Company culture matters
Every organization has a culture whether it is clearly defined or not. It’s the set of values and behaviors that your employees perceive as important or expected. In other words, it’s a way of doing things. 1
CEOs and founders of organizations usually have a vision regarding the desired behaviors that they hope for their employees to have. These are typically derived from the founders’ own values and behaviors. As long as the company is relatively small, it’s not immensely challenging to create an environment that embraces this shared vision. Nevertheless, at a certain threshold, things begin to change.
At Ragnarson, we experienced this shift when we reached around 26 employees, out of which one fourth of the people had been working with us for less than 6 months. The more people we added, the harder it was to ensure that “the right” behaviors were occurring. In our case, it was especially noticeable among the newcomers. They simply didn’t have enough guidance about what was expected of them.
The problems we encountered from a broader perspective were:
- Ensuring that “the old” team was consistent in their behaviors and understood our priorities
- Making hiring decisions about which applicants were a good fit for our company
- Onboarding newcomers
- Making decisions about who should be promoted and who should be fired
- Identifying which customers were a good fit for us
In order to preserve our culture and ensure that our efforts were aligned, we decided to be more explicit about the behaviors that we valued. 2 The perfect tool to clearly identify and convey these behaviors were well-defined core values.
The road to core values
I learned about core values from an excellent book, Delivering Happiness, written by the founder of Zappos, Tony Hsieh. This book helped us not only to understand the importance of shared values but also provided guidance on introducing this concept to our team. At the beginning, we weren’t sure what the exact steps were that we needed to take. It became clearer as we dived deeper into the topic. The whole process from conception to the final document consisted of the following steps.
What do we actually believe in?
In order to state something explicitly, you first need to identify what it is that you are trying to say. The first list of our values was created by just a small group including me and few members of our management team. Everyone made suggestions based on what they thought was important. We came up with a long, chaotic list of items, such as:
- We are passionate about what we do;
- We are transparent inside the company;
- Everyone can influence their own personal growth as well as the company’s growth;
- We give back to the community;
- We are goal-oriented.
The next step was to categorize these proposals into a few core values and to clarify each one with a short description. Since we liked how Zappos accomplished this step, we mimicked their process. After a few months, we had a first draft that was ready to be reviewed by the entire company for feedback.
We were a little bit concerned about the commitment of our developers to this feedback process. They typically prefer to code rather than talk about values. Nevertheless, everyone was asked to spend at least 30-60 minutes reviewing the document to provide comments and suggestions. People had two weeks to review it, and we also encouraged them to examine their own values by providing them instructions on the mountains and valleys exercise. We collected a lot of feedback that, taken together with the draft, served as excellent raw material for our final version.
Good writing is difficult
Describing the values of an organization is a daunting, challenging task. While writing our values, we realized that there was confusion in regard to several terms, like policies and goals. We learned a lot about ourselves and our company during the process. As a result, it was challenging to explain all the subtleties attached to each of our core values using just a few sentences. We went back and forth through the list with an editor, and the final result was a disappointment. Instead of clarity, we had created more confusion and clutter.
The entire process took us almost a year to complete. Fortunately, this time allowed us to look at the document with fresh eyes a few months later. It was much easier to diagnose the problems after taking time to reflect on the process. In the meantime, we also came across a presentation from Reed Hastings, the CEO of Netflix, about their culture. We appreciated the way in which their values were described using only a few simple and short sentences. I’m not exactly sure, but this might have been the turning point when we learned an important lesson. Having core values on a piece of paper is merely a tool. It will never convey the entire message, nor is it intended to do so. It’s useful to have a list of core values, but the more meaningful outcome is evident in our daily behavior. If people act upon our values on a daily basis, it was worth the effort to state them. It also means that we need to actively learn from each other what these core values might mean in different contexts.
With guidance from the presentation given by Mr. Hastings and after numerous discussions, we developed a solid description of our core values that hasn’t changed much over time.
Learning about the company and its values
The last stage before publishing our values, arguably the most important step, was mutual learning and an integrity test. Everyone was asked to prepare himself and herself for the meeting. The goal was to check if the defined values truly reflected our company and to clarify what each of us understood by the descriptions. All of the employees were divided into smaller groups of 5 to 8 people. We held online meetings since we are a remote company. 3 Each group spent around 3 hours discussing the values that we had defined. Our employees were well-prepared, active in the discussions, and willing to share their insights.
Examples of the questions we asked during these conversations were: 4
- Do you think that the decisions we make on a daily basis align with our values?
- Do you believe that the company is run in a manner that promotes the behaviors we identified as important?
- Do you think that people are being promoted and fired in accordance with our values?
It was a tremendously helpful activity that allowed us to better understand ourselves and our environment. It also led to another important lesson, which was that the company was not always performing in accordance with its values. We are just people, each with our own shortcomings, agendas, and values. It’s impossible to always be perfectly aligned with what an organization needs or expects. This is why we treat our values as something we would like to gravitate toward rather than a hard and fast set of rules. We may go astray, but our values point us back in the right direction.
Acting upon your values makes all the difference
As of today (May 2018), it has been two years since we completed this process. It’s hard to accurately measure how much guidance the values provide for us on a daily basis. However, they are an integral part of our business processes:
- Recruitment - the third stage of our recruitment process was created to ensure that there is a cultural fit between the company and our future employees
- Evaluation and feedback – these values are an essential component during our self-set-salary process
- Sales – they are used to evaluate potential customers to make sure that we will be able to work together effectively and harmoniously
- Day-to-day collaboration on our projects
It’s hard to imagine now how we would make all of these decisions if we had not spent time clearly defining our culture. Our values are deeply ingrained in all of our business processes and guide us whenever we are in doubt. It’s one of our greatest achievements.
It’s inconceivable to imagine a successful company that does not have a strong culture. There are so many tasks to accomplish and decisions to make. If an organization’s efforts are not coordinated, the results will likely be far from optimal. Core values have provided us with an invaluable tool to make sure that we are working towards a shared vision. The greatest achievement, for us, is being practitioners of our core values and not merely believers. I’m curious about what your experiences are with shaping and operating within your company’s culture. What was your approach at the beginning, and what have you done to improve your culture? Feel free to share any questions and comments on Twitter.
Here is a humorous presentation on our company’s values prepared by Maciej Małecki, one of our former developers.
Want to know more about what a culture is, what it isn’t, and how to change it? Consider watching - How to Start a Cultural Revolution by Ben Horowitz (Andreessen Horowitz) at Startup Grind Global. ↩
More about remote work can be found in Remote: Office Not Required by David Heinemeier Hansson and Jason Fried. ↩
Many other questions helping to check the integrity of an organization’s core values are suggested in this article by Wendy Maynard - How to Write Remarkable Company Core Values (Part I). ↩