The Hidden Costs of Misaligned Culture Values
photo by WetSun
[Disclosure: Zynga is a RoundPegg customer.]
At RoundPegg, we quantify the impact of culture in a number of ways.
There is the hard cost of turnover (RoundPegg has saved companies well into the 7-figures by aligning culture and reducing turnover), the decrease in performance by having to conform to the values of others and the long-term benefits of having everyone pulling in the same direction (Jim Collins’ research showed companies with ‘strong, well-aligned cultures were 6x more successful’).
Opportunity cost is ever-present, but we never lean on it because it’s so squishy.
Yesterdays’s article in the NY Times about Zynga’s hard-diving culture however starts to put some real figures to the opportunity cost. At least two deals, totaling over $3Bn, were never consummated because, according to the article, the would-be acquiree had reservations about working within the Zynga culture. In fairness, there’s likely more to the story, but it is a telling that it was a big enough a factor for them to share with the New York Times.
The folks at Zynga are super sharp so they wouldn’t make an acquisition if they weren’t expecting to make money on the deal. Assuming they were expecting a 20% return, their cultural misalignment with the acquired companies cost them $640 million.
The article unfairly paints the Zynga culture as a less than desirable one. What they don’t account for is that there IS NO ONE ‘RIGHT’ CULTURE. People are not all the same. Some thrive on that sort of internal competition and others find it suffocating.
Would you love working in that type of environment? Maybe not, but that doesn’t mean it’s wrong. It just means that it’s not the right employer for you or for these companies about to be purchased.
The goal is to align the culture around similar values so that everyone understands the expectations and are motivated by the actions being rewarded. If that means cultivating a work first, hard-driving, metric-centric mentality then so be it. Plenty of employees are as happy as a FarmVille pig in mud, but that would have made for a less interesting article.
Ultimately, those failed acquisitions were probably a good thing because they recognized beforehand that integrating the cultures of the companies would have been a challenge. But leaving $640M on the table is never easy.
Company Culture & Employee Engagement
photo by stuttermonkey
In a recent post about boosting employee morale, David Irvine sites a number of compelling and depressing stats about the disengaged state of the workforce amidst this global recession.
If you are a stats person and would like to see the damage, I recommend you visit last week’s RoundPegg post on the Modern Survey results. Today, however, I would rather focus on the solution – CULTURE.
David Irvine would agree and listed culture as one of his three solutions.
The reason? Culture is the one of the main reasons employees thrive and stay engaged. It is the alignment of unique individuals through shared values, and a well-aligned culture is one of the biggest drivers of a company’s success.
Person-Environment Fit research shows that when people fit their work environment they perform better, turn over less and are more committed to the company.
Another way of putting this is that when people can go to work and be themselves then they have a lot more energy to apply to the challenges the company requires solving.
When your computer is asked to process multiple programs at once you often see the spinning beach ball or the hourglass, right?
Well, as complex as the human brain is, it too only has so much processing power. When we ask people to conform to an unnatural (for them) behavior it requires a chunk of that processing power. They are no longer 100% free to process work challenges.
You are probably wondering if this is the case, then why aren’t all companies quantifying their culture and hiring for cultural fit?
Culture initiatives are hard because they are typically conducted by the senior leadership team, a high-priced outside consultant, several flip charts and a lot of debate about which values (e.g. respect, integrity, communication, excellence)* matter. Nothing ever changes.
What nobody does is ask all of their employees what they value. It’s no wonder employees are disengaged because they’re being asked to live by somebody else’s values. And probably pretty vanilla ones that are only occasionally followed at that.
Active culture management can’t happen if you don’t know what you’re dealing with already. If you’re lost in the woods a new map isn’t going to do you any good. The most helpful thing is knowing where on that map you are at the moment you’re lost.
Culture matters in getting your people to perform. If you want to make a difference, then you need to know what your culture is from the bottom-up. Because the values pasted on your lobby wall are probably nothing more than very cheap decoration.
*Sound like your company? Those were Enron’s.
Communicating Corporate Values
photo by pasukaru76
Harvard Business Review’s latest email tip of the day is around how to communicate your company’s values. While this isn’t exactly rocket science it’s often easy to fumble identifying, communicating or changing the value system.
Rosanna Fiske’s first two points are vital.
1. Ask employees what is important to them
2. Establish values across the company, not just within management
A company’s value system cannot be mandated top down. You didn’t mind being told what you valued when you were 6, but you also didn’t know any better.
Each day you contribute to your company’s culture based on what you value, how you get things done and how you behave.
In fact, everyone does.
So while a plush corporate off-site to hammer out new values feels like important work, it’s a boondoggle. Without assessing the value systems of the employees, not as they experience the existing culture, but what they truly value in the workplace, the initiative is destined to be a very public flop.
Culture initiatives typically suffer the same fate as the boy who cried wolf. You don’t get many chances to make an impact on the culture so don’t waste that bullet trying to create something without the feedback of everyone who walks through your doors today.
As I said, this isn’t rocket science. The best way to guess what someone is thinking is to ask them.
Introducing HR3.0
photo by mysza831
RoundPegg was mentioned on NPR’s Marketplace program last week talking about HR3.0 in the context of the hiring process. (Disclaimer: we may very well have made up the term.)
Despite that, we fervently believe in the idea behind it and want to define it a little more detail.
HR3.0 introduces transparency to the job search/hiring process.
Even with more of the hiring process moving online, we are only just now beginning to catch up with where the process was in the offline world 15 years ago.
That’s not to say the digitization and transition online hasn’t improved the process some. But it’s mainly recreated what’s already existed into 1s and 0s and improved things at the margins (see after the jump for a brief history of the online job industry).
HR3.0 marks the day when the power of the Internet is brought to bear to actually do things that were difficult, if not impossible, to do in the offline world. HR3.0 starts the process of changing the game.
At its core, it is about transparency.
Transparency to ultimately figure out whether you can work successfully within a company or whether a job candidate will return you a positive ROI.
That includes peppering who you know and their contacts for information on working at a company or peppering shared contacts to get the real scoop on a candidate. It also means having the ability to drill deep into a company’s real culture or a team’s sub-culture or drilling into whether a candidate will be able to work well with a team.
Changing jobs/hiring is a massive commitment and one where the deal is typically sealed after a three dates. If a job seeker makes the wrong decision the downstream effects could derail the individual’s career path for a couple of years. And a bad hire costs a company a ton of money (~150% of compensation) and has ripple effects throughout the team.
The commitment for both sides though is largely psychic though. Will a new hire ruin a team’s chemistry? Will a new gig and manager make your life miserable? Team politics (used neutrally – every team has them) can be crushing for a new individual who doesn’t quite fit.
Being able to put more of that work-style information in the hands of the players involved means better decision-making (usually).
LinkedIn and apps like BranchOut have made it much easier to be proactive in the process. It’s much easier to collect information about potential managers and candidates alike to begin painting the picture of what working together may be like.
We at RoundPegg are taking an exhaustive, objective approach to help companies understand their culture and who best fits while GlassDoor has started on the other end and offers candidates a peek behind the wizard’s curtain.
Ultimately it all paints a better picture of whether the grass really is greener. Calling provided references is a joke and asking your uncle’s college roommate what it’s like to work at GloboCorp is a silly, invalid data point of one.
The Internet is helping reveal the true drivers of workplace success and providing both sides the opportunity to do things differently (and better).
Welcome to HR3.0. This is just the beginning. It’s going to get really damn exciting especially when these approaches start to converge.
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Company Culture: Weeding Out Diversity
photo by akean2
A couple posts ago we wrote about a poll RoundPegg had posted (login req.) on LinkedIn asking whether people would be willing to complete a 25-minute assessment to help identify how well they fit the culture of the company to which they were applying.
There were some strong opinions in the comments, both pro and con. The takeaway is that many people who are against assessing whether they fit a culture have a different understanding of what culture is altogether.
“Homogeneity and lack of diversity are bad.” That rebuttal may sound compelling but it has nothing to do with company culture (at least not how we define it).
What they mean is that you don’t want a company who thinks alike or, even more cynically, doesn’t hire people of certain races, genders etc.
First, let’s clear a few things up:
- * Culture has nothing to do with the color of your skin, your age or what associations you have
- * Culture is not what or how you think
- * A homogeneous ‘culture’ doesn’t mean that everyone blindly agrees
Culture is about values.
A company rewards what is collectively valued (e.g. being decisive). And individuals are motivated by what they value. You WANT those two to be aligned. Desperately. A lack of diversity/homogeneity in values is a good thing.
When people are rewarded for doing things that motivate them, they will work a hell of a lot harder and produce far better results. They find themselves swimming downstream instead of up.
With respect to diversity, nobody should be discriminated against because of race, sex, age, disability – absolutely. But that doesn’t mean you get better results when you mash people together with wildly different values (see: Congress). Nor does it mean you get people who think alike.
Everyone comes to the table with different life experiences, different work experiences and different interests. All of those create the diversity of thought both sides of the conversation desire.
Imagine we both value ‘being decisive.’ Without talking about it beforehand (ground rules are rarely set for our work conversations) we have implicitly agreed that we need to make a decision quickly and move forward.
But because we’re both seeking a quick decision that doesn’t mean we agree on the solution.
Sharing a value system creates a strong foundation upon which to constructively disagree. We both understand the motivational forces behind the others’ argument. So when I abruptly deliver my solution you aren’t going to see my curtness as a personal slight. It’s not that I don’t value your opinion. But I value our time more. We can discuss it rationally (but quickly).
All those things we call ‘politics’ are lessened when we share a common set of values and we can now focus more on solving our business’ challenges instead of deciphering what the other meant in our last conversation.
When we talk about company culture let’s put aside the automatic reflex to fall back on diversity and start critically thinking about what culture actually means.
Company culture is what is valued and what is rewarded. Period.
