Company Culture – the VPE Perspective

What Is Culture ?

Culture Defined

Culture is the personality of the organization.  Formally it can be defined as the collective values, behaviors and expectations of a group of employees. It can refer to:

  • processes of decision making
  • guidelines about what kinds of behavior gets rewarded or reprimanded
  • rules around WHO gets to make decisions
  • the values that guide conduct, action and decisions

Culture tells employees how to behave — from how to dress and what hours to work to when and how to speak up or voice opinions. Culture ultimately defines what types of employees will be successful and satisfied in an organization. Creating the culture in an engineering organization is challenging mostly because the initial members will have more impact in shaping the organization. Bringing the wrong people to a small team can disrupt and sometimes prevent you to create the organization you have planned. This is like getting the right people on the bus and then driving to your destination.

During change one of the most common mistakes of engineering managers is not to recognize that there is a culture in place and that either you compromise and adjust to it or you must plan to replace a substantial part of your team with new people that would be more aligned with the new order.

During the transition it’s critical to communicate often and reinforce behavior you believe is right and communicate back behavior that is not part of your vision for the organization you are building.

Moral Setting of Culture

No matter the explicit or implicit standards of conduct or values are within an organization, it is only as good as the leadership of the organization. The organization members can see hypocrisy from miles away. It is incumbent on leadership (and management) to “walk the talk” at all times. This includes personal life, if their personal lives are known to the public.

Moral culture is the foundation for company culture. If the leadership does not have high moral values, it does not matter if you have the right people doing right things. It will be just a matter of time until the system disintegrates.

Culture relates directly how employees are going to be rewarded based on their behavior. A culture based on the wrong values foster bad behavior and despite of producing some good results in a short period of time it will hurt the company on the long run. A inadequate culture will also attract the wrong people accelerating even more the dysfunction and the level of cynicism of the good team members.

Why Does it Matter?

Humans are highly socialized animals and excellent at fitting in or adapting to different social contexts. People generally behave as is expected of them, and in the absence of explicit rules, this behavior is defined implicitly by culture. Obviously it’s unfeasible (and insulting to your engineers) to establish a rule for every behavior you would like or expect from them. So to get the kind of behavior you want, you need to establish a culture that fosters it.

A good company culture can result in improved productivity and lower costs. Productivity gains result from engaged and empowered employees. If your engineers are disengaged and unmotivated, your organization’s productivity will immediately reflect that.

Lower costs result from improved retention and recruiting. Happy engineers will stay with you longer. Interview candidates will quickly sense happy engineers and a strong culture. If the culture is right for them, they’ll want to be part of it, and if otherwise then you won’t want them anyway.

Culture Is an Alternative to Process

Companies require large quantities of people to collaborate effectively to achieve difficult goals. These collaborations are governed by social habits, some of which are informal, and some formal. The formal social habits are the company’s documented processes. The informal habits are the ones that define the company’s culture. Because the informal habits are more flexible and easier to learn and follow than the formal ones, it has been said that culture is what keeps a company from degenerating into bureaucracy. It is often a hallmark of dysfunctional organizations that they try to make up for defective culture with processes.

The VPE Role

Establishing Culture

Every department’s culture exists within the larger culture of the company as a whole, and it would be very hard to create an engineering culture that is at odds with the overall corporate culture. For example, if the company values shipping quickly over quality, every group from marketing to customer support expects this behavior. It’s very difficult for 1 department, or 1 executive for that matter, to be the lone holdout. One of the signs of a good company is the when all the department’s culture evolves in a together in a complementary way. This is a challenge, especially for startups, whose culture often changes and evolves very quickly.

Your department’s culture will be a reflection of your leadership style. Employees take cues on how to behave from the leaders. If you are open and engaged, then so will your engineers. You will not succeed in trying to establishing a culture that you do not adhere to. If you do not respect your engineers, it’s unlikely they will respect you.

In addition to setting the example, you can help establish culture through other means. You can help foster communication with an open office space and low walled cubicles. Similarly having regular team outings will give you and your engineers a foundation for communication beyond work related issues. The more communication you have with your engineers the more you establish the culture you’re after.

Maintaining Culture

Anonymous employee surveys provide early warnings of cultural problems, or at least employee perceptions.

Rewarding work that is “above and beyond” can build employee enthusiasm, but it will backfire if this is not done right. “Fair is not the same as equal”, if you reward everyone, you are not rewarding people who go “above and beyond”, and it is even worst if you reward “the favorites” rather than the ones who really deserve it. If you can’t do this right, it is better not to do anything!

When there is fast growth in staffing, it’s important that existing employees are not stuck doing maintenance just because they know the product. Since working on new products is generally viewed as more fun, there will be resentment if only new hires get to do this.

If you are undergoing rapid growth, it will become difficult to maintain the culture you have worked hard to establish. In any hiring decision you should consider the candidate’s fit to the established culture. You should also include a culture section into your new hire training program with plenty of “what-if” scenarios describing different situations and the expected behavior.

Again one-on-ones are the best way to be connected and detect the friction between employees early on before the relationship disintegrates. It takes a lot more energy to recover than to prevent a confrontation in your staff. Another challenge is to revisit your hiring decisions and adjust accordingly.

Also, opening an email to receive anonymous communications can help you to navigate a rapid growth phase.

Good Culture

Traits of a Good Culture

  • People run towards problems rather than away from problems
  • People work for company’s gain, not their team’s gain

Developing a Good Culture

Build a meritocracy: when employees believe their accomplishments will be recognized and rewarded, they will worry more about the overall company success than their own situation. This means dedicating time and attention to managing employees, no matter how busy things are.

An important point to be noted is that sometimes employees are not able to realize their full potential because their need in important mundane tasks like supporting legacy code, etc. As a leader you should look at situations like that as opportunities to develop a “partnership” with your direct reports by recognizing the situation and working with them in finding the right project that will help them to move to the next level.

Innovative Culture

As problems and solutions become more sophisticated, more value is produced out of collaboration of several individuals that out of individual contributions alone. Successful innovative companies create some form of structure that foster collaboration and also allow reward for individual contributions. This combination can be seen in innovative companies of different sizes.

Another key indicator of an innovative company culture is the level of knowledge shared by individuals of different groups. This can be measured by the quality of technical “wikis” (or any other form of content sharing tool) that are maintained by the engineering group.

  • Cultures of innovation (vs accountability?)
  • “Fellows” programs for innovation
  • “Free 15%” or “Free 20%” – what it implies for the culture
  • Do you want efficiency?

How size can influence culture

Engineering groups in smaller organizations tend to tackle the critical tasks earlier while in larger organizations it’s more common to address the less complex tasks first and postpone the resolution of the most critical tasks. Nowadays most of the leading Silicon Valley companies have a flat organizational chart and are designed to be self organizing entities with smaller fairly autonomous groups.

Depending on the size of each autonomous group, the level of formality and bureaucracy increases slowing down the pace of development. The key metric is not the size of the organization necessarily but the size of each of the autonomous groups in the organization.

Diversity and Culture

Typically when a company starts, its founders typically share some common social and cultural context. As the company grows, this can cause challenges as newcomers arrive who don’t share this background. A good example is one company I worked for where most of the early employees were Russian. This caused the interesting effect that most conversations in the break room would be in Russian, until a non-Russian walked, at which point people might start speaking English. Normally this kind of thing is fairly harmless, however as a leader one has to make sure that people aren’t feeling excluded because they don’t belong to the right culture. What to do about this ? There are a couple of approaches. Some east coast financial companies find that golf is so much a part of their culture, that to insure that no one is left out, they provide golf classes for everyone. This isn’t so common in Silicon Valley. A more common approach is simply to ensure that all important activities are open to and comfortable for all employees. In fact as the company grows, particular to different locations in different regions it becomes more and more important to figure out how to separate company culture from specific habits of specific groups of people. For example, one of the authors’ company has a beer bash every Friday. However, in India some of the people don’t drink and aren’t comfortable with that. Since the building has multiple floors, the solution was to have the party with beer on one floor and without beer on the other floor. This typical of the sort of creative compromise that’s needed to keep everyone happy. Another interesting issue is the differing needs of younger and older employees. The younger folks, newly out of college, tend to view work as a major part of their social life, and like to do things in groups, and hang out. Older employees, tend to have family obligations and want to do their job – and then go home. This sometimes causes issues with planning events because not everyone will be equally excited. Again, the trick is flexibility and compromise. What really matters with stuff like this is listening carefully and being in touch with what the employees feel. One needs to particularly watch out for the common phenomenon that the senior management tea may come from a different cultural group as many of the employees, and maybe out of touch with what some of the more newly hired people are thinking.

Another angle on diversity are the sheer cultural differences in how people approach work, ranging from attitudes towards hierarchy, in how much they speak up, and how ready they are to admit bad news or to contradict the boss. For example, some newly hired employees may be uncertain in their English skills and as a result reluctant to speak up. Since you hired these folks, you need to make sure they’re getting properly integrated! The key lesson in all this, is be aware and sensitive. You can’t always predict what will go wrong, but if you stay in touch, and listen carefully, you can often get pointers on what you need to adjust.

Confrontation and Tension

Some managers thrive on being extremely confrontational, and exploiting tensions within a group. In the short run, charismatic and intense leaders can move teams to accomplish amazing things. In the long run, if they are too abrasive they can also burn so many bridges that they self-destruct. Really there is a broad continuum here. Some leaders who are very confrontational are also excellent at creating loyalty and vigorously leading their organization forward. At their best such leaders tend to get a long fine with those who are capable and understand them, and reserve their venom for the inept. Many famous CEOs like Larry Ellison or even Steve Jobs fall in this camp. At their worst, such people can exercise a corrosive effect on the organization. A good examples come from the CRM business, where one well known company in spite of great products and a great team was ultimately undone by the irascible personality of its president who couldn’t resist interjecting arbitrary changes of directions, displays of favoritism, and general fits of meanness that raised the tension level in the organization tremendously and greatly lowered morale. The moral of the story, is that being an intense and strong personality can be just fine, as long as it is accompanied by a sufficiently bold and correct vision, as well as a decent level of judgment about people. Such a person will be so effective as to routinely attract the right people. Nonetheless, there are plenty of examples of highly effective leaders who at least outwardly are much milder in character. Nonetheless it’s hard to imagine being an effective leader without at least some measure of pushiness.

Dealing with hard times

When having to do layoffs, it is important to openly communicate how the selections were made. The people you want to retain will see how you selected the people to layoff, and if it appears arbitrary or unfair, you will lose them too.

Bad Culture

Symptoms of Bad Culture:

  • When a company is not a meritocracy: that is a much of the company believes it’s who you are and not what you have done.
  • When the company does not value responsibility and accountability from everyone.
  • When a company is secretive and what is communicated differs between different executives and managers.
  • When a company drinks its own kool-aid, i.e. it believes the product or business is much more capable than it actually is.

Fixing Bad Culture

Culture starts at the top with executives holding themselves and management to the standards they ask of their employees.

When to bring in Consultants

If a culture is weakened by a deep seated conflict between factions, bringing in outside resources as neutral mediators can be very effective. Change management experts can also help an organization if it is trying to do some systematic transformation, with a lot of people involved, by helping everyone be effective in this transition, particularly if not all the involved parties are experienced in change management. Especially with Engineers who are quick to jump from problem to implementation without a clear understanding of the question, trained facilitators can help the group reach good decisions. Since such consultants are quite expensive, in a larger organization you may want to have someone like this on staff in Human Resources. Failing that, having them focus on training managers in how to do change management can also be effective.

If on the other hand, cultural weakness stems from weak corporate management, then no amount of consultants can help. However, consultants really love this last case, because they can make a lot of money! I have seen lots of costly sessions run by consultants to try to create culture, vision, ….., and it produced nothing except very large invoices for the consultants.

When to Run Like Hell

When executives don’t acknowledge cultural problems that a sizable number of employees bring up in anonymous employee surveys.

When the company culture starts having you behave in ways you find uncomfortable, or forces you to explain behavior that you can’t explain.

Dimensions of Consideration when Assessing Culture

You may only spend a few hours interviewing for a position where you’ll spend years of effort. It’s important to get a sense of whether the culture is compatible with your our beliefs/style. When you interview with a company, it’s important to get a sense of the companies culture, by asking questions of the CEO, executives as well as the team you’d be managing.

  • How are employees rewarded or recognized.
  • Is the CEO a dictatorial type?
  • Is one particular dept. (mktg. or sales) favored over others? (How did the CEO rise through the ranks?)
  • Is the culture one that accepts an adequate amount of risk, but not too much?
  • What do ex-employees of the company say about the culture (it’s worth trying to track down a few), good or bad.
  • Ethics and culture are entwined, does the company make the right ethical decisions for the employees, stockholders and customers?
  • What are the company communication mechanisms? Is having ‘fun’ encouraged?
  • How do decisions get made?
  • How do promotions / advancement decisions get made?
  • How does the culture recognize performance? What achievements draw recognition and accolades?
  • What humor is tolerated and encouraged? Discouraged?
  • What standards are applied for time management? meeting start times? meeting agendas? action item closure?
  • What do people do in their free time? Do they spend free time together? Do they like each other? Do these activities cross management levels and vertical department lines?
  • How are mistakes punished? rewarded?
  • Is there evidence of NIH? How strong is it?
  • How does the company position and describe the competition? the customers? the partners? the analysts? the investors? the board members?
  • What does the CEO like to do in his spare time?
  • Has the management team ever been sued? levied restraining orders?
  • How much authority is pushed into the lowest levels of the organization? budget authority? representation authority? customer handling? employee recognition?
  • Are technical specialists afforded the respect that line managers are?
  • Are there lots of titles in the company? Levels of titles?
  • Are there very wide spans of control per manager?
  • What level of management has authority to provide employees monetary recognition / bonuses?
  • How often are stock options / grants given subsequent to initial onboarding?
  • When hiring packages are proposed and approved, how do compensation package targets get set? What resources are used as baseline reference?
  • What does the competition say about the company?
  • What do customers say about the company?
  • What do non-customers (ex-prospects) say about the company?
  • What does the investment community say ab out the company?
  • What kinds of stories are repeated to new employees or interviewees when being introduced to the company?
  • Do people smile? frown? crack smiles ever?
  • Do people gather around common areas to spend moments in conversation with each other?
  • What does the refrigerator look like? is there lots of beer? ice cream?
  • How long into the life of the company did the soft drinks stay free?
  • Does the company support regular training and conference attendance?

Stories and Anecdotes

Story #1

I recall a colleague recounting a true story of how one CEO made roadmap decisions. He had everyone in the management team allocate $10 product dollars against their high priority projects. At the end, the CEO announced that he was going to ‘spend/allocate’ $100, saying ‘I can spend more than you because I’m the CEO’. Is this the kind of ‘culture’ you’d like to work in?

Story #2

I worked for a company once solely focused on IPO or acquisition. As a result there was a culture of pretending; everyone knew the product didn’t really work, but no one wanted to talk about it. Everything became a matter of pretense. Also, who you hung out with counted for more than one’s results. The moment the company was acquired it fell apart quickly because in fact no one liked anyone else, and the ‘mafia’ surrounding the founders was incensed when the new owners took them to task for building something that was so broken. They did not want to hear that message.

Story #3

I worked for a company which prided itself on how complicated their software was and bragged about the number of Ph.D. years that went into its development. This created a culture of hubris, which was completely at odds with the company stated value of humility. The business problem that the software was supposed to solve was actually very complex and was both data and process dependent. The assumption was that the problem was solved with the company’s highly configurable product, but in truth the existing team did not have the capacity to produce such a piece of software, especially from the current product which by no means fit that description. Nonetheless, the product was sold as though it solved this problem. Consequently every deal required new functionality to be built into the product, usually based on hazy requirements inferred from quick and dirty prototypes used to close the deal. This was an impossible place to succeed as an engineer.

 

Note: This is an excerpt from “Leading and Managing in Silicon Valley“, a book co-authored by Sam Hahn and other VPEs.

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