4 Ways to Protect Culture During Rapid Growth

Protect Culture During Rapid Growth

How to Protect Culture During Rapid Growth
While rapid growth companies (20%+ per year) can be very exciting and meaningful places to work, high growth puts high pressure on organizational culture and strategy.  We define culture as the way things get done on a day-to-day basis.  Most leaders look to protect culture during rapid growth by holding on to the meaningful values, beliefs, attitudes, behaviors and assumptions that enabled them to be successful so far.

Six Times When Culture Becomes a Crisis
We have found corporate cultures to be most vulnerable during periods of major change. During change, operational approaches, decision making boundaries, social norms, risk tolerance levels, go-to-market approaches and beliefs about customer and employee centricity can weaken or become misaligned.  And once sacred cultural norms are lost, they can be very difficult to recover.

Based upon almost thirty years of client work, we have found culture can become a crisis when:

  • The business strategy shifts
  • There is a change in leadership
  • A merger or acquisition occurs
  • There is a sudden or unexpected downturn
  • Employee attrition of top talent increases
  • Rapid growth occurs

Corporate Culture Matters
Many still mistakenly believe that culture is “soft people stuff” that can be deprioritized because it does not have a quantifiable impact on business performance. Successful leaders know better. They understand and leverage their culture to outperform their competition.

  • A recent Harvard Business School research report described how an effective culture can account for up to half of the differential in performance between organizations in the same industry.
  • Our own organizational alignment research found that cultural factors account for 40% of the difference between high and low performing companies in terms of revenue growth, profitability, customer retention, and employee engagement.

High Growth Creates High Pressure
Because strategy must go through people and culture to get implemented, forward-thinking leaders seek to protect and align culture during rapid growth.  They know success is dependent on how their teams work together toward executing their strategy.  They know culture can make or break their ability to scale gracefully in terms of organizational structures, processes and systems.

How To Maintain a Healthy, High Performing and Aligned Culture
How do you maintain a healthy, vibrant culture during hyper growth?  How can even the most sophisticated and committed CEOs continue to have a real influence on the culture when:

  • So many employees are being hired so fast
  • Limited resources are being stretched so thin
  • Customer and stakeholders demands are so high
  • There’s barely enough time to break for lunch never mind champion culture change

Some Wise Advice
We have seen companies at the rapid growth stage sacrifice their positive and meaningful culture to the pressures of rapid growth…only to regret it later.  Here are some tips for company leaders on how to protect culture during rapid growth:

1. Make Hiring Right a #1 Priority
According to the Society for Human Resource Management, turnover from poor cultural fit can cost an organization between 50-60% of the person’s annual salary. New hires that don’t fully align with existing or desired cultural norms typically underperform and decrease team engagement levels.  Conversely, our own employee engagement data tells us that employees who are strong culture fits, report greater levels of:

  • Advocacy
  • Discretionary effort
  • Intent to stay

While recruiting and interviewing is certainly time consuming, don’t pass off your responsibility to hire top talent to others.  Because your new hires will have a major impact on your culture, stay heavily involved in the selection process.  You want to hire for cultural fit and build a high performing team that lasts.

2. Reward High Performers and Help Underperformers and Cultural Misfits Improve or Move On
Let’s start with high performers. Top companies know that different talent contributes different levels of value.  Make sure you have a plan in place to identify, develop, engage, reward and retain your top performers who are most aligned with high growth and where the company is headed.

On the other side of the performance scale, poor performers and employees who struggle to scale with the business drag down the motivation and commitment of workers who perform at or above the agreed-upon performance and behavior standards.  If under-performance or behavior misalignment is ignored, your high performers and cultural champions are liable to disengage or leave.

During rapid growth, invest the time required to:

  • Set clear performance and behavior standards
  • Define meaningful rewards and consequences
  • Identify high and low performers
  • Reward high performers
  • Help under performers improve or gracefully move on

3. Monitor and Sustain Organizational Health
We define organizational health as the corporate values and behaviors that are consistently lived across an organization. In general:

  • Organizations strive to be healthy
  • People want to work in a healthy environment

Health is an important component to protect culture during rapid growth.  Similar to employee engagement, organizational health can be measured on a “bad-to-good” scale in terms of leadership, trust, capabilities and climate.

While organizational health rarely, in and of itself, differentiates the performance of one company from another, there are absolutely minimum levels of health that must be attained during periods of high growth.  During growth and change, make sure you monitor and improve organizational health as a foundational building block of your talent management strategy to attract, develop, engage and retain top talent.

4. Align Your Culture (the How) With Your Growth Strategy (the What)
Exponential growth and change in the business usually create cultural misalignments for how the strategic work gets done. Because strategy must go through culture and people to get implemented, leaders must reassess cultural norms and priorities as often as they reassess go-to-market strategies.

To ensure you protect culture during rapid growth and that your culture is ready to grow gracefully with your business, take a look at your current and desired culture across ten proven dimensions.  Then determine where you need to shift your culture (the how) to support your rapid growth strategy (the what) on the cultural scale for:

  • Market Approach – Do you need to be a market leader or market adopter to meet your targets?
  • Customers – How transactional or intimate do you need to be with your customers in order to be successful?
  • Loyalty – Will you distinguish yourself through individual relationships and capabilities or through overall company attributes and credibility?
  • Focus – Should you emphasize internal systems and processes or external customers and trends?
  • Risk Tolerance – Does it make sense to embrace risk, take chances and learn from failure or is it best to mitigate all risks before moving forward?
  • Operational Approach – Should employees be encouraged to determine the best path forward for high quality work or should standardized approaches to work quality be adopted?
  • Decision Making Information – Should decision-making be based more on personal opinions, experience and intuition or more on facts backed by extensive data showing the pros and cons of each option?
  • Decision Making Location – Should individuals be allowed the freedom to make decisions with input from the frontline or should top leadership review and make all decisions?
  • Atmosphere – Is a flexible approach to social norms and the work environment the best approach or would a very formal environment with strict norms make more sense?
  • Results – is delivering results the highest priority or does doing things the right way matter most?

The Bottom Line
Your organizational culture can be an asset or a liability to your growth plans.  If you want to protect culture during rapid growth, you need to prioritize and realign what matters most.  You will be glad you did.

To learn more about how to protect culture during rapid growth, download The 3 Levels of a High Performance Culture

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