The Four Growth Stages Of Company Culture

Company culture is immanent – felt everywhere, but difficult to measure. Like the proverbial fish who does not know that it is wet, it can be difficult to recognize the effects of company culture from within the culture itself.

One reason for this is that a common vocabulary for discussing company culture does not yet exist. There is no doubt company culture has garnered more attention in recent years, but its measurement remains imprecise. Company culture studies face a variety of challenges:

  • Exchanges that reflect company culture are often brief and are not recorded anywhere
  • Traditional tools for quantifying company culture, such as employee surveys, are limited
  • Researchers rarely have direct access to employees, so they must use indirect methods

Few businesses are interested in having their company culture exposed for examination, particularly in academic research that may be widely published. Unfortunately, this means enterprises that have the most to gain from a structured approach to company culture may be the least likely to pursue one.

Four Steps Toward A Mature And Effective Company Culture

In the absence of common vocabulary, many ways of looking at company culture have been proposed. It is important not to misunderstand culture as a single monolith: It is something that develops and changes over time. Thus, it is perhaps most fruitful to characterize it along a trajectory.

Culture begins in the most simplistic terms as “the way things are done,” an imperfect reflection of policies and procedures. Through specific culture-building exercises, norms develop and are strengthened. In time, positive aspects of culture can become self-perpetuating, while negative ones are pinpointed and remedied.

Consider the following model:

1. Ad Hoc Company Culture

It is often said people do not leave bad jobs, they leave bad bosses. While this formulation may flatten things a bit too much, it has some merit. The early days of any organization’s life are a sort of pre-history. There are often few written traces to guide behavior, and managers have an outsized impact on culture.

An ad hoc company culture is one too young for lasting norms and too decentralized for meaningful change campaigns. Team members often have no experience of a wider company culture outside their own workgroup and their relationship with an immediate supervisor.

When the latter hinders performance, these negative experiences are essentially “culture” for those who are affected. A manager may create a toxic work environment through a penchant for micromanagement or by many other habits of behavior that reflect the need for greater EQ.

If there is one positive element to an ad hoc company culture, it is that the direct effects produced by an adverse managerial style are limited to a single team. However, that is hardly a comfort in small organizations. The inability of that team to perform to its full potential is sure to have knock-on effects.

2. Standardized Company Culture

Standardized company culture is one that has begun to define its mission, its values, and how both should be reflected in day-to-day efforts. It may have a clear and concrete statement of values, but it is more likely that this has been crafted by the executive team rather than through an all-hands effort producing deep buy-in.

This is the phase where leaders start to approach employee enculturation in a structured way. They begin to define keystones of the employee experience all members of the workforce should share in. There are several obvious focal points for these efforts, which often reflect a formalization of the HR function:

  • A rigorous employee onboarding process, which is shown to substantially reduce early turnover
  • Mechanisms for performance feedback, often going beyond the once-annual evaluation report
  • Quarterly or annual events such as town hall meetings that foster cross-functional collaboration

The principal goal of the standardization phase is to address and reduce the extreme variance in employee experience produced by different silos and management styles. In this, it is necessarily imperfect but provides greater value as activities extend throughout the employee life-cycle.

3. Adaptive Company Culture

To rise from the standardized phase to the adaptive phase, leaders must become strategic about their company culture: Going beyond its most visible manifestations to recognize its limitations and potential for improvement.

An organization with adaptable culture is one that responds nimbly to change from without and inside:

  • It is able to celebrate its accomplishments and derive actionable lessons from its setbacks
  • It takes on best practices, new workflows, and new technologies with little resistance
  • It aligns quickly around new strategic priorities, with easy cooperation between functions

At this stage, company culture has permeated the organization to the point where it is reflected in workflows and informs decisions about conflicting priorities. Most employees understand the company’s ethos and mission, and many embrace them. Less time and attention are needed to preserve existing value.

Leaders are highly visible in embodying company culture at the adaptive level, and there is often a perceived relationship between the average employee and the executive team. Developing high potential leaders may become a focus, along with a comprehensive update of all employee job roles.

One pitfall many organizations stumble into at this point is the desire to hire for “culture fit.”

Recent research suggests hiring for culture fit is a double-edged sword. Employees who fit today’s values and norms may not necessarily move with the times as your company culture continues to evolve. In a recent study, the tension between culture fit and adaptability was made stark:

  • High fit was correlated with more promotions and favorable performance evaluations
  • Over time, adaptable employees were more successful than those hired with high fit

“Adapters” were more able to take on new perspectives and new ways of doing things, enabling them to stay aligned with company culture as it changed. On the other hand, those with high fit who were not also adaptable were more prone to become set in their ways, potentially leading to change resistance.

4. Mature Company Culture

In a mature organization, the values, norms, and standards of the company culture have been intentionally designed and are widely, enthusiastically embraced. Virtually all employees understand how the mission and core values of the business affect both their daily decision-making and their long-term goals. Likewise, they recognize how their performance affects others in the organization beyond their own team and vice versa.

A mature company culture is a point of pride and a differentiator. These organizations can position as employers of choice, and often continue relationships with their “alumni” long after voluntary departure. This creates a referral network that can allow them to fill important vacancies quickly, including at the top levels.

The most effective company culture does not happen by accident. Culture must be reinforced until it becomes a natural extension of performance that suffuses the employee experience. The interplay between the purposeful design of that culture and the seamless integration of organic adaptations can be a tricky balancing act.

Equal Parts helps you unlock the full potential of your company culture. To learn more, contact us.