How to Scale Culture - Podcast Transcript
Harrison Kim (Harrison):
Hello, this is Harrison Kim and you're listening to Working with People by Pavestep. The Working with People podcast is for executives, managers and people leaders. We bring people experts together to provide you with relevant content on how to think about and manage your most important asset, your talent. We have Mattson here with us today. How's it going?
Mattson Newell (Mattson):
Great to be here.
Nice to have you here. Today, we're gonna be talking about scaling culture. Culture is one of those things that most of us kind of know & definitely feel but have a hard time defining and taking actions on it. So I'm really excited about this podcast and this topic. But before we do that, tell us who you are and what you do.
I'm Mattson. I'm a senior partner with Partners In Leadership. And our firm focuses on culture management. For the past 30 years, we focus on two things. There's an accountability and culture that's been our sole focus is we work with organizations, we work with companies, from small startups to Fortune 50 organizations, helping them manage their culture to deliver their results and strategy.
Awesome. So let's start with culture, how do you define culture? And why is it important?
It’s a great question. We could go in the industry right to the great Peter Drucker quote: “Cultural eats strategy for breakfast every day of the week” but still with that culture sometimes gets a little bit of bad rap and it gets overplayed.
In the marketplace today, people talk about culture, we want to have a good culture. In fact, we get a lot of calls from organizations that want us to help them manage their culture. We take these calls, we smile, and then we respond, but the question is really a culture to do what? Because if the end game is we just want a “good culture”, then then you go about it in a very different way like having more casual Fridays, or spin Wednesdays. So this is where culture gets a bad rap. And people see it as a “soft skill”, when in reality, culture is fundamental to the way we get things done. We work with a lot of different organizations. And if you've got a company that has a great strategy and a terrible culture, that company might be producing results, but their turnover is going to be very high. No one wants to work there. Their NPS is going to be high, and it's going to impact their customer experience. Now in the same token, we also want to bounce it out - you can have a company that has a great culture and a terrible strategy. And the business will go under in the next six months. Where we see transformational companies - companies that achieve phenomenal results - is when you mirror the two, you've got a great strategy and a great culture.
So how do you define culture? Simply, it's the way people think and act in our organizations. So I'll walk you through one of our foundational models, we call it the results pyramid. And if you can just imagine for those on the podcast, just imagine a pyramid and break it up into four different sections. At the top of that pyramid, is results - the results we need to achieve underneath that are the actions people are taking. Now, often, leaders and organizations will operate with a pyramid that's just two layers deep. So if they're not getting results, they go right to actions, and they do knee jerk reactions. They come up with action plans, they reorg, restructure, hire fire bonus incentivize, and they spend their wheels all day long, focused on actions, right. And actions do produce results.
But to get long term, sustainable results, you've got to go deeper into the pyramid. So where do actions come from? Well, it comes from the beliefs our people hold, and where those beliefs come from are the experiences that they've had. So experiences create beliefs, and beliefs influence actions, actions produce results.
Now you think about 2020. Everything that's happened this year, when a lot of organizations have defaulted from results to right to actions, and what are some of the actions they're taking? They're scheduling more meetings. They've got more issues going on. They've got more policies, procedures, strategies and checklists, right? And people are feeling overwhelmed and burnt out. I think all of us can say please, no more zoom meetings & no more video meetings. We've had too many when you have back to back to back to back zoom meetings. It leads to this this disengagement, it leads to fatigue of our employees. And so when you think about our culture, it's the way people think and act in our organization. So back to this disengagement piece. Disengagement is nothing new. In fact, since 2005, Gallup has been doing their annual engagement survey. Right and those scores are atrocious. When you look globally, the engagement scores in the US workforce last year, I believe it was 32% of the workforce was actively engaged, which is 68% who were disengaged out work. They estimate that this cost organizations in the US $600 billion.
If employees are disengaged, think of the impact that has on our agility. Yeah, we're not going to move very fast. Think of that the impact that has on execution, it's not going to be as crisp. Yeah, think of the impact that has on our results, they're not going to be as good, right? And so how are people are thinking and acting today? Leaders need to get very prescriptive with culture, and define it - what is the culture we want at our organization? And get very clear with what that culture is.
That was the best definition of culture that I've heard in a really long time. So that's, that's perfect. So I'm going to give you another big question. At an organizational level, what are some of the best practices to effectively scale culture? One of the things that I think a lot of companies that especially that are growing fast, they think about, Okay, we got to have these processes, we got to have X, Y, and Z. And then culture is like, maybe on the list at number 20. If it's on the list, how should growing companies think about scaling culture?
Yeah, it's, it's interesting. And, and in school, those and undergrad, business schools, PhD programs, we've got strategy 101 classes, we've got finance 202 classes. But rarely you see a culture one on one class. But why is that? Because culture is hard to grasp. Yeah, people throw that word around. So much of ‘we want to have a great culture’. And it gets back to defining it. So I'll go back to the results - results, actions, beliefs, experiences. Let’s say Harrison that you're a brand new employee in an organization. Day one, you walk into that organization and you see someone who's been there for 15 years. And you're at lunch with them. What question are you going to be asking day one?
How do you like working here?
That's right. You're trying to get the inside scoop? How did things really work? tell me about the organization. Yeah. And this employee whose been there for 15 years, we'll say, “I love it. Great people, great organization. We do great things. I've been here 15 years. I love it.” Right? In this moment. How are you feeling about joining this organization?
Feeling pretty decent, but the skeptic in me will be like, yeah, everyone says that.
That's right. You're feeling good. But what's really there? Now let's say that person says, “Harrison, when you're in one of those manager meetings (where the leadership is there), don't speak up in that meeting.” The question you're going to ask is why. And they will say, “Harrison, we had a guy named Frank. Frank spoke up in one of those meetings six months ago, no one's seen them, since we don't know what happened to them.” So all of a sudden culture is at work here. So back to the results pyramid, you just had an experience day one on your job. Your belief is now: I cannot talk about anything here, I gotta keep my mouth shut & look pretty. That's right, the action you take is you stay quiet. The result is our organization has a brand new employee day one, who's not going to speak up, not going to share ideas, & not going to be innovative. It’s not a desired result. But too often, we have those beliefs that are operating in our ecosystem of our organization. And cultures, either working for you or against you. Culture never takes a holiday. It never checks out, never turns off, culture’s always working. The question that leaders need to ask, and especially those involved with human capital, which by the way should be every single leader in an organization, they need to ask, “Are we creating the experiences we need to be creating to foster our culture? How do you do that?”
So you first have to define the culture. And that starts with defining the results you need to achieve. So if you are perfectly those who are listening, you and your organizations are perfectly aligned today to deliver on the results you are achieving. Your experiences, beliefs and actions are producing the results you're delivering.
January 2021 is coming up. Here’s the trap - many organizations are going to come up with new results, and they're going to send them out an email blast. They'll probably put them up on a poster on the wall and they'll say okay, “Team, here we go, let's go and deliver them.” Though they've defined new results, the challenge is they have not defined new actions, beliefs or spaces. They have not defined culture. So get clear on the results we need to achieve. And then level deeper, what are the top three to five beliefs we need are people holding to deliver those. A common belief that we're seeing with the organizations that we're working with this year is the agility - the need to be agile and flexible and adapt to the changing circumstances. So leaders say, Hey, we need to be agile. But how do you create experiences that drive that thinking around agility.
So there's some specific tools that we work with organizations to help drive that. So we've got culture management tools, I'll mention three here. (i) Focus feedback. Feedback is so important. (I know I'm preaching to the choir Harrison with you and your expertise around feedback). We have to give feedback around the belief of agility. And we have coach each other on how we can be more agile. (ii) We also have focused recognition. We recognize our people, we applaud, we highlight the actions that are agile and that are helping us achieve our results. And then finally, (iii) focus storytelling. We tell the right stories at the right time to the right people to help move our culture forward. So we don't just say, “Yeah, let's be agile, and put it up on the wall.” Instead we ask, “How do we embed that?” How do we make that a part of who we are to deliver the results.
So when I say define culture, I'm saying define your top three to five key results. And then define the top three to five shifts you need to make in your culture today. And when you define that, then you're able to build an operating system around it with the culture management tools and with other processes to help you really focus on that culture. You get those right, and it helps accelerate your shift to those new, better different results you're seeking to achieve.
Perfect. So you I think you covered a little bit of this already. But what role do managers have throughout the company's hypergrowth? And how can the HR and the talent/people team really support them to make sure that they've got the right goals, the right culture, the right operating system? How can they work together and collaborate there?
Middle management is key in this process, but I'll say that it starts with leaders. Leaders have to define it, and get clear on it. And then a manager’s role is to align, to ask questions, and to make sure they're clear on that role. But it also scales down. Managers need to be very intentional around the culture that they're leading. And this needs to be showing up on agendas. It needs to be showing up in meetings in their one-on-ones. Back to the feedback conversation, feedback is something I get passionate about, because it's so important to our performance. And historically, feedback has this negative punitive reputation, that it only happens when things go wrong, or it happens once or twice a year at performance review time, right? And you think of the huge miss, that is if I'm a manager, and my team does something wrong, and I write it down in my notebook only to share in six months when we meet last six months of time.
And in the world of sports, they have this figured out. You think of the greatest athletes in the world. They all have a coach. LeBron James, one of the greatest basketball players in the world. He's got a coach. Frank Vogel. He's a lot shorter. He's a lot more unathletic than LeBron James. So somebody could say, “What in the world does Frank Vogel do for LeBron James? Why does LeBron have a coach?” It's a different perspective. And you notice the coaching - they take timeouts during the game, they've got halftime, they're coaching constantly throughout the process. The same environment needs to be taken place in organizations, we need to be coaching each other constantly throughout the year and be giving this feedback. The role managers play is critical. If there's a disconnect between leadership and the front lines, that disconnect is with that manager group. So managers need to make sure they're giving feedback upstream to leaders and downstream.
For every leader listening to this conversation - the most important thing you can be doing around feedback is asking for it & getting other peoples’ perspective asking “How am I showing up?” We get so excited about feedback and say, “Hey I've got a list of 10 people I'm going to go and give feedback to.” That’s great. But what's more powerful is when you ask for feedback, and how you're doing, and how the culture is.
For leaders who are seeking to define the cultural shifts, how can you without asking your team? You've got to reach out managers to the frontline and ask, “What are the shifts you need to make?” We were working with large pharmaceutical company, and they were growing. Their CEO at the time had been there for about 2-3 years. She talked about the challenges she was having in the organization said, “I just feel like I'm operating with blinders on. I'm not seeing the big picture. What can I do differently?” So the response was, “Well, feedback. Are you getting feedback? Are you asking for it?” And she responded, “Well, from my team, my close circle, we're working together.” We told her, “You've got to expand it, you've got to expand it throughout the organization.” She ended up getting someone from the front lines on their shipping dock. And his name was Kevin and Kevin came. And once a week, they would sit down together. And she would get Kevin's feedback. She was CEO of this 10,000 employee global pharmaceutical company, and she was meeting with one of the supervisors on the shipping dock. And he would bring her feedback every week and say, “Hey, here's what I'm hearing here. Here's what we're seeing in the organization.” All of a sudden, that organization started to achieve new, better different results than they had ever seen before. And what this leader chalked it up to was the feedback she was getting.
And so if we don't have that feedback going up and down the line in our organization, we're missing on some low hanging fruit where we can improve and we can accelerate our culture. This is where culture gets very strategic. We need to be doing things differently if we want our culture to shift. And those managers play such a critical role in that.
Absolutely absolutely makes sense. A lot of the times when you think about smaller organizations, they have that more instant and shorter communication line between the top and the bottom. And as companies start to grow to 10,000 employees, they're lucky to be able to do that, but that gets lost oftentimes. So I think this is one of the biggest and most important exercises and initiatives that companies can take on to accelerate that growth. So is scaling a culture from 20 employees to 100 employees different from scaling from 200 employees to 1000. When you think about culture at a startup of 5-10 people, it's shaped by practically speaking for most cases, the personalities, if you will, of these 5-10 individuals, how they behave, how they think. But over time, obviously, you've got to put the right things in place. So is it different from 20 to 100 versus 200 to 1000?
It's a great question, and one we deal with all the time, the principles remain the same around the need for clarity, the need for alignment, and the need for accountability at every level of the organization. So when I said clarity, again, for the the key results, top three to five, and the cultural shifts, top three to five, alignment at every level of the organization to deliver on those results in those shifts, and then personal positive accountability for every employee to live that culture and deliver those results.
So clarity, alignment, and accountability - the principles remain the same, but the dynamics are a little bit different. When you scale it to organizations that are 10,000 - 20,000 (we have even worked with 250,000 person global company), that’s where that manager group becomes even more critical. Because the senior leaders have to scale that expertise in that mastery down to that next level.
And at on this point, I'll talk about or emphasize the need to make sure that we're being genuine. If our focus as a culture is disingenuous and we're not being authentic, employees can read that out so quickly. The focus should be on trust in three months, then it can change to execution, and then accountability, and then it can change to the communication. If you're really serious about coaching, you have to be genuine, you have to be authentic, and you have to commit to the process over time. Now, that doesn't mean that cultural transformation takes a lot of time. Back to this organization with 250,000 employees - within three months, the culture was defined, articulated, scaled, and communicated outward to the entire workforce. And that's when the real work begins. Because then that's where you have to follow it up with the experiences and actions. So there's the initial training and the initial phase of getting the communication out there.
So an example, one organization had the focus on collaboration this year. They are a small organization about 500 employees, but something they did to show their employees that they were real about this issues is that this year, they are bonusing one collaboration. They're bonusing employees based on how well they've exemplified the cultural belief around collaboration. And so you build it into your systems. So you define the culture, you integrate it into your systems, into your communications, and in your HR processes.
And then the final piece, which is in this article I recently published INC for Partners and Leadership, was you hire for it. If your cultural beliefs and the results you're hiring, don't show up in your hiring process, then you're missing an opportunity to really integrate and make sure you're hiring for the right people. So a great equation when you're looking to hire is skill + will + cultural fit.
Now, some people would push back and say, “Well Mattson cultural fit that is so subjective.” And we'd respond, “It's not if you define the cultural beliefs you want to have. If your organization is all about collaboration, sharing feedback, and execution, those are three beliefs that I would hope that you'd be interviewing people for - do they show high aptitude around those three beliefs, because that's the kind of people we need here. That's the kind of people we need at our organization, which is different than our competitors different than the people down the road.” So hiring for it, scaling for it, the principles remain the same, whether you're a 10 person organization, or 200,000 person organization - the only difference is how you scale and the people you need to enrol and champion the culture.
And I think when you talk about culture fit, this is probably a conversation for another time. But there's also a stigma around what culture fit really means. 510 years ago, culture fit culture fit was always the thing to hire for. And now people are thinking about, okay, well, what about culture add? What does that look like? But I mean, we'll talk about that in another episode.
Well, let me hit on that because I think it's important. When you define your culture in the way that we're talking about, you remove that stigma, if you don't, then you get into an area where you're talking diversity and inclusion, you're talking equity, you're talking? Are you just hiring people who look, think and act like you, right? And that becomes a problem. If you let your culture get in that rut, you need to run from that as quick as you can. And you need to define your culture differently. You have to get back to: what are the beliefs? What are the results? and then you drive your culture towards that.
Love it. One last question for you. So this is something that I've heard a lot (especially when I was a consultant and even now when I talked to our partners who are growing really fast) is ‘it’s not what it used to be’. It's a common phrase that employees may say when corporate culture begins to change or, worst case scenario, begins to erodes. What are some of the common signs that company culture is starting to become a liability? How can you, as a leader or a manager spot that and start taking action?
Yeah, some common traps here. I'll go back to when you start seeing more meetings happening than before. When you start seeing meetings increase, when you start seeing feedback decrease, when you start having those champions in your culture, who you've been able to depend on before, start to go quiet, you know something's up. And ultimately, at the end of the day, when you're not achieving the results you need to achieve. Your culture is misaligned. We could survey all day long, and we do surveys, we do culture surveys. We'll look at strengths, weaknesses, opportunities, threats. But at the end of the day, when I'm talking to the CEO of a five person company, or a 50,000, person company, what do they care about? What keeps them up at night? It’s results. And so our answer would be the same. How do you know if your culture is working? Are you delivering the results that you want? If you're not, there needs to be some cultural shifts that need to be made. And it starts with you as a leader. And I'll share an example here, a organization global manufacturing company that was looking to move from a $250 million business to a $500 billion business in three years time. And they had just spent roughly $75 million on infrastructure upgrades. So this was equipment. This was facilities that they upgraded.
But this senior vice president he said to me “But Mattson, we did not say see an ROI on our infrastructure upgrades until we also invested the necessary time, resources and energy in culture. What was really fascinating was once we spent the time, energy and resources on culture, not only do we see a tremendous ROI on our infrastructure upgrades, but every other key initiative we were focusing on in the company improved. Hmm, I don't get it.” And of course, we said, well, you got culture, right? When you get culture right, it helps accelerate your ability to move to shift, to be agile, and to deliver your results. Think about your cell phone - we’ve all got our cell phone whether your Android or iOS, and we've got our operating system. Culture is your operating system. And it will reject or slow down apps, you try to put on it new initiatives, new policies. And so you have to get your operating system, right. And when you get that, right, everything else is magnified. When you get it wrong. Everything else is magnified. And so either you manage your culture, or it will manage you.
Awesome. I love that analogy to the phone. It's something I'm struggling with right now. So that's awesome. Well, those are the big questions. Anything I missed?
Just the the importance to make sure that people see culture as part of their strategy. We talked about this at the outset. And and love what you and you and your firm are doing Arizona around feedback around the process is so important, what your team is doing and what others are doing as we focus on helping organizations turn this into strategic reality, and not getting stuck in the casual Friday. So I just sighs again, when it comes to culture, it's all about clarity, alignment and accountability.
Awesome. Well, thank you so much for your time. Mattson. Where can the audience find you and your thought leadership?
Follow us on LinkedIn, Partners In Leadership. We've got a number of books out as well. We were on podcasts all the time and constantly publishing. We'd love to engage. If you have any questions & comments, we'd love to connect.
Thank you everyone for listening to working with people by page step. Feel free to check out other episodes on pavestep.com/podcast. Thanks again Mattson.
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