In 1999, Zappos was a small online clothing company. To grow, founder Tony Hsieh realized it needed top-notch customer service, and that started with Zappos’ employees. How did the company do it? It built a culture focused on customer service. All employees were required to spend six weeks in the call center to reinforce the importance of the customer.
In a 2010 Fast Company article, Hsieh noted that every new employee must buy into the culture. “Everyone that’s hired, it doesn’t matter what position – you can be an accountant, lawyer, software developer – goes through the exact same training as our call center reps,” he said. “It’s a four-week training program and then they’re actually on the phone for two weeks taking calls from customers.
“At the end of that first week of training we make an offer to the entire class that we’ll pay you for the time you’ve already spent training plus a bonus of $2,000 to quit and leave the company right now. The goal of that was to weed out the people that are just there for a paycheck.”
Ten years after its founding Zappos was acquired by Amazon for $928 million.
Zappos is just one of thousands of companies that learned the importance of culture. No book, though, can accurately define what “culture” is. It’s as much feel as it is philosophy. What experts do agree on, though, is that it needs to permeate all facets of the company.
“Culture is one of the few things companies can make ‘unique’ for employees,” explains Andrea Alaimo, vice president of human resources for third-party logistics company Redwood Logistics. “Most companies are going to offer similar pay and benefits for types of work. If you have a good culture, that is something intangible and extra that employees can experience.”
Marc Berman, a partner with Bain & Company and a culture expert, tells FreightWaves that culture builds on the company’s “internal compass,” which he defined as the core values set by the CEO or board. It also builds on a number of other metrics, including the ability to manage the work environment, set expectations, and inspire employees.
“Inspiration is different than satisfaction,” Berman says, “because it’s an emotional connection to the company.”
To get that emotional connection is difficult enough; to define what that emotional connection should be is even tougher.
“There’s a process to internalize what the culture means to [each employee],” Berman notes. “Making those choices is quite important, and they tend to be very personal.”
A successful culture can pay big dividends for a company when it comes to employee retention, attracting better quality employees, and even the bottom line. A slide from a Bain presentation points out how much value an inspirational and performance-driven culture can provide. According to the slide, a company with this type of culture is 3.7 times more likely to be a “business performance leader” (BPL), defined as a company with “top performance on financial performance, growth and profitability metrics” as compared to those in the bottom 10.6 percent quartile of BPLs.
Like many things in business, building a successful culture is about listening as much as it is setting values. Berman says culture starts at the top with the CEO or the board – how do they want the company to function?
“The expectations that a board or a CEO may have are based on targets [such as goals or performance],” he points out. “I think there are some expectations on how people should behave, [and] you can define as a CEO what you want your culture to be for people but … you can’t just tell them; you have to make it real.”
Alaimo mentions that culture also needs to evolve over time. “It should be authentic, not a directive,” she says. “Like anything, workplace culture should evolve as the company does, but it won’t take shape without strong leadership.”
Berman cites an example of an airline that Bain worked with to improve its culture. The airline wanted pilots to interact on a more personal level with passengers. To do so, it put them through a communications training program in which they were taught the right way to mix an authoritative voice with a friendly demeanor to try and capture that connection. More senior pilots were then used as models for younger employees.
“Some aspects of company culture should be felt as a ‘first impression’ to an outsider,” Alaimo points out. “While a guest is waiting in the lobby, they can get a sense of the culture through the physical space; the pictures on the wall; the people and interactions around them. For a first impression to last, employees need to feel a commitment to that sense of culture day after day, month after month. If the lobby is spotless and the receptionist is friendly, but the rest of the office is cluttered and coworkers are rude to each other, employees will feel deceived.”
Berman suggests employing company surveys and focus groups. He also says some companies have found success by asking employees to write down what they believe the company’s culture to be. This helps leadership identify “if they’ve delivered the results they’ve tried to achieve,” he says.
It’s not just the culture inside the company that is important, though. As Alaimo notes, how potential employees perceive the company is just as important. Berman says this requires being consistent with outside communications – social media, the company website – and monitoring sites such as Glassdoor to see what current and former employees are saying about the company.
Berman also says not to forget your recruiters, whether it is the in-house human resources department or an outside agency.
“Ultimately, the people you use in the recruiting process [are important],” he notes. “Also, it’s the stories they tell. If you want to promote yourself as a company of high integrity you need to make sure the recruiters have the right talking points.”
Both Alaimo and Berman say that setting corporate values is important to getting the process started. Without these, employees have a difficult time in discerning what the culture is about. Then, empower employees to carry the message, something Berman refers to as “sponsors” or “change agents.” These are employees that adopt the company culture and help spread its message through their work ethic and interactions with other employees.
Firms with multiple locations can sometimes struggle in developing a consistent culture across locations. Berman uses his own firm as an example. At Bain, he says, project teams may be spread throughout seven different locations globally, so a common culture is important to bridging divides. “It’s really important to us … that we have the same culture,” he says. “If you need that type of commonality of culture, then you need to engender locations and you may want to move people around [to new locations].”
He adds that not every company needs to operate that way, citing retail as an example in which different cultures can reflect local employees’ values. Alaimo says the same concept applies to offices of different sizes.
“What makes sense for an office of five in Dallas might be different for an office of 1,000 in Detroit,” she notes.
Both experts believe management needs to listen and continuously survey employees to ensure the proper culture remains.
“Invest in evaluating your company culture through proactive interviews of managers and employees rather than waiting until turnover indicates that something is not aligned,” Alaimo says. “Employees continuously want more flexibility, options and experiences in the workplace, and business leaders should be responsive if they want to continue to recruit and retain talent.”