The Good, the Bad and the Ugly of Strong Company Cultures

These are arguably some of the most admired (and profitable) companies of today.

And what makes these types of companies distinctive?

Culture.

Long thought to be a touchy-feely concept relegated to HR, the notion of culture -- a company’s vision, goals, ways of working-- has now catapulted into the C-suite. It was also a recurring theme at this year’s SXSW Interactive Festival. And for good reason -- company culture, especially one that is collaborative and transparent, has shown to provide real value for the bottom line.

Organizations that have a strong culture internally show it in the people they hire, the products they build, and the interactions they have with their customers. Some managers simply ask themselves whether they’d want to have a beer with a prospective hire to get the right cultural fit. Others, like Google, even have a term for this je ne sais quoi--”googliness.”

Even companies outside of the tech space are making culture a priority. During a panel on quantifying happiness in the workplace, Randy Goldberg, Hyatt’s former VP of talent, mentioned that the hotel chain insisted on a "no paperwork” policy on employees' first day. Each new hire instead went through an immersive experience that dove into company values, mission, and people.

Think your culture’s just fine? Speakers during SXSW asserted that the best measure was your retention rate, specifically of top talent. If you’re keeping your “A players,” then chances are, they’re happy. And happy, high-performing employees usually equal happy, satisfied customers.

The bad

Despite the increased focus on culture as an asset, the “can-I-have-a beer-with-this-person” litmus test could be a doubled edged sword if not watched closely.

Ever look at the executive leadership page of a company with a distinct culture?

More often than not, everyone just looks...the same. The same alma maters, the same professional networks, and oftentimes, the same gender and ethnicity. And with Google, Apple, and Microsoft recently revealing a significant underrepresentation of women and people of color within their workforces, it’s no wonder the topic of diversity was a recurring theme during SXSW this year.

Some have attributed a lack of qualified candidates from diverse backgrounds as the culprits. However, some, such as Ola Okelola, the first black engineer at Facebook, suggested the increased focus on “cultural fit” could actually be what’s contributed to continually homogenous hires. Because usually when you want to have a beer with someone, you like them (unless you’re a masochist). And science tells us that we usually like people who are pretty similar to us.

Ironically, homogenous workforces are the enemy of innovation at scale. Just think -- if you only have exposure to challenges that a specific set of people have, like young, affluent people who live in San Francisco or New York, chances are, you’re innovating just for young, affluent people who live in San Francisco or New York. And--spoiler alert--most people don’t live in those places or in the same way.

The ugly

During a session on innovation, Judith Williams, Google’s Global Diversity and Talent Program manager called out Google executive chairman Eric Schmidt for repeatedly interrupting Megan Smith (first female chief technology officer of the United States and only woman on the panel) while, ironically, sharing his views on the need for diversity. Though Williams’ gesture was surprising, the facts that motivated them aren’t new--studies have shown that women are more likely to be interrupted --by both women and men--as men are, often unknowingly to the interruptor. Being in this type of environment can have a significant impact on promotions and, ultimately, retention rates.

And we’ve seen that being part of insular, homogenous networks can mean we don’t quite have the familiarity we need to connect and empathize with those who don’t a certain mold. So we continually hire, build relationships with, and reward those we “recognize.” And so goes the vicious cycle.

Obviously this is a huge issue to tackle, but there’s a small step companies can take to at least mitigate against implicit bias. Makinde Adeagbo, Engineering Manager at Pinterest, says that companies must codify their culture on paper--create tenets that are flexible enough to hire a diverse set of people who work well together, but also clear enough that they limit the amount of personal bias introduced into the hiring process.

William Tincup, co-founder and principal analyst at KeyInterval Research, recommends that companies create a “not cool list” -- a list of specific principles that your company values. Share ideas with your colleagues? Cool. Cut them off in meetings? Not cool.

Alexandra Wood is global digital product director at Havas Worldwide