy without job titles. Of all the applicants that applied, the company hired only about 1%. Zappos was often listed in Fortune as one of the best companies to work for. Beyond lucrative salaries and being an inviting place to work; it delivered extraordinary customer service.

Hsieh made Zappos fanatical about great customer service. The company was not just about satisfying customers but amazing them. It always sought to over-deliver on its promises.

Also, to ensure great customer service, Zappos mastered the art of telephone service. Telephone services are a black hole for most Internet retailers. For Zappos, they made it key. The company publishes its 1-800 number on every single page of the site. All employees are free to do whatever it takes to make you happy, a step up from the Ritz Carlton where anyone could spend $1,000 to make a customer happy. The call center has no scripts, no time limits on calls, which means no robotic behavior! Zappos employees had an amazing emotional connection to the company through its culture and core values, which then infected their customers. As Richard Branson has said, “Clients do not come first. Employees come first. If you take care of your employees, they will take care of your customers.” Thus, Zappos is a company that’s bursting with personality.

According to Hsieh, if you get the culture right, the rest will take of itself. Besides, Hsieh believed that a company’s brand is just a reflection of the culture. You can see how this value was applied in Zappos’ hiring process.

 

The Interviews

There are two sets of interviews. The first set is done by the hiring manager looking for the appropriate skills and ability to fit with the team. The second is done by HR and is only looking at culture fit. You have to pass both to be hired at Zappos.com because they will only hire people who fit with its culture. Also, regardless of performance, they will fire someone who doesn’t fit with its culture.

 

The Training

All Zappos’ employees, when joining the company, spent the first four weeks going the same training regardless of whether they were a call center rep or a software engineer. The employees receive full pay during training, and this training immerses them in the company’s strategy, culture, and obsession with customers. The training starts with Call Center Training. The next two weeks, they all spent time on the phone taking customer calls because if the brand is all about providing the greatest customer service, then customer service is not a department but the entire company. A side benefit of this approach is that when the busy time of the year occurs, all employees can help in the call center because they have all done it, reducing the need for temporary workers to help. Finally, the last week is at one of their warehouses, picking and packing.

 

The Offer

At the end of the first week of training, all the new employees are offered a bonus of $2,000 to quit and leave the company right then. This is a standing offer that remains throughout the training period. After the training period ends, the offer is raised to $3,000 and extended for a few more months.

As a Harvard Business Review article put it, “Because if you’re willing to take the company up on The Offer, you obviously don’t have the sense of commitment they are looking for.”

The rationale behind the offer was that Zappos.com didn’t want anyone who was there for the paycheck; they wanted people who bought into the company’s culture and vision. Furthermore, those who didn’t take the offer had to go home and tell their family and friends that they had turned down the offer because they believed in its culture and wanted to be a part of such an organization. Zappos.com found that those employees were more committed to the organization when they turned down the offer.

When Zappos started the offer, it was only $100, but the company has increased yearly because they feel not enough people take the offer. According to Hsieh, about 2-3% of employees took the offer. Amazon was so impressed by “The Offer” they have instituted a version of it.

 

Performance Reviews

All employee performance reviews focus on job performance, and are you living and inspiring the Zappos.com culture. If not, you will not remain at the firm. Culture is essential.

 

The Culture Book

Once a year, all employees are asked to write a few paragraphs about what the Zappos.com culture means to them, and these are put in the Zappos.com Culture Book. Their submissions are only edited for typos, but otherwise, everything left as written, the good and the bad. It is organized by department so you can see how culture may differ within departments. Here is a link to one of their culture books.

Some examples of how Zappos employees define their culture.

  • Happiness. Great culture leads to employee happiness. The same way a toxic culture leads to unhappiness. Happy employees mean higher engagement, profitability, and low turnover.
  • People. Our culture would not be what it is today without the people, past and present. We are all protectors and cultivators of the Zappos Culture; it’s what makes it unique and something that changes every day.
  • Being Yourself. I love that I get to be me all day. The culture encourages you to be the same person you are at work as you are at home. I don’t have to pretend to be something I’m not, which makes Zappos a comfortable place to be.
  • Unique. Every company has a unique culture that’s all their own. Just like every person has their own personality, every company has its own culture. Building a culture is a special process that can’t be taken lightly. It’s the responsibility of every employee to represent and foster culture.
  • Fun. Work can be fun! We have 2 annual parties at Zappos. Our Vendor Party where we invite all of our brands to thank them and celebrate our partnership. And our employee holiday party. Past epic party themes have ranged from Mardi Gras and old-school hip-hop to a Hawaiian luau at a waterpark. Each has had its own twists and tricks to surprise and delight partygoers. This year, we invited our vendors to run away with us to the “Untamed Circus.”
  • Perpetual. Your culture doesn’t stay the same; it will continue to evolve. Having a defined set of values will serve as your guide to continue your culture’s growth and evolution in a positive direction.
  • Not Always Measured. A strong culture means lower employee burnout and, therefore, lower turnover. It leads to higher employee engagement and higher profitability. But really, companies should focus on their culture because it matters. Because it’s just the right thing to do. To quote Tony Hsieh, “Just because you can’t measure the ROI of something doesn’t mean you shouldn’t do it. What’s the ROI on hugging your mom?”
  • Work-Life Integration. Companies and employees worry about work-life separation or work-life balance. But why? Wouldn’t you rather be a company where your employees easily combine their full self into everything they do? Wouldn’t you rather work for a company whose focus on culture allows your job to integrate with your life? It shouldn’t be a struggle to find a balance between life and work where you are truly fulfilled and happy.
  • Partnerships. Your vendors have the same objective as you: to sell their product, be successful in their work, and maybe have some fun while doing it. Something unique that Zappos does is allow brand representatives access to all the same sales and inventory information on their products that Zappos has. By working as a team, by partnering, you are setting the stage for success!
  • Real. Your company has a culture. You may not have “planned” it. You may not like it. Or maybe you love it. But it’s there. It is real. You can choose to be thoughtful about your company culture. You can set values and identify the behaviors that you want to be the core of your culture. That part is fairly easy. The hard part is committing to the values once they are set. Living them.
  • Core Values. Values are more than just words; they’re a way of life. They are the foundation of your company culture. We know that companies with a strong culture and a higher purpose perform better in the long run. As we continue to grow, we strive to ensure that our culture remains alive and well.
  • Your Brand. A company’s culture and a company’s brand are really just two sides of the same coin. The brand is just a lagging indicator of the culture.

 

Twitter

The company is very active on Twitter. They introduce employees to Twitter during the training, and at the end of the training, it is up to the employees if they wish to remain engaged on Twitter. Zappos has a Twitter page that aggregates all the employee tweets together, enabling employees to learn about their fellow employees who they may not have met and build better relationships. As a result, many of its employees are power users of Twitter so that their friends, colleagues, and customers know what they’re up to at any moment in time.

 

Core Values

Zappos didn’t initially have core values because they felt they had to “real” to the organization and not just some words on a wall developed by a public relations firm. Hsieh and his team emailed all the employees asking what they thought the company’s core values should be and then spent a year going through the responses to come up with Zappos core values. Zappos has 10 core values are they are:

  1. Deliver WOW through Service
  2. Embrace and Drive Change
  3. Create Fun and a Little Weirdness
  4. Be Adventurous, Creative, and Open-Minded
  5. Pursue Growth and Learning
  6. Build Open and Honest Relationships with Communication
  7. Build a Positive Team and Family Spirit
  8. Do More with Less
  9. Be Passionate and Determined
  10. Be Humble.

Today, according to Hsieh, if you Google search any one of these core values by themselves, Zappos is among the in first results. The company has interview questions for each one of these core values.

Other interview questions:
#3 Create Fun and a Little Weirdness. On a scale of 1 to 10, How are Weird are you? With 1 being not weird and 10 being very weird? If you are 1 – 2, you may not be too weird. If a 10, maybe too weird. The answer is not the issue, but everyone is different, and what Zappos is looking for work-life integration so that the person is the same at the office as at home. If they can be who they are at all times, then creativity comes out, and true friendships are made.

#4 Be Adventurous, Creative, and Open-Minded. On a scale of 1 to 10 how lucky are you in life? 1 is “I don’t know bad things always happen to me,” and 10 is “I don’t know why good things always happen to me.” Zappos doesn’t want the 1, not because they are unlucky, but that luck is about being open to opportunities so looking for people who are open beyond just the task.

#6 Build Open and Honest Relationships with Communication. Zappos is about Transparency and its beliefs are, “Be real and you have nothing to fear. Your culture is your brand. Don’t try to be someone you are not.” Zappos when they have reports come by, they allow them to go around and talk to anyone because they are comfortable with that. This is because every employee is living the brand, have the same cultural views as the company, and they are authentic

#10 Be Humble. This value causes the most problems in the hiring process because many smart people are egotistical and if you accommodate them, you lose the corporate culture. To look for humility, Zappos had would question the shuttle driver who picked up the applicant up from the airport and drove them around to see how they were treated. If the candidate did not treat the shuttle driver well, they were not offered an offer regardless of how the other interviews went.

Tony Hsieh’s legacy will live on, but I challenge those among you to consider how your corporate culture stands up to Zappos and do you really live it. If not, why not? It could revolutionize your business.

 

(c) Copyright 2020, Marc A Borrelli

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