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At what point does a company have a culture?

Jul 13, 2018 | Human Resources, Small Business HR

Monthly, I host a culture event featuring leaders from various companies with amazing workplace cultures.  In these events I ask each guest when he/she became aware of their company’s culture.  All too often, they respond with a story of how they discovered the importance of culture too late, usually a lesson learned the hard way.  Some waited until 20 employees, others after making a bad hire.

So when should you start addressing your culture strategically?  Whether you are an Entrepreneur, small business owner, mid-size business leader, or corporate executive know this….YOUR BUSINESS ALREADY HAS A CULTURE.  If you have a service or product, you also have a culture just as you have a brand.  The size of your business can determine the level of work your culture requires, unless it’s a small but bad culture.  Bad cultures are always a lot of work to turn around – I know – this is what I do!  Yesterday I  shared some tips with the hosts of the Entrepreneurial Talk Podcast (see live recording below) on culture for every size business.  Providing even more help on this topic, I’ve outlined some general culture exercises and guidelines based on the number of employees.

How many employees make a culture?

Teresa Marzolph with hosts of the Entrepreneurial Talk Podcast talking culture for every business.

The Solopreneur

In addition to handling your own sales, marketing, accounting, customer service, and IT, you now have culture responsibilities?  In short, yes.  But, it’s not as tough as it sounds.  I mean, how much can you deviate from yourself?  You and your values are the culture of your business.  In this scenario culture work is more about defining your purpose and your own core set of values.  It may seem silly, but you DO need to establish some core values.  Most entrepreneurs can recall a time they deviated from their purpose or values, and it’s rarely a good story.  Have you ever taken on a client you suspected of being dishonest or deceptive?  How about deliver a product or service that was less than satisfactory because you were in a hurry and out of time?  These are examples of solopreneurs deviating from their own culture and values.  These values should dictate the vendors you choose, sub-contractors you work with, leads you target, how you market to them, etc.  Should you later decide to add to your team or take on a partner, these will be key to growing successfully.

Culture for 2-15 Employees

Building on culture needs for the Solopreneur, you’re now getting into some compliance matters.  Payroll, time off benefits, worker’s compensation, and some core policies will help to manage your risk.  While it’s common to want to just slap some policies and procedures together and fill seats (perhaps even with friends), it’s important to incorporate culture into these essentials.  The time spent on infusing and capturing the company’s culture into basic policies, procedures, and practices will help a lot moving forward.  Lincoln said, “Give me six hours to chop down a tree and I will spend the first four sharpening the axe”.  Your culture will be tested and building it on an unstable foundation ensures it will fail.  So take the time to focus on what you CAN control and sharpen your axe.  Without spending the time on being proactive, the time you spend later on chopping down the tree is much more time consuming, expensive, and unpleasant.  Furthermore, without preparation the tree you’re so eagerly chopping down may just fall on you.  Research the federal and local laws that impact your business or engage someone to do it for you.  Get some expert culture help on hiring and training so that you attract and retain the right people.  You likely don’t need a full-time HR person yet, but that doesn’t mean you are without HR needs.  Many payroll companies offer on-demand HR support, or you may choose to engage an HR consultant on occasion.  Ideally, the expert you choose will have experience in both traditional HR knowledge (ie compliance and risk management) and culture.  Historically we talk about these things separately, but when done correctly, they are two sides of the same coin.

Culture for 16-49 Employees

At this point, your payroll, compliance reporting, hiring, benefits, and employee relations issues are getting to the point where it makes sense to hire someone.  This person is likely tasked with and focused on the administrative side of human resources, but lacking experience with culture strategy.  You’ll see as the business grows in size, your people (or HR) strategy shifts from a focus on compliance to a focus on culture.  Compliance and integrity is at the root of every solid culture; however it in itself is not culture.  For example, simply having milk, salt, flour, yeast, eggs, and butter does not in itself give you bread.  You merely have a good start to prepare some tasty bread.  So, at this size, building on the culture exercises from the 2-15 headcount approach, it’s important to start focusing on employee performance and recognition.  I meet a lot of business owners that think they’re too small to worry about these things.  While employees at this size company still have a pretty solid understanding of how their work impacts the company’s success, they can sometimes feel underappreciated.  Companies this size also often fail to provide training or develop their employees.  Make sure continuous improvement is part of your culture by focusing on goals at every level.  Managers and employees should meet biweekly or monthly to discuss the employee’s progress toward meeting company goals (designed to help the company succeed) as well as the employee’s progress on his/her own professional goals (designed to help the EMPLOYEE succeed).  These one-on-ones don’t need to be long, but they need to happen regularly and need to be effective.  When done correctly and managers are bought in, these meetings can work wonders – improving the employee-manager relationship, and also improving the overall efficiency of the company.  Even at this level, managers can often lose sight of issues at the front lines felt by customer-facing employees.  If coming together regularly in a meeting, both managers and employees are held accountable to progress and support.  The employee is given opportunity to shed light on potential issues before they explode.   In a company this size, every person is EXTREMELY valuable and even the smallest culture deviation can wreak havoc in an entire office!  Stay in the know by setting up proper communication channels.

Culture for 50-150 Employees

When I was first starting out in my HR career, the rule of thumb was one HR person for every 50 employees.  As employee expectations have changed over the years, so too have work demands, geographic restrictions, accessibility, and technology.  As result, the need for human resources has also changed.  A company with 50 employees in many ways faces the same federal regulations as does a company with 5,000 employees.  There are still some exceptions of course, and every employer must also comply with their own local employment laws.  Administrative tasks under the HR realm at this size are too much for divisional managers (operations, sales, etc) to handle.  Culturally, 50 employees is where companies can derail.  At this point you may have layers of management, making it more difficult to keep everyone “on the same page”.  Communication needs to be strategic.  Transparency doesn’t happen automatically at this size and companies run the risk of becoming siloed.  People may feel unrecognized or underappreciated.  When transparency and recognition are lacking, animosity can set in, most often leading to allegations of favoritism or preferential treatment (where harassment and discrimination charges are born).  If left unattended, good employees are often the first to leave, allowing a mildly negative culture quickly to grow toxic.  Compliance should be maintained in workplaces of this size, primarily focusing on culture.  If you are not confident in your ethical integrity, hire a compliance expert or firm to do an audit of your employee handbook, employee record retention practices and record-keeping, injury reporting, compensation practices and strategy, benefits reporting, and workplace safety.  Additionally, implement safeguards such as using an ethics hotline, where employees can make anonymous ethics tips that are reported back to the company executive team.  Ensure you have either an HR person or consultant available to conduct workplace investigations.  No business owner loves to learn of ethical violations or employee issues, but they are inevitable.  Realize it’s better to hear of these issues early, from an internal source versus officially from a government employee, or worse, an attorney.  Wherever possible, make feedback a part of your culture.  Don’t wait until you lose your top talent to investigate whey they are leaving.  Don’t wait until you’re charged with an EEOC claim to make diversity a priority in your workplace.   Employee surveys can be of help and there are a million survey companies out to choose from.  Proactively seek feedback from employees – but be sure to do it strategically.  I once worked with a company that designed and administered their own employee survey.  While their intentions were good, the survey sucked.  Full of open ended questions, asking the same questions over and over in different, confusing ways.  The survey completion rate was terrible because it was too long to take!  Employees used text fields, not to answer survey questions but instead report suspicions of discrimination and unethical business practices.  Because it was anonymous, there was no way to investigate or even ask about the claims leaving the company in a risky and powerless position.  Also, because of the poor strategy and phrasing of the questions, the data was essentially useless, lacking substance or actionable quality.  The lesson here is to use a trustworthy source if you’re gathering feedback and opinions.  In my experience, by just introducing an employee survey employee morale improves.  A word of caution, DO NOT CONDUCT AN EMPLOYEE SURVEY IF YOU ARE UNWILLING TO TAKE ACTION.  While morale will typically improve immediately following a survey, it will just as quickly crash and burn if leaders fail to address or act on the feedback.  When you ask an employee’s opinion and they give it, it is a sign of trust and faith in the company.  To then do nothing and say nothing in response to the feedback (to the group) is a kick to the teeth.  Companies that have made this mistake will end up worse than had they never asked at all.  Commit to making the workplace better before conducting a survey.

Culture for 151-500 Employees

These companies should be almost entirely focused on culture while maintaining and managing compliance.  If you are a company this size and are considering outsourcing any aspects of HR, outsource the compliance side, never your culture.  Receive updates of law changes.  If you have a significant number of employees on leave, engage a company to administer and report to you leave usage for your company.  If you choose to continue managing all aspects of HR (from compliance to culture) in-house, have a person familiar with culture and strategy on your team, or hire one.  Culture can be very difficult to manage at this size, particularly if you are not located in one central location.  If employees are working remotely, it’s even more difficult because employee engagement is now likely your biggest challenge.  Employees in a small company with less than 50 employees are keenly aware on what it means when they fail to show up for work, perform, or meet their goals because they are closer to the end product or service.  Unfortunately we can become unaware or apathetic to the achievements or challenges of others when we don’t see it such as with larger companies.  In a company with 151+ employees or in a company spread out in multiple locations, perceptions become limited.  Culture work for these companies is focused on the employee experience as a whole.  How are you attracting top talent?  If you don’t hire the best, your competitor will.  How are you onboarding employees to make sure they are setup for success from the beginning?  How is information dispersed throughout your company?  What do you do to motivate employees individually?  Does it prevent them from collaborating?  How do you incentivize both innovation and consistency?  It’s in the complexity of the human experience where a true strategist shines.  A person familiar with how the employee experience translates to company success, capable of tapping into and interpreting workplace trends and behaviors, can elevate both a company’s culture and performance.  Because strategists can be expensive, it’s sometimes uncommon for companies to hire a person of this caliber, even at this headcount.  If you’re looking to keep overhead costs down, engage a firm, consultant, or someone to help you.  Technology has wonderful feedback and surveying tools available that are affordable, some providing just feedback and data and some complete with analysis and support.  Experts are also able to do a significant amount of this analysis and support virtually.  Choose the method and approach that is best for your team.

Culture for 501+ Employees

Hire. A. Strategist.  Hopefully it goes without saying, at this size a company should have a dedicated people strategist as part of their team.  Managing your culture’s reputation, like managing your brand, takes a lot of insight, time, and is best when done proactively.  Like the saying “more money, more problems”, “more people, more chaos”.  I tell my husband all the time, people are messy and this is why I love my job.  At this level, you should know as much about your target market as you do your ideal candidates, if not more.  How well do you know your most loyal customers?  Know your high performing employees better.  I’ve seen companies invest hundreds of thousands of dollars on market research yet hesitate to invest anything in doing 360-reviews, a PULSE survey, or even an anonymous feedback tool.  I ask leaders of these companies what they know of the first-line employees that engage with customers.  Not their favorite question of course, but it demonstrates my point.  If you choose to invest money and time into researching the customers you serve and leads you target; however invest no time or energy in learning about the employees that serve them directly, it’s money wasted.

Many factors can impact your company’s culture needs.  The number of people you employ can have great influence on a company’s culture demands, partly due to compliance requirements associated with headcount.  At any level, the first step is to assess risk, ensuring any assumed risk is deliberate (some risks are worth taking so long as it’s a calculated choice).  Once a company’s leader (or the soloprenuer) is comfortable with the assumed risk, implement a system to “manage” compliance and invest in they company’s culture.  This is something corporations have been doing for decades.  If you have a business, regardless of the size, you are most likely competing with at least one large corporation well-equipped with strategies to attract, retain, motivate, and develop top talent in your industry.  Now is the time to catch up!  Understand and deliver on culture expectations for your team and they will deliver on performance expectations you have for your business.

Teresa Marzolph image

Teresa Marzolph is the Founder and Head People Strategist for Culture Engineered believing valued employees produce valuable results.   In her HR and culture career she’s helped both small businesses and large corporations attract, develop, and retain top industry talent.