Effective Culture - The Best Indicator of Future Performance
Company culture exists from Day One whether the founding team makes an intentional effort to define culture or not. Just this week a founder of one of our best performing early stage companies said to me that his culture had been “organically forming through good hiring and following some simple shared beliefs.” His comment wasn’t surprising - culture happens when the first employees of a company take their cue from the founding team; their values, beliefs, and behaviors. It’s built organically one way or another, but over time cultures grow and scale and contribute to the ultimate success or demise of an organization, so it’s important to invest in them appropriately as part of a good strategy. Good “people” strategy is good business strategy.
Most companies look to financial measures as the hallmark of success, but these measures are lagging and backward looking and not necessarily relevant indicators of future outcomes. Think of them as the financial outcome of past employee performance and culture as a better indicator of what’s to come.
the customs, arts, social institutions, and achievements of a particular nation, people, or other social group.
If we believe that effective employee performance is the leading contributor to company performance and thus, company success, and we believe that company culture is the leading contributor to effective employee performance, then it stands to reason that strong company culture metrics would be a more critical indicator of future success. This is a good reason to actively build and invest in strong company culture and to measure cultural performance as a mechanism to better predict future success.
Culture can be considered in two ways, from two different perspectives, that are ultimately enabled by the same scaffolding. People often speak about them differently but these two views are very dependent on each other.
This visual represents the interdependence between how a high performing culture looks and can be measured, and what employees experience. But, each of these things depends on sturdy scaffolding to make them possible. Good scaffolding is always being reviewed and (re)assessed and looks like this.
There’s a lot of content to be absorbed here. I will do a follow up deep-dive series on onboarding, leadership, healthy growth, and measures/reporting in service of effective, high performing culture. I’ll also do a piece on some things to be aware of that will actively detract from effective culture. In the meantime, I posted a few weeks ago about a clear mission and shared ways of working here and I recommend “The Culture Cycle” by James Heskett and pages 184-199 of “High Growth Handbook” by Elad Gil.
Stay tuned for more….