Company culture.
It’s nice to have, right – but how important could it be?
Pretty important, it turns out. Since 2009, organizations listed on Forbes’ “Best Places to Work” list did better than the Standard & Poor’s 500 by 84%. And the 30 companies rated the lowest on Glassdoor.com underperformed the market by 75% .
Talk about company culture making a difference.
Throughout history, business leaders have always been looking for the next competitive advantage. They’ve attempted to master things like efficiency, quality assurance, design, user experience, and innovation. All those advantages made a difference – for a while, at least.
The problem is that every one of those business improvements only created a competitive advantage for short amount of time. Then, other companies caught on, and what used to be an advantage was suddenly just table stakes.
Your competitors can always get to be as efficient as you, as innovative as you, as good at user experience as you. They can pay as well, or better than you, and provide the same amazing benefits to attract talent. But there’s one thing they can’t copy.
Your culture.
Wrapping your mind around culture
A decade ago, when I was first getting into consulting, very few people knew what I was talking about when I brought up company culture. These days, the word gets thrown around constantly.
It’s one of the reasons I wrote my book, Great Mondays: How to Design a Company Culture Employees Love. I was passionate about the idea that a company culture is the only sustainable business advantage of the future, and I wanted to create a framework business owners could use to take control and manage their culture.
Briefly, culture works like this:
When you are able to codify and articulate why you are in business beyond making money, you will attract the sorts of employees who believe in that idea and want to help. By demonstrating how you want to work with values, you can onboard new hires more quickly, and they can connect more easily (and productively) with their peers. By rewarding values-aligned behaviors, they will serve your customers better. And eventually you’ll start to notice less turnover and more employee engagement.
The good thing about culture is that it’s not nearly as mysterious as it sounds. That’s because it can be easily broken down into six components.
The Six Components of Culture
When you think about culture, it’s ultimately how a company influences the behaviors of its employees. There are a lot of different models out there, but I like to think of culture as a cycle of six components that build on and shape each other.
- PURPOSE: Why an organization exists beyond making money
- VALUES: Shared beliefs about what’s most important
- BEHAVIORS: Choices made by employees, guided by purpose and values
- RECOGNITION: Programs that encourage culture-aligned behaviors
- RITUALS: Group activities that build and strengthen relationships
- CUES: Reminders that help employees stay connected to the future
The first three are all about establishing where you want to go: What’s your purpose, the peak of the mountain? What values will guide you to the peak most effectively and safely? And, what behaviors do you want to see in your employees?
The second three are about activation: How do you surface, incentivize, and encourage the kinds of behaviors and choices that lead to fulfilling your purpose and vision?
Each of these six components feeds into and informs the next. Connecting your purpose and values defines the behaviors you want to see your employees acting out. Those behaviors are supported by how you recognize them and spread throughout the company through the relationships that are built with rituals. Finally, physical and behavioral cues within your organization reminds everyone why they are all here in the first place – which points back to purpose and values.
Putting it all together
No one company is doing this all perfectly, but some are getting close. To me, one of the most interesting examples of a company who is doing culture well is Airbnb.
Let’s take a closer look.
Their purpose is helping the world to be at home in the world, and one of their major values is hospitality. You can see that come to life both in their offices and in their product. (Their product being both the marketplace platform and the diverse homes and experiences on offer.)
To articulate their purpose and values, they have to reinforce their culture strongly enough that it translates not just through employees, but through the hosts. How do they do that? By rewarding hospitable behavior in both hosts and employees, and through rituals and cues that reinforce their values.
For example, when I visited a friend of mine on the design team there, I saw that they were preparing to interview someone for a position. They had a handwritten sign that said, “Welcome, Jacob!” That level of hospitality is miles away from the typical interview experience.
What they’re doing is creating a parity of product experience and employee experience, which is the pinnacle of a cultural DNA that’s proving itself at every possible touch point.
It’s all in the values
In the end, the reason Airbnb – and other companies that top the Best Places to Work lists – have a strong culture is because their values aren’t just platitudes on the wall. They’re actionable, well-defined, and are unique to that company.
You see them reflected in the way the platform is designed, in the way employees treat customers, in the way managers give reviews, and in the way teams are run. You see them shaping the way behaviors are rewarded and even in the way conference rooms are named.
It’s not easy, but creating a cultural DNA that strong will pay dividends for decades. And it will give you a business advantage your competitors simply can’t copy.
Are you ready to start designing your culture? Consider these questions:
- Does your company have a clear and compelling purpose statement?
- Are your values actionable and relevant?
- How do you reward values-driven behaviors?
