Does Company Culture Matter?

Company culture is one of those vague concepts that can mean different things to different people. I use the term here to capture the company philosophy in terms of how it treats its employees, customers and partners, and the impact this has on product teams.

These are often related. In fact, it is said that if you want to know how a company treats its customers, look at how it treats its employees. I believe there is considerable truth in that. After all, it is your employees that interact with your customers, and people will generally treat others as they are treated.

Employees

Treating your employees well doesn’t necessarily mean paying them a great deal, although if employees, in general, don’t feel they are compensated fairly, then this can become a significant factor. That said, few employees name compensation as their top priority in terms of whether they like where they work.

More often, people consider how they are treated as people. If they don’t view their manager as their supporter, coach, and someone who truly cares about their career and who is committed to helping them reach their potential, many employees try to find a different manager, which often means leaving the company.

But company culture is created by more than just the immediate manager. The people at the very top of the company have a tremendous impact on how the culture is perceived. Even with the best policies and published guidelines that say all the right things, if the people at the top don’t behave consistently with those policies, then that’s the real culture that will be set. Most companies have a personnel department that knows the sorts of things required in a good culture, and they do what they can to foster that culture. But more often than not, the people at the top are the ones that truly establish the culture, by their actions.

It is difficult being a senior executive because people throughout the company are watching you so closely. They want to see how you handle conflict, and how you deal with difficult situations. If you lash out publicly at someone, or if you jump in and start to micro-manage a situation at the first sign of trouble, this will define the actual culture much more than any PowerPoint slide or Company All-Hands presentation ever will. On the other hand, if the employees see you going above and beyond in order to take care of a customer, or an employee in need, or empowering the staff to learn and grow, this is what they will remember.

When I was a software developer fresh out of college at HP Labs, the research wing of HP, working long hours in my little cube, I experienced the “Management By Wandering Around” aspect of the culture that I had heard about.

Dave Packard, the late co-founder of HP – who by then had retired but was still the company’s chairman – popped into my cubicle early one morning and introduced himself and asked what I was up to. Although I was nervous at first, I showed him what our team was working on and shared our thoughts on how the technology would be applied. The whole encounter only lasted a few minutes, but I could see that he was interested, and it was his way of both keeping his finger on the pulse of the company, and in demonstrating his interest to those of us much further down in the company hierarchy.

Over the course of my ten years at HP, many people dropped by this way and introduced themselves, and through this and countless other actions, I never doubted that the company valued its employees, and worked hard to treat them well and try to do right by them and the community we lived in. I was always proud to work at HP, and especially as I learned about other company cultures, I came to appreciate just how lucky I was to have learned my craft there. I worked long and hard hours for many years, and could have made more money elsewhere, but I stayed because I loved the company.

Much as children learn by actually watching what their parents do more than what they say, we as employees learn the culture by watching what the leaders do more than what they say.

Customers

There is no question that taking care of customers is hard. Sometimes they can be demanding, short-sighted, and impatient. But they are also nervous about going out on a limb and committing to your product and possibly putting their career on the line.

I have never seen company culture material that doesn’t talk about how much the company values customers. But I would also have to say that this is one of the hardest things to live up to, and few companies consistently demonstrate their commitment to their customers.

There are some notable exceptions. FedEx is one of my favorite companies because of their ability to consistently deliver outstanding products. However, they are at least as famous for their company culture, and the way they treat their employees and their customers – especially how they empower their employees to use their initiative to take care of their customers.

The legendary example of this is how, when FedEx was just starting out, they did not deliver a bride’s dress the day before the wedding. The panicked bride called FedEx and explained the problem. Without getting permission, the person who handled the call assured the bride that she would take care of her, and she immediately tracked down the lost package, and arranged to have the dress flown in by private chartered plane so that it would arrive in time for the wedding, which happily it did. This not only earned a customer for life, but as many guests at the wedding heard the story too, it led to commercial business from local industry, as well as helping to establish by example the desired culture of the young FedEx.

Some might consider the business decision to charter a plane a poor one, since a refund would have cost FedEx much less than the chartered flight, but of course that would have been short-sighted, and it is impossible to estimate the value of FedEx employees understanding how serious the company is in getting packages delivered on time, and in taking care of their customers.
Customers know when you truly care about them. Even if you can’t always do exactly as they like, they know and appreciate when you listen and they see you try.

One of the reasons that company culture is so important to customer satisfaction is that the typical customer touches many people at your company – and you touch many people at your customer’s company. In addition to your customer support organization, your sales team, professional services organization, product management, and senior management all may be interacting with the customer. All it takes is one person to taint the experience for the customer. Even if an escalation helps to get the problem resolved, the bad feelings linger.

When I was at Netscape, Jim Barksdale, the company CEO, was famous for his commitment to customer satisfaction and he demonstrated this frequently. One example in particular quickly became legend. He visited a customer that was having ongoing problems with a new product, and he wanted them to know that we were taking the problems very seriously and would correct them, so he told the customer that if the problems weren’t addressed to their satisfaction he would write their company a substantial personal check out of his own pocket. This of course very much impressed the customer, but it also had a profound impact on the product team – they saw that Jim believed they could do what was needed, and they also saw how much he was committed to the customer’s satisfaction. Jim never needed to write that check, but nobody ever doubted he would have.

Partners

In addition to employees and customers, virtually every company also has partners of one type or another. These partners might be technology providers, or outsourcing firms, or agencies, or simply other companies that you have teamed up with because you have common interests.

These people may not work for you, but they likely depend on you in other ways. How we treat our partners also contributes to the company culture. It is easy for a company, especially when they are successful, to be arrogant with their partners, and treat them poorly.

At AOL, during the heyday of the Internet, the company gained a reputation for being extremely harsh with partners. The people managing the relationships with these partners prided themselves on their negotiating skills and tactics, and in truth, they did everything they could to extract the most value for AOL. As a result, many, if not most, partners came away with very bitter feelings about the company.

When the fortunes of AOL changed, these partners certainly didn’t feel an obligation or desire to go out of their way to support the company. But even more damaging, I would argue, is that many people at AOL saw how the company was treating these partners, and it was very hard for senior executives to make the case about a caring, customer-focused company culture in the face of such public behavior.

There are of course other aspects to the company culture, but if you are trying to build product teams that will work long and hard to produce products that your customers will love, it’s important to instill this sense of caring for and treating people well – your employees, customers and partners.