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.
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.
Do Pre-Hire Assessments Affect The Applicant Pool?
People Don't Mind Assessments
This was a question we wondered about too. For good reason, obviously.
Turns out, despite the fears of some, administering pre-hire assessments do not significantly diminish the applicant pool.
The fears are highly justified, but the bigger story here is that candidates want to avoid landing in a bad job as much as you want to avoid a bad hire. After reading the comments it was clear they overwhelmingly supported the idea that applicants are not just willing, but hungry for something that will also help them identify whether they will fit a company’s culture prior to joining just as much as HR professionals and hiring managers.
The results (seen above) show that only 10% of applicants claim to flat out refuse to take a pre-hire assessment. [Though when push comes to shove, I'd guess not all of them will hold that line.]
Even better for hiring managers is that over a quarter will only complete the assessment if they are truly interested in the job. This means pre-hire cultural assessments are a quick and painless way of lopping off the portion of the applicant pool who may have the skills and even be a good fit, but they just aren’t that into you.
Moral of the story: You may experience 1 in 10 people refusing to complete the assessment, but you’ll save time not having to weed through 1 in 4 who aren’t that serious or interested in your company or the job. Even better, by administering pre-hire assessments you can tip the odds in your favor of hiring top performers who fit your culture.
[NOTE: Given the number of respondents these results are accurate at a 95% confidence level +/- 3.56%.]
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.
Company Culture and the Rockstar CEO
photo by michellerocks 
It’s almost universally acknowledged that a company’s culture matters.
Some companies go to great lengths to ensure that they maintain their core values and it truly is the work of everyone in the company to set the social norms and out undesired behavior. Often though, the ‘good cultures’ become inextricably linked to a ‘visionary’ CEO. Even when their motivations are pure, so much of their time becomes dedicated to writing books and giving speeches that it makes it difficult not to get a little cynical.
(note: we’re big fans of any CEO touting treating employees like intelligent, full-grown adults, but we don’t want their public ubiquity to make it easy for others to dismiss the importance of their words because there are lessons to extract.)
Cynicism aside, there are two massive issues with the rockstar CEO that tend to get overlooked:
- Culture usually starts at the top so the praise isn’t unjustified. But it’s time we give credit to the people who manage the culture over the long haul. The line managers who promote the right behaviors and admonish the wrong ones, the HR teams who build the internal programs to highlight core values and the hiring managers who do a better job than most of identifying those who ‘fit.’ A lot goes into building and maintaining a culture. The fact that these CEOs have paid as much attention to it as they have is a testament to their understanding of what drives their business forward, but they get too much credit.
- Furthermore, there is no one right culture. These guys wouldn’t be able to make as much money on the books if they said that but look at the list below. Almost every one of them has/had a different style. There is little in common between Jack Welch and Tony Hsieh other than their success. But, each made it work by fostering a culture that worked for them and their business. And each was ruthless in their own way of ensuring that the values stuck.
[Just a few off the cuff examples - Lee Iacocca, Yvon Chouinard, Jack Welch, Gary Erickson, Tony Hsieh, Gary Hirschberg, Herb Kelleher...and we could go on and on and on.]
Celebrate your culture and live it everyday – just don’t forget that in order to lead you need to have people willing to follow.
