When you hear the words “company culture,” what comes to mind?
Is it a group of twenty-somethings, wearing ripped jeans, flannel shirts, and hipster glasses playing ping-pong in their Silicon Valley office? Is it smiling faces, modern facilities, family Christmas parties, and catered lunches? Or is it competitive salaries, great benefits, and big bonuses?
To be honest, these are many of the things that come to my mind when I think of company culture, too. And to be fair, these are all things that contribute to it. Company culture is a very important aspect of every successful business because it effectively guides actions and policies, makes certain companies more attractive to employees than others, and can lead to increased productivity and job satisfaction. However, the foundation of a company’s culture doesn’t lie in modern amenities and chic offices; it lies in a company’s core values.
A company’s values are what all employees practice and live by every day. What’s important is that these values aren’t cliche, such as “we’re committed to integrity” or “we always put the customer first.” These aren’t necessarily bad or incorrect statements. Rather, they’re simply implied, mainly because I don’t think there’s a single company out there that is “committed to fraud” or “always puts the customer last.” Companies who use these cliches as values demonstrate that not much thought has been put into what’s uniquely important to the company. Values statements that don’t incite passion for one’s company and describe what differentiates a company from its competitors don’t do much good for the company or its culture. Ultimately, remember that meaningful company values are the foundation of a good company culture.
It’s no coincidence that some of the world’s leading companies have some of the best company cultures. And it’s also no coincidence that these companies also have some of the most meaningful and profound value statements. On the other hand, however, the opposite is also true. There have been successful companies with all the attractive aspects of company culture listed above (ping-pong tables, great benefits, casual dress codes, etc.), but lack meaningful values. These companies often don’t end up doing too well, as we will soon see.
I’ve taken a few statistics courses in my life, so I realize it’s tricky to establish an actual cause-and-effect relationship (and frankly, I don’t quite remember the qualifications for claiming one). However, it seems to me that there is a relationship here, maybe not one of cause-and-effect, but at least one of correlation.
Thus, I’d like to make two arguments:
- Companies with good values and good cultures tend to do quite well. A meaningful list of values leads to a positive company culture, which plays a large role in the success of a company.
- Companies with seemingly good values and seemingly good cultures generally don’t fare too well. A lack of values (or a lack of meaningful values) often leads to a poor company culture (even if it still has all the surface-level aspects of a good company culture), which often leads to problems within a company.
Let’s take a look at a case study on each side, which will hopefully affirm my arguments.
Seemingly Good Values and Seemingly Good Cultures
In case you don’t, Enron was an American energy giant that eventually collapsed and claimed bankruptcy after years of unethical financial activities. While Enron was still around, though, it was seemingly successful, with a seemingly good culture, and seemingly good values. (If you haven’t caught on, seemingly is an important word to notice here).
Enron appeared to be doing extremely well right up until its file for bankruptcy in 2001. In fact, it was named by Fortune as “America’s Most Innovative Company” for six consecutive years and reported revenues of nearly $111 billion in 2000 (of course, these reports were actually falsified).1 Moreover, Enron boasted all of the stereotypical aspects of a good company culture. In fact, former employees described elaborate parties, competitive salaries, and sizable bonuses. For a more complete and jaw-dropping description of Enron’s lavish corporate culture ventures, click here.
So what went wrong with Enron?
The problem lies within their values, which are listed below:
- Respect: We treat others as we would like to be treated ourselves. We do not tolerate abusive or disrespectful treatment. Ruthlessness, callousness, and arrogance don’t belong here.
- Integrity: We work with customers and prospects openly, honestly, and sincerely. When we say we will do something, we will do it; when we say we cannot or will not do something, then we won’t do it.
- Communication: We have an obligation to communicate. Here, we take the time to talk with one another … and to listen. We believe that information is meant to move and that information moves people.
- Excellence: We are satisfied with nothing less than the very best in everything we do. We will continue to raise the bar for everyone. The great fun here will be for all of us to discover just how good we can really be.2
These seem okay, right? Yes, they are okay, but they’re not great. As I mentioned earlier in this article, companies should be wary of including ambiguous qualities on their values lists. Moreover, what’s the point of having a values list if those values don’t mean anything to a company? Not only are these four attributes so widely used that they’ve essentially lost any practical meaning, but Enron employees also outrightly acted against each one of these during the scandal. Clearly, management flippantly listed four qualities that sounded good, but no one actively displayed these qualities in action. While the founders of the company wanted these values to characterize their actions in an ideal world, their actual actions showed complete disregard.
In the end, the values of Enron only seemed good, which led to a culture that only seemed good and to a formerly successful company that collapsed.
Good Values and Good Cultures
Now it’s time to take a look at a company on the other end of the spectrum. Last year, Glassdoor.com published a list of the top 25 companies for culture and values. For the sake of this argument, let’s just take a look at the company holding the number one spot: Twitter.3
Twitter is a social media giant that has been hugely successful, despite competing with many other social media platforms. Twitter employees cite rooftop team meetings and a friendly, family-like atmosphere when bragging about the awesome company culture. Moreover, the San Francisco headquarters offers free meals, in-office yoga, and unlimited vacation to qualifying employees.4 Clearly, Twitter has all the “bells and whistles” of a successful company and a good culture.
However, like Twitter, Enron was a successful company with many similar perks. But, as I’ve argued, it takes a meaningful and acted-upon listed of values to turn a seemingly good company and culture into an actually good company and culture. This is exactly what differentiates Twitter.
Listed below are Twitter’s core values:
- Grow our business in a way that makes us proud.
- Recognize that passion and personality matter.
- Communicate fearlessly to build trust.
- Defend and respect the user’s voice.
- Reach every person on the planet.
- Innovate through experimentation.
- Seek diverse perspectives.
- Be rigorous. Get it right.
- Ship it.5
The differences between Twitter’s and Enron’s values are many; however, what’s most important is that Twitter’s are not ambiguous. Rather, they carry intrinsic value and are very specific to the market that Twitter occupies. Twitter has sought to grow its culture as a natural offshoot of its values; things like yoga and free food are simply byproducts of that culture. Ultimately, these values are the breath that all Twitter employees breathe and the reason for its amazing culture, which may also attribute to Twitter’s booming success. Upper-management abides by these values, and employees continue to follow suit.
In this case, Twitter’s values are actually good, which has led to a culture that is actually good and to a company that continues to succeed.
To Wrap Things Up…
So did Enron fail because of its ambiguous values and unethical culture? And will Twitter’s success be perpetual as long as its employees continue abiding by the company’s values and an ethical culture is maintained?
To be honest, I’m not completely sure, and I’m definitely not in a position to speculate about Enron’s past failures and Twitter’s future successes. However, my argument remains that companies with meaningful, acted-upon values and positive, ethical cultures have a greater chance of success.
In the end, it’s important to realize that even the intangible aspects of a company, like values and culture, are extremely important to its success. No matter how well a company is doing from a tangible or monetary standpoint, the entire company can be jeopardized when improper values lead to an improper culture which leads to improper (or illegal) actions. Finally, remember that the tone is usually set at the top. Both entrepreneurs and seasoned managers alike should never disregard the impact of values and culture on the future success of their companies.