This is the second in a series of articles that looks at what organizational culture is, why it’s important, and how to change it.
Things were looking dismal for the BYU Cougar football team in 2004. There had been three losing football seasons in a row, and several players had been suspended for violations of the school’s Honor Code. Paul Gustavson offered his help three different times, and all three times was told thank you, but no.
Then, in 2005, Bronco Mendenhall was named head coach. Finally, Gustavson had found someone who would listen.
Gustavson is a Cougars fan, a former player, an MOB graduate of BYU Marriott, an organizational design consultant, and the founder of Organization Planning and Design in San Jose, California. What he wanted to do, he explained to Mendenhall, was to help transform the football team from the inside out.
He ended up spending hundreds of hours coaching the coach about theories and practices culled from the corporate world—about purpose and vision, communication and strategies, and what, in the lingo of business, made the Cougars a “differentiated brand.” With Gustavson’s input, Mendenhall worked to imbue in the players a collective sense that they were unique in American football, a team made up largely of returned missionaries who follow a rigorous honor code, and that they had a purpose that was bigger than wins and losses. They were, he told them, flag bearers for BYU.
Carefully measure and determine what you want the end result to be, then help them visualize it, Gustavson urged. So Mendenhall ran the team to the top of the Y on the mountain, where they could see, literally and symbolically, how the view was different at the top. He took the players to the banks of the Provo River, where he had them write down what they didn’t like about the football program and then ceremoniously crumple up those papers and throw them in the water.
The idea, says Gustavson, was to craft a new team culture.
There are lots of ways to explain the abstract idea of organizational culture, but perhaps none more efficient than the metaphor offered by the late Sumantra Ghoshal, who taught management strategy at the London Business School. Some companies and organizations, he said, are “downtown Kolkata in summer,” while others are “the forest of Fontainebleau in spring.”
It’s easy to conjure up the feeling of his hometown in July, where the heat and humidity can inspire lethargy and naps. Speaking at the World Economic Forum in Davos, Switzerland (an appearance available now on a grainy YouTube video), Ghoshal explained that Kolkata in summer would translate as a corporate culture that prizes “constraint,” whereas other business cultures create the kind of pep and optimism you might feel in a French forest on an April day.
Ghoshal’s two choices don’t cover all the possibilities—what about corporate cultures that create havoc (Miami in hurricane season)?—but his point is that all organizations create an environment within their walls, an ambiance that is palpable if not always easy to articulate.
The idea is that corporate cultures are made up of not just employee handbooks, free gourmet lunches, or lofty slogans, but something more fundamental: deep-seated norms, values, and assumptions that can shape employees, customers, and the bottom line.
Companies where the culture has gone awry are the ones that make headlines. Think Volkswagen amid the 2015 diesel emissions scandal, for example, or Wells Fargo during its 2016 fake accounts scandal. Flourishing work cultures provide less dramatic models but are worth inspecting to figure out what they do right.
In the mid-1990s, researchers at Harvard came up with a theory called service-profit chain, which posits that a business culture that is built to be supportive and inspiring will lead in a straight line to employee satisfaction, which in turn leads to customer satisfaction, which leads to customer loyalty, which leads to profits.
At the Utah grocery chain Harmons, Aimee Smith’s title is vice president for the people, which is shorthand for the company’s service-profit-chain philosophy, because the “people” in this case are the four thousand employees who work at the chain’s stores, distribution center, and corporate office. While Harmons shoppers keep the company in business of course, it’s Harmons employees who are the company’s top priority. “If we take care of our people, they’ll take care of our customers,” Smith says.
By deliberate design and careful calculations, senior management in a solid culture exists with one purpose: to help employees achieve. As Ghoshal put it, these are the cultures that can be summed up by the word stretch. In these companies—the ones that feel like Fontainebleau in spring—there is the sense that “every individual, all the time, is trying to do more rather than less.”
Or as Gustavson says, finely crafted cultures are those where employees can say “every day I have the opportunity to do what I do best.”
Passion and Creativity
In the knowledge economy, says BYU Marriott associate dean John Bingham, companies want employees with ideas. “It’s not just about being compliant and coming to my job from nine to five and punching a time clock. It’s about I’m in the shower or at a soccer game, and I have ideas because I’m passionate about my job.
“When organizations create an environment where people are excited, where they have buy-in and engagement in their work,” he continues, “it means the organizations get the very best out of those people, their very best thinking. And they can do it in ways that help the company succeed.”
In some sectors, that might mean giving employees the freedom to be creative, ask difficult questions, and feel part of a team. In the retail economy, it might look like giving frontline employees the autonomy to figure out how to provide the best customer care.
There is, for example, this famous (although unverified) story: When Nordstrom opened a store in Fairbanks, Alaska, in the 1970s, a man rolled a set of tires into the men’s department and said he wanted to return them. Of course Nordstrom didn’t sell tires and never had, but the department store reportedly sat on the site of a former automotive store. Then, as now, Nordstrom was known for its generous return policy, so the salesperson smiled, took the tires, and gave the man a refund.
The rest of the story is that Nordstrom is also known for its legendary employee handbook: “Rule #1: Use your own good judgment in all situations. There will be no additional rules.” In reality, the handbook now contains additional rules, but the main idea—the value of employee autonomy to make decisions on things such as refunds—still stands. It’s a value that works to give Nordstrom a strong identity and reputation. It works for the customer, and it works for the kind of employees who like to feel trusted and empowered.
“A culture that gives employees the right amount of autonomy, provides a psychologically safe environment, celebrates employee accomplishments along the way, and has leaders focused on helping employees achieve, are more likely to see innovation,” says Alexander Lovell, director of research and data science at the OC Tanner Institute.
A Culture Connection
In the Business Career Center at BYU Marriott, students are encouraged to explore future job opportunities in terms of “culture fit.” Some employees prefer structure and a clear chain of command, others want to be thought of more as equals and given a chance to innovate. Some employers want risk takers, others want rule followers.
Students who recognize their own values and strengths can thus avoid a situation where they’re tempted to sign on with a marquee company in the hopes it will look good on their résumés, only to discover that they value time with their families but the company culture values sixty-hour work weeks. The result is “culture shock.”
A 2019 study by the hiring and workplace reviews website Glassdoor found three key elements of all robust corporate cultures: (1) a clear mission connecting employees’ daily work to a broader social purpose and positive change; (2) leaders who are inspiring, empathetic, and competent; and (3) clearly defined pathways for career advancement so workers aren’t stuck in dead-end jobs.
All truly effective organizations create a sense of purpose, notes Brigitte C. Madrian, BYU Marriott dean. At Harvard, where she was a professor of public policy and corporate management before coming to BYU, that collective purpose focused on research. At BYU Marriott, she says, the purpose is “a high-quality business education that is also part of a university bathed in the light and truth of the gospel. Having staff, faculty, and students who have bought into that mission engenders a strong sense of cooperation and community.”
In general, says Gustavson, “the more you can connect someone’s personal sense of purpose to the organization’s sense of purpose, great things can happen.”
One of Gustavson’s clients is the dog food company Hill’s Science Diet, a division of Colgate-Palmolive. “We hired people who love pets,” Gustavson says. “They think, ‘Thank goodness I have an opportunity to work in an organization that has an enormous value for people who view their pets as companions.’”
Hiring for culture fit helps retain employees, and that avoids costly severance packages and new-hire training when things don’t work out. In business jargon, the whole process is known as attraction-selection-attrition. According to Jim Collins, whose book Good to Great is a bible in the industry, “research indicates that person-organization misfit is one of the important reasons for employee turnover.”
At the online retailer Zappos, whose motto is “Live and deliver WOW,” the hiring process can last for months, says Maritza Lewis, Zappos learning and development consultant. One of the qualities the company tries to assess in its potential recruits, she says, is whether they have “the politeness gene.”
Back to the Drawing Board
“One of the advantages of starting a company from scratch is that you can build the culture from scratch too,” says Traeger CEO, BYU grad, and BYU Marriott entrepreneurship founder Jeremy Andrus. In Andrus’s case, he had taken over the thirty-year-old, Oregon-based pellet grill company and inherited a sometimes-hostile culture that was set in its ways. When he moved the company to Utah, he essentially started over, hiring only a few previous employees who wouldn’t be “cultural detractors.”
Even now, when he hires new people, he doesn’t focus on their résumés. “I want to understand how they think about risk-taking and what skills they want to develop,” he explains. “I try to ensure that we apply a tight cultural filter to anyone we hire. We want to find people who are already living by our values.” Most companies screen for skills, he says, but we “need to be thoughtful and diligent in the hiring process. And then, after that, leaders need to evangelize their values every day.”
Many companies don’t have the luxury of starting from scratch when they realize they need a do-over. That realization typically arises, says Gustavson, from either (1) the better-mousetrap scenario, spurred on by an aspiration to be bigger or better, sometimes to beat out the competition; or (2) the burning-platform scenario, where it’s suddenly clear that something awful has transpired (an oil rig that has exploded in the Gulf of Mexico, for example).
Short of a PR disaster, signs that a culture isn’t working might include the presence of office cliques and silos, employee reluctance to voice concerns, and employer reluctance to listen. “I think the major pathology in all organizations that I’ve seen,” says Edgar Schein, one of the fathers of corporate culture research, “is that upward communication is very faulty. Subordinates know lots of things that would make the place work better or safer”—but bosses don’t always listen. According to employees’ reviews of Wells Fargo posted on Glassdoor, the bank had a problem with corporate ethics years before the scandal.
“Without a culture emphasizing the importance of integrity, honesty, and trust,” writes Collins in Good to Great, “mandatory ethics training programs are often doomed to fail.”
To design or craft a culture, “you can’t go in and do one rah-rah session and expect it to work,” says Kristen DeTienne, BYU Marriott professor of organizational behavior and human resources. On the other hand, a complete overhaul might be impractical. For starters, she suggests, “choose a handful of behaviors and mindsets to change, and figure out who the leaders are, both formal and informal, who can make that happen.”
The Finished Product
Sometimes, though, a culture just needs a little finishing up around the edges, which is what Madrian discovered when she took over as dean of BYU Marriott in 2018. What struck her right away, she says, is that undergraduates were sometimes intimidated by the formality of the Tanner Building. So she introduced Donuts with the Dean in the atrium and Festive Finals with hot chocolate and Christmas carols.
At the other Marriott—Marriott International—the company’s core values “[give] us an edge over the competition,” then CEO Bill Marriott told students in a 2012 BYU forum presentation. He pointed to a 2007 study conducted by BYU Marriott business students that looked at corporate culture and the bottom line in the hospitality industry. The findings: in an industry where the employee yearly turnover rate is a whopping 46.4 percent, Marriott International had a 35 percent lower employee turnover rate than the industry as a whole. (It’s estimated that the cost of employee turnover is about 1.5 times an employee’s annual salary.)
“Put people first, pursue excellence, act with integrity, embrace change, and serve our world,” Marriott said to sum up the values he inherited from his parents when they opened their first motor lodge in 1957.
Marriott International has consistently appeared on Best Places to Work lists and on the Fortune 500 list, suggesting a link between employee engagement and company profits.
That link is underscored by findings from a 2015 “Does Company Culture Pay Off?” report and a 2019 “Measuring Culture in Leading Companies” report by researchers from Glassdoor and the MIT Sloan School of Management. Using data from more than one million employee reviews of US companies, the 2015 study found that a portfolio of Glassdoor’s Best Places to Work lists outperformed the overall market by 115.6 percent. On the flip side, a portfolio of the thirty lowest-rated public companies “broadly underperformed the market.”
And corporate culture is not just about the bottom line. The average employee, the 2019 researchers noted, spends 40 percent of waking hours at work. “A vibrant culture can help people thrive professionally, enjoy their job, and find meaning in their work,” the researchers concluded. “A toxic culture, in contrast, can be soul destroying.”
So what kind of culture are you interested in crafting?
Written by Elaine Jarvik
Illustrations by Red Nose Studio
About the Author
Elaine Jarvik is a Utah playwright and former reporter for the Deseret News. Her most recent play, Four Women Talking About the Man Under the Sheet, is scheduled at the Salt Lake Acting Company for a four-week run in fall 2021.