Building Company Culture: 7 Steps for Every Small Business
June 25, 2018
Right now, candidates have more options for employment than at any point in recent history. In other words, it’s a candidate’s world and we’re just living in it. And for small businesses, that means that if you want to fill your open roles, you need to set yourself apart – and you need to have a great company culture to do that.
Now, we’ve heard a lot of praise for the company cultures of tech giants like Google and Netflix or retail monoliths like Zappos (just to name a few). But, let’s get real: small businesses can’t do anything with these examples. You don’t have huge HR teams with expansive budgets, built-in (and beloved) brand recognition, or all the perks like doggy day care centers, onsite barber shops or any other over the top benefits those companies are offering lately.
Without all the bells and whistles, most small businesses have had to be, for lack of a better term, more “scrappy” in how they build winning company cultures. In my opinion, what they are doing are the real examples most of the business world can learn from. Not to say that the large companies aren’t doing amazing things, but in the name of “stuff my company can actually do” vs. “what I would love to do If I had a huge budget” it’s time we started offering up some examples of small businesses that are doing things right – and that are actually relevant to the majority of the folks reading this stuff.
So, I recently spoke with two different small companies from two very different industries about how they go about building, defining and measuring a successful company culture. Based on our conversation, here are some steps that every small business can take to build a geat company culture:
Step 1: Define what you want your company culture and values to look like
- Why does our company do what it does (i.e. Why do we exist)?
- What do we believe (i.e. what are our values)?
- Where do we want to go with the company (i.e. what is our vision for the company)?
Michael admits that in the early years of Buildium, without answering these questions it was much harder to build a clearly defined company culture. “In the absence of answers to these most basic questions, we didn’t know whether we were really aligned. That was fine in the early years when we were in survival mode, but as time went on, our employees increasingly wanted to know where we were going as a company.”
Michael offers this advice to fellow small businesses: Don’t defer what’s important.
“Focus on your culture as early as you can. The perks — free beer, free snacks, ping pong tables — will carry you by for a while, but ultimately, people want to know where you're going, and why they're doing the work they're doing. Without a defined culture, employees get disenchanted; they move on. And without those guardrails, it makes it hard to make decisions as an owner.”
Buildium's core values.
It’s also really important to ensure that these values are part of the everyday fabric of your employee experience. “Make sure you aren’t just hanging values on a wall. Come up with something genuine to you and your company. Then think about what it looks like to live what you've described, what it will take to stay true to that company vision and those values." Michael adds.
Step 2: Look at what your culture is like now – and if you need to make changes
Sarah Larson, Partner and CHRO at Third Rock Ventures, has a ton of experience building company cultures in her career. Third Rock Ventures is a venture capital company that launches and builds Life Sciences and Biotech companies. Long story short, building cultures in startups is something Sarah has done countless times over.
When asked about how she goes about literally starting a company culture from scratch, Sarah said: “Culture starts with the very first person. Whatever the circumstances are that they came to be in the company, it's their set of beliefs and values that will dictate the initial build. It does not take long (maybe 5-10 employees) to be able to see what kind of culture exists,” she says. “This is when you can start to proactively make changes if you want to."
For example, Sarah says that if you are worried about the energy level in a team (perhaps they are too laid back) make a deliberate decision to hire people with more energy. Or if you feel like there is too much “group think” – perhaps employees are from only startup companies’ backgrounds or from all big pharma companies – change it. “Building a company from scratch is actually the easiest cultural build. It's changing culture once it's ingrained that's hard,” she says.
Third Rock Venture's core values.
Lastly, in these early stage company cultures, do not underestimate the importance of the Board and their impact on culture as well. “Invest in board culture as much as you do company culture: In small companies the role of the board is often more intimate and connected to the organization and has the ability to have a heavy influence on culture.”
Step 3: Identify (or hire) someone who will be your people person
Clearly, hiring the right kind of personalities and backgrounds has a huge effect on how a company operates culturally. Sarah said there is one key hire though that can really help make a difference in the early stages of culture building – your people person.
“I believe that one of the most critical hires as early as possible in a company is your people person. You need that expert who is trained in culture to help drive what you are creating and help identify if it’s going well or not.” she says.
And, that doesn’t mean hiring an HR person. “Many people make the mistake of thinking that just because someone is an HR professional, they “get” culture. That could not be farther from the truth. Ask yourself, has this person ever been in and witnessed exceptional cultures? Because if they haven’t, why would you expect that they can create it for you?"
While the people person in your company is a big part of helping in your cultural endeavors, don’t make the mistake of putting the role of culture all on one person. “Culture is not 'HR’s Job.' It's everyone’s priority and it should be a top strategic imperative,” Sarah says.
Also, while we hear constantly about all of the fun events and activities some of the world’s most admired company cultures do and have, we need to remember that these activities and events in small businesses are a two sided coin. “Culture is not all about social events: Don’t create a bunch of “fun crap” just because you think it will mean you have a fun and socially engaged culture. Small companies are very busy. Social events take away from people’s time to do their work. So make them meaningful,” Sarah points out.
Step 4: Invest time in building your talent brand
Your talent brand is what your employees think, feel, and share about your company as a place to work.
“I am a big believer in the power of a talent brand and the ability to articulate your culture through different channels,” says Michael. “In today’s war for talent, candidates are almost always passive. Giving them an opportunity to connect with you in advance of meeting with you, allowing them to form an opinion and then gauge their expectations once they are on site creates another level of engagement,” he adds.
Sarah says she is fascinated by how few (biotech) companies are building their talent brands. “When I was at Foundation Medicine, we were one of the pioneers in Biotech with our adoption of talent branding. Biotech is notoriously a “play it safe” industry with its branding. We saw immediate and exponential results.”
An example of Foundation Medicine’s talent brand was this highly successful video, showing individual employee stories under the broader company vision of “Transforming Cancer Care.”
Michael added that Buildium also understands the real importance of effective talent branding. “Use your culture and values to hire,” he says. “You want your employees to know what they are signing up for, and you want them to want to be a part of it. If they see the vision and understand what’s important to you, everyone can more easily row in the same direction.”
Step 5: Optimize your hiring process to ensure you are bringing in the right people
When it comes to recruiting and hiring, “taking the time up front will pay off because in a small company, getting it wrong is palpable,” says Sarah. I agree with this statement with the power of 10,000 suns. The early hires you make can not only impact your business, but also directly impact your culture too. Often, I see a lot of small businesses hire for skill early on (because of need) but they don’t place enough importance on the culture aspect in assessing new hires.
Here are some ways to make sure your hiring process is set up to bring in the right talent:
- Make sure candidates appreciate your culture and values: If your new hires align with your culture and values, it's easier for everyone to be moving in the same direction, according to Michael. Here are some interview questions that can help you assess if a candidate shares your companies values,
- Divide and conquer in the interview process: Optimize your interviews and use your interview team to cover as much ground as possible. No one, no matter how good an interviewer he or she may be, can get a full picture in 45 minutes. Assign your team different areas to cover in the interviews (skills, cultural fit, experience, etc). If you assign different areas of the interview (and interviewers) to different subjects, it will result in deeper conversations, different conversations and a broader understanding of each candidate.
- Prioritize attitude over skills and experience: As a growing small business, the easy thing to do is hire that person who can do the job “right now” with as little training as possible. Heck – most small businesses are hiring people who are doing the same exact job they need – just at a different company. While these hires have immediate impact (usually), you need to question if they will be growing with you for years after the immediate task/need you hired them for is gone. I have seen a lot of clients have longer term success in hiring people who might not have all 10 of the 10 skills or experience they need, but maybe have 6 - 7 and are great fits culturally and genuinely excited about the opportunity. These types of hires tend to stay longer and have the ability to grow into different roles as the company grows.
- Don’t hire “mini-me”s: “Culture fit” does not mean that a new hire looks like, thinks like or acts like you and your team. Think of it as a “culture add” – is the person someone who brings diversity of opinion, thought, experience and background? Understanding this as you hire will help bring a balanced and truly diverse type of culture to your organization.
Step 6: Find ways to constantly reinforce your core values
Having programs and initiatives in place that regularly reinforce the core values that make up the central tenants of your culture is key to keeping your culture thriving. At Buildium, they do just this, starting with culture awards.
“All of our awards are peer nominated. We think it’s a great way to celebrate those who consistently live our values and go above and beyond,” says Michael.
Some of these awards include:
- The Founders Award — an annual award given to an employee who best exemplifies the core values, and represents the best of what it means to be a “Buildian.”
- Core Value “Animal” Award — a monthly award given to an employee who best demonstrates the core values. It’s actually “Animal” from the Muppets (!).
Other Buildium core value programs include “Volunteer Weeks” four times a year and company wide monthly meetings with lots of open communication. Michael believes that “living” these values also leads to a culture that can have tangible effects for your customers too.
“Some of my favorites aren't programs at all but are the small examples of going above and beyond: Sending a customer flowers when we learned about their 30th wedding anniversary; ordering an Uber for one of our customer’ tenants who was in a bind; sending co-workers prepared meals when they and their families are going through a tough time. You won’t find any of these things in any company handbook or manual. These are just examples of our employees exemplifying what it means to be a Buildian. That’s a culture we’re proud of,” says Michael.
Step 7: Measure if your culture is effectively attracting and engaging talent
In the absence of countless tools and the resources to manage them, how do you actually measure whether you culture is one that people buy into and like being a part of?
To do just that, Michael likes to measure something he calls “Employee Pride.”
"We measure effectiveness in several ways, including employee engagement surveys, employee referral rates, voluntary turnover rates, and employee ratings and review sites. These measures help us tell whether we’re on the right track with respect to creating the kind of employee experience we want to create.”
However, Michael cautions that there is only so much you can measure via metrics. “We find that the things that can't be measured are just as important. It's what you can see and feel happening around you. For us, we always ask; 'Will this help the employee see this as the best place they've ever worked?' and 'Are we setting the highest standard for the way business should be done?' That results in an environment where employees lift each other up, and we see them doing everything they can to go above and beyond for our customers.”
Sarah thinks the recruiting side can also be an indicator of measuring cultural effectiveness. “Are you winning the fight for talent without jacking up the compensation to ridiculous levels?” she asks. Sarah also says that one measure is to simply look at the bottom line. “Most people don’t think to consider productivity and sometimes revenue [to measure engagement]. Happy people produce more. It’s a fact."
There's one thing Sarah said that I think really nails it:
“Work life balance is not a “thing” in small companies. Own up to it and embrace it. Be honest about it. And then create an environment where you trust the robustness of your hiring process to deliver new employees who understand the commitment they are making, what will make them successful, what the expectations are of them and what they can expect of you.”
Culture is a big difference maker in attracting and retaining great people – as well as in being a high performing business too. Signing up for a startup or 1000 person company culture can be very different than joining one that has 100,000 employees. Yes, the huge multinational “sexy” companies are doing some amazing things, but what they do can be incredibly hard to learn from when your entire company is 5 - 200 people.
The building of an effective culture is ultimately unique to each organization, but the “nuts and bolts” of an effective culture for small businesses are what made these conversations with Saran and Michael so fascinating (and important) to me. Any company, regardless of industry or size, can learn from their advice.
As promised, no yoga room or office sommeliers – just some real-world examples and advice that doesn't require a huge budget and lots of resources. Building your company culture is one of the most important endeavors for any small busines – and an effective one can be the key to hiring and retaining a highly engaged and productive team.
*Image from Buildium
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