Forget mission statements. Your company’s decisions reveal your culture.

Real corporate culture is operational. How are decisions made, who makes them, how transparent the process is all determine whether a company will thrive or dive.

This is one of many powerful insights I gleaned in my interview with Amos Schwartzfarb, Managing Director at Techstars, a startup accelerator that provides companies access to financial, human, and intellectual capital to fuel the success of their business.  

Culture starts at the top.

“Everyone in the company, starting with the CEO, needs to feel like this business is impacting people in a positive way and changing lives,” says Schwartzfarb. “When they feel like they’re making a difference to someone external to the company and inside of the company, those tend to be the cultures that work the best.”

Based on working with hundreds of startups at Techstars, it comes down to leadership. “The two most important things are:

1) Do I have a gut feeling that the CEO can build a big company?

2) Can they attract great talent?

Everything else will trickle down from there.”

In his own career, Schwartzfarb has seen leaders who inspired the kind of loyalty where people would say, “We believe in this person. Let’s follow this person into the fire!”

The common thread is that they were trustworthy, competent, honest, and transparent.

Leaders like to assemble teams that embody those ideals. The leadership team sets the tone for culture about what’s accepted and expected.

What if the CEO doesn’t embody the best ideals?

When there is a moral vacuum at the top, people become leaders within the organization who aren’t at the top of the org chart.

These managers, directors, or VPs become CEOs in their area of responsibility, and they set the tone for their group. You may have multiple subcultures within a company. A great middle manager can attract talent who is loyal to them.

“It doesn’t mean that they believe in the full mission of the company,” says Schwartzfarb. “They will follow that manager to the next place and the next place.”

Insecure leaders who fire beloved managers do so at the company’s peril. When employees no longer feel a personal tie to the company, they often leave in droves.

Incentivizing a thriving sales culture.

No matter what the company, the sales department, because of its individual and collective goals, has always been a separate culture.

In most companies, the sales culture is highly competitive on an individual basis with very little leeway given to underperformers. In most companies, it is sink or swim with a carrot and stick philosophy.

“I remember being literally yelled at and threatened in front of others for not hitting my numbers in the first 30 days,” remembers Schwartzfarb. “It didn’t work for me. This works for some people, they need to feel like their job is always on the line.”

High turnover is a problem with such a hostile competitive environment. Competition is good, but it needs to be both an individual and a team sport.

“Are you competing with yourself, your competitors, or your teammates?” says Schwartzfarb. “I think your number one competitor is your competitor, and your number two competitor is yourself. You need to win from somebody external versus trying to beat the person sitting next to you.”

Structuring incentives for the sales department is the key to acting like a team. Everyone has individual goals, but high performers (who are achieving 110% of their goals for example) get one kind of accelerator bonus while others (who are at 30%) would get another.

Then you create additional rewards when the team hits their goal. So if the team hits their goal and if you’re a low performer, you shouldn’t get anything. However, if you’re a high performer who helped drag the rest of the team across the finish line you get an extra team bonus.

Culture is operations

Culture is operations. How does information flow, how are decisions made, whom do you hire and whom do you walk away from and why?

How do you assess a really strong company to acquire or merge? When the two executive teams are going to be one, sitting in a boardroom and making decisions, how easily can you make things align? What do they believe is important and what do you believe is important?

It helps you shape a roadmap for culture.

How to maintain a great culture

A good culture is like a cult. These are behavioral frameworks that people have chosen to live by. In previous generations it was all about money or status. The workforce of today is looking more towards that self-actualization rung on [Maslow’s] hierarchy of needs. They want to feel deeply connected to the mission and values of the company.

For the leadership team it is important to write down the elements of the culture that you value. Don’t assume that everyone knows them. Share them and encourage people to challenge you when you’re not doing a good job at meeting those touchstone goals.

Continually getting feedback is exhausting but it is very important. Schwartzfarb has a quick question he asks frontline employees, “Can you tell me the two most f’ed up things in the company that aren’t at the executive level?” suggests Schwartzfarb. “I’ve watched them start to look deeper into the company and start to realize, there are some challenges and they may not be cultural at all.”

This post is based on an interview with Amos Schwartzfarb, Managing  Director at Techstars. To hear this episode, and many more like it, you can subscribe to What Culture Could Be.

 

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