The Upward Spiral

It’s Monday Morning. Does Your Team Want to Come to Work? To me, a successful company culture can be summed up by answering one simple question:

Do your team members feel like they want to go to work on Monday morning, or do they feel like they have to go to work? It might sound idealistic, but I truly believe and have proven that an organization brimming with smart individuals who actually like being at work can be built. If leaders can achieve a strong culture,

their entire team can improve a company’s outcome and ultimately their quality of life.

How a Strong Company Culture Increases Productivity, Passion and Profit

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My Inspirations:

Over the years I have been inspired

by companies such as Zappos,

Netflix and Hubspot that have focused on company culture.

At Zappos they created a culture where the team members are part of a family. Each team member is empowered to make decisions that ensure the ultimate customer service experience. They are known to go above and beyond for their customers, from free delivery upgrades to overnight delivery to spending an hour or more on the phone with customers to ensure that they find just what they are looking for. They offer $4000 to any new employee who would like to quit and walk away because they don’t want anyone on board who only wants to be there for the money. Interestingly enough, only 2-3%

take the money. Zappos does not sell shoes online. They “deliver happiness.” They have 10 core values, with the number one being “Deliver WOW through customer service.”

Netflix has 7 aspects of their culture such as “freedom and responsibility,” “highly aligned, loosely controlled” and “values are what we value.” They have a high-performance culture, rewarding ambitious team members who earn their level in the company. They are not a family, where that spot is a given; instead, they are more akin to a pro-sports team, where players are measured based on performance and either kept or let go. They use a review process called “Start, Stop, Continue” where every year they offer feedback on what an employee should start, stop and continue doing. They also have a policy against “brilliant jerks,” or smart additions to the team who may be helpful for the company but ultimately degrading to the culture. As a result, Netflix has dominated the online content space for years.

In this eBook, I will detail the history of corporate culture and the effects of good vs. bad culture, as well as include observations I and others have made experiencing various successes, failures and challenges when building a successful company.

First, we must define the term “successful company.” For me, a successful company is one in which every team member wants to come to work on Monday morning, faces challenges that better their sense of self, has the autonomy to make decisions and the flexibility to balance work and personal life, and finally, profits. I purposely placed profit last because I believe that if all the above are achieved, the profit will come. Focus on your team; they will be happy and more productive, which will in turn delight your customers. Delighted customers are more loyal and will likely tell their peers about their experience, which will in turn improve profit. Improved profits provide more resources to reinvest in the team, which create even happier and more productive team members, and translates to even happier customers. You get where I’m going with this: it’s an upward spiral where everyone wins.

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As a customer of Hubspot, I have seen firsthand how focus on customers and their team has resulted in the creation of the fastest growing, most dominant companies in their space. Their culture code is an excellent example of creating a culture that translates to a big win for both team members and customers. Their approach is the best I have seen, and as I was walking through it, I kept saying, “Yes! Exactly! I totally agree!” I literally could not have said it better myself. I’m very grateful for the Hubspot team shared their culture code, as it was such an inspiration for me. They talk about “Creating a company we love”... “for the love of marketing.”

My Experiences:When my business partner and I founded AG Salesworks in 2002, we did so because we believed we could improve our lives by improving the lives of sales and marketing professionals, both internally (our team members) and externally (our customers). We would do this by delivering the most fully qualified sales opportunities available, coupled with a level of support and customer service that could not be found at any competing firm.

While we have accomplished this, it did not happen with the first attempt. From day one, we operated by the philosophy of improving the lives of sales and marketing professionals by improving the lives of our team. However, the definition of “improving the lives of our team” has constantly evolved.

The first era, years 1-3, created happy team members and customers, but turned out to not be as profitable as we wanted. We promoted and paid oftentimes on feelings and loyalty versus hard results. This created a culture of entitlement, which was not healthy or sustainable.

In reaction to this, during years 4-7 we decided to move towards a more structured and accountable approach, where our team was managed in a much more rigorous way. There was less autonomy and more focus on results. We talked about how we do what we do and what we produced. The production was good and the customers were happy, but something was missing.

For the past five years we have focused on why we do what we do. We have given our team much more autonomy to make decisions and to get involved in improving processes. I have been amazed at the number of people who have stepped up and made contributions to process, customer service, training, etc -- and all because they wanted to. We did not offer additional pay or promotion to motivate them; we just communicated our vision and got out of their way. The end result turned out to be pay and promotion, but it was the team members who created their own pay and promotion by adding value, instead of managers attempting to pull results from the team. It’s amazing the results you can achieve

Great companies aspire to a higher purpose, not just a higher profit.

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with a team that wants to do something versus a team that has to do something. At the same time, we eliminated any tolerance for mediocrity. Much like building a championship sports team, only the best and brightest need apply here. We get our “feel good” from greatness and accountability instead of tenure and loyalty.

As my colleague Allie and I began to dig in and research corporate culture (full disclosure, Allie did most of the heavy lifting), it became obvious how powerful and profitable a strong corporate culture can be. So why is it that every company’s executives do not embrace and benefit from all that a great corporate culture can bring to their team members and customers? Well, lots of reasons. Maybe they just don’t know how. Maybe they just don’t care (if that’s the case, this eBook won’t help you). Maybe they had a strong culture, but lost it due to management change, growth, or lack of perpetual nurturing.

A great culture does not just

happen. You have to define the “why your company does what

it does” and constantly work

at reinforcing the attitudes and

behaviors that help drive and

maintain the culture.

Like a plant that is left unattended, eventually it will wither and die. Once this happens, it is extremely difficult, but possible, to revive. Hopefully this eBook will help you do just that.

First, though, let’s take a look at the history of corporate culture, what is and what is not corporate culture, and how corporate culture can affect your company both positively and negatively. I’ll also offer some advice based on my experience as well as insight gained from our research on how to improve your culture, assuming there is room for improvement. We will include links to some great information if you would like to learn more as well.

The History of Corporate Culture:

Company culture is older than you might think. Max Weber, Protestant Ethic and the Spirit of Capitalism and Martin J. Wiener, English Culture and the Decline of the Industrial Spirit 1850-1980 were some of the first to study this subject as it related to business profitability.

It was not until the late 1970s that the term “corporate culture” came into general use. In the late 1980s there was a boom in the study of corporate culture. Some of the earliest thinking around corporate culture was with the Cadbury corporation in Britain. Founded in 1861, the company went by Quaker beliefs that every individual must be treated with love and respect (labor is not a commodity or a means to an end), belief in brotherhood of man and spiritual equality of woman (hatred of exploitation and

PAY ATTENTIONTHERE’S GOING TO BE A QUIZ!

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suspicion of profit motive). Quakers hated conflict, so they believed cooperation was the true basis of business. Clearly these guys were really onto something; have you tasted their chocolate? Anyway, the two founders performed humble tasks, and committed to “associated control,” which extended from the boardroom to the shop floor, reaching decisions by consensus only. They were also one of the first organizations to offer educational programs for the development of their workers.

The Word Culture:

As defined by Kotter and Heskett, “Culture represents an interdependent set of values and ways of behaving that are common in a community and that tend to perpetuate themselves, sometimes over long periods of time.”

Is culture a static property of a given organization – its shared customs, beliefs, norms, values, or assumptions? Or is culture a dynamic human process of constructing shared meaning?

Culture is both a process and a state; it is a pattern of shared basic assumptions that a group has learned as it solved problems of external adaptation and internal integration that has worked well enough to be considered valid and, therefore, to be taught to new members as the correct way to perceive, think and feel in relation to those problems.

In general, there are 4 different types of cultures: • Strong - All managers share a set of values and methods of doing business, make it known in creed or mission statement, roots of the culture go deep; criticism: theory is incomplete, overlooks too much - a good idea, but there are more factors to consider such as below• Strategically appropriate - The values, content of a culture are just as important as its strength, if not more; there’s no winning culture; the better cultural fit, the better performance; criticism: a good fit can be undermined by a changing environment and ultimately hurt economic performance • Adaptive - Cultures that can help organizations anticipate and adapt to environmental change, associated with superior performance over long periods of time; criticism: can’t explain why a firm without a risk taking or entrepreneurial culture might do well over an extended period; overlooks questions such as “risk taking for what? innovation for what?” • Unhealthy - cultures with arrogant managers who don’t value customers, stockholders and employees, all constituencies, and who are hostile to values such as leadership or other engines for change; criticism: they suck

At AG, we started off with a strong culture, then moved towards a strategically appropriate culture, and now we have an adaptive culture.

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What Culture Is Not:

Culture is not something you create. It’s something that happens. “If you encourage people to share, and you give them the freedom to share, then sharing will be built into your culture. If you reward trust, trust will be built into your culture.”

Workers should be led rather than

driven, inspired rather than coerced, so

that they would take a positive interest

in the welfare of the business, and…

feel that their work and their personality

count, no matter how humble the

position they occupy”

– Edward Cadbury

I have seen many companies’ attempts at a healthy culture fail. They offered catered lunches, company cruises and bowling nights, but still saw distress about politics within the company. These types of activities are great; in fact, we do them all at AG Salesworks. However, these types of activities stem from a particular company culture; they are a result of a great culture, not the culture in and of itself. One indication that you have a great culture is when team members genuinely like each other. If you can hire and retain people who are on board with your company’s philosophy, your why, chances are they will be similar in their likes and dislikes and will get along with others in the team. A team that gets along, will tend to be happier and more productive, and will

enjoy spending time together outside of work. You can’t create a great culture; you can only create the environment in which a great culture can thrive.

What Culture Is:

Well, the truth is, all companies have a culture. They are all different, and not all are healthy. Each and every organization that has created a great corporate culture has done so in different ways with different core values. Certainly there is some overlap but there’s no secret formula. The following are a few quotes from leaders who have achieved great cultures.

Just figure out what your personal values are then make those the corporate values.”

– Tony Hsieh, Zappos

We’re a team, not a family. We hire, develop and

cut smartly so we have stars in every position.”

– Netflix

The best way to improve a man’s circumstances

is to raise his ideals.”

– George Cadbury

Each of these great leaders has a unique approach to creating and nurturing a great culture. While the approaches vary, they all have one thing in common: They are all focused on their team’s happiness. They do so by creating an environment where team members can earn their happiness, where they can thrive - an environment that rewards those who represent the company’s values and hold accountable those who do not.

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Great leaders inspire. They passionately speak about why they do what they do, not how they do it. They talk about a higher purpose. This vision or purpose which is bigger than the individual tends to attract like-minded people to enjoy working together to make a difference. For example, Bill Gates did not create and build Microsoft to sell computers, he built Microsoft to “change the world” by changing the way people did business. Steve Jobs encouraged people to “Think Different,” with a goal to bring the power of the computer to the masses. Starbucks CEO Howard Schultz did not create Starbucks to sell coffee, he wanted to create a “third space” where people could spend their time relaxing, working, reading and socializing. The PC, the iPad & iPhone, and the coffee and pastries are the what or the how these great leaders enabled their vision, while those philosophies are the vision itself.

I have recently read, and been inspired by, a book entitled Start with Why by Simon Sinek which I highly recommend. In his book he speaks of how, “all the great inspiring leaders and organizations think, act, and communicate in the exact same way, and it’s the complete opposite as everyone else.” Why does your organization exist? Why should anyone care?

A few additional points Simon makes in his book

• People don’t buy what you do, they buy why you do it.

• The goal is to do business with people who believe what you believe.

• The part of the brain that controls decision making doesn’t control language; it’s the feeling, or the “heart,” in the limbic brain.

• There are leaders and there are those who lead, those who inspire us. We follow them not because we have to but because we want to. Not for them, but for ourselves.

Remember, the secret to high

performance isn’t external rewards like money, it’s the

“deeply human need to direct

our own lives, to learn and

create new things, and to do

better by ourselves and our

world” – Daniel H. PinkDaniel H. Pink is an American author who has written five books about business, work and management. He worked as an aide to Secretary of Labor Robert Reich, and from 1995 to 1997 he was chief speechwriter for Vice President Al Gore

For me, an organization with a team that wants to come to work on Monday is an organization with a clear “why” that is in line with the core values or beliefs of those team members. AG Salesworks was founded to make lives better. My business partner

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and I wanted to spend more time with our families, have more freedom and autonomy at work, and create a company where our team could enjoy the same. The services we provide do the very same for our customers. Sales and marketing professionals, by achieving higher levels of success through our support, enjoy a better work experience, and are happier as a result. The quality opportunities we pass over to our clients is not the why we do what we do, it is the what or the how we achieve our why.

Like-minded people tend to be attracted to similar core values, and when working together, tend to have a more enjoyable, more fulfilling, and more productive work experience. As a result, the customer enjoys a more valuable partnership, continues to work with that company, and more than likely tells others about their positive experience. This creates what I call a positive upward spiral, a true win-win where not only the customer is happier and more successful, but the company providing the products or services is more successful, enabling them to continue to invest in their team and culture, creating an even more fulfilling work experience, and the positive cycle continues.

A Few Examples to Ensure You are Reinforcing Your Values:• If your value is communication, you may have the managers and supervisors get to know employees on a personal basis

• If your value is transparency, you may have company documents available to everyone

• If your value is teambuilding, you may have everyone work together and help where necessary

• If your value is responsibility, you may let employees work remotely because you trust them to be responsible

• If your value is high performance and accomplishment, you may want to focus on more work done than workdays completed; some even decide not to have a vacation policy

• If your value is trust, you may not have a clothing policy and trust that people won’t come in naked?

• If your value is healthy competition, you might have that reflected in the comp plan, or have a field day or games room to keep everyone actively competitive

• If your value is development of employees’ intelligence, abilities, skills, etc., you may give them the opportunity to develop themselves by giving them challenges and supporting their own self-improvement (offering classes, books to read, etc.)

Chances are you feel many, most or perhaps all values listed above are important. These are just a few suggestions to consider as you work to build or improve your culture. We have designed the following quiz as a fun way to see how your company rates.

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Is Your Culture as Strong as You Think It Is?

1. Do you communicate your company’s values on a monthly

basis (at a minimum)?

Yes.

No.

If you answered “No,” you should consider sending out a monthly email with inspiration and encouragement or holding a monthly meeting recapping how the month went. Praise and acknowledgment of employees’ hard work is important to building a strong culture, and these values need to be exhibited through the words and actions of the higher-level employees.

2. Are you hesitant when an employee tries to lead a project or

change the status quo in some other way?

Yes.

No.

If you answered “Yes,” you may have an unhealthy culture. Being hostile to values such as leadership or other engines for change can make your employees feel weak. They also won’t have a vision for the meaning behind their work, which would most likely result in higher turnover. When an employee comes to you with an idea, seriously consider it before brushing him or her off.

3. Do you encourage discussion about your company’s culture?

Yes.

No.

If you answered “No,” consider checking in on employees about how they’re feeling about the company culture, even asking for suggestions on how to improve it. When they feel their input is heard and maybe even incorporated, they’ll feel empowered in the workplace.

4. Are your criteria for hiring and cultural fit transparent? Yes.

No.

If you answered “No,” make it transparent. Write a Culture Code like Zappo’s, HubSpot, or Netflix. Make documents and PDFs for hiring and cultural fit available digitally to employees, especially if there’s a referral program in place.

5. Do you distance yourself from employees once they’re

settled in?

Yes.

No.

If you answered “Yes,” stop distancing yourself from new employees. Check in on them at least once a week, then moving to once a month, to make sure they’re happy at the workplace. Even if you’re a C-level executive, you should still make sure your employees are happy, as happiness equals productivity.

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6. Do you cater to your customers, stockholders

and employees?

Yes.

No.

If you answered “No,” you should start doing this right away. Heskett and Kotter say that the more a company caters to their customers, stockholders and employees, the more revenue their company attains. Try to find the balance between catering to all of them, instead of putting all your resources into one group.

7. Do you have a manifesto of the company’s values to show

to new employees?

Yes.

No.

If you answered “No,” make a company manifesto. It can be as short as a simple list or as long as an essay about the values within your company. Hand out copies of the manifesto to employees so they have something tangible to hold and reference when they see the company’s values exhibited through leadership.

8. Is your company’s history readily available to everyone?

Yes.

No.

If you answered “No,” make it available. At AG Salesworks, the history of our organization is available on the homepage of our website, complete with videos from our founders. Other organizations such as Cadbury have a timeline of events leading up to the present. Understanding where your organization came from, and why it even exists, is important for building a culture focused on success.

9. Do you buy ping pong tables and air hockey sets in hopes

that they will produce a strong culture?

Yes.

No.

If you answered “Yes,” you may not understand what culture means to your company. While there’s nothing wrong with buying ping pong tables and air hockey sets, it’s unrealistic to think these “things” will affect your company’s culture. The culture needs to come from the executives in the office and the values they exhibit.

10. Do you communicate with your employees the WHY behind

your company?

Yes. No.

If you answered “No,” consider doing this more often, through email communication or meetings, and even on the website. It’s important that employees are able to answer the question: WHY was this company created? WHY are you here? WHAT are you contributing? Feeling part of something bigger than themselves will make employees more excited about the work they do.

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Why should I care?

For those of you that are not the warm and fuzzy types, those whose job it is to focus on the bottom line, I totally get it. However, consider this: there is plenty of research that suggests a healthy corporate culture is good for the top and bottom line. The facts prove great values lead to great behaviors and practices which leads to great performance.

A few stAts.Firms with cultures that focused on many or most of the above values increased (on average) revenue by 682% vs. 166%, expanded work force by 282% vs. 36% and grew stock prices by 901% vs. 64%, improved net incomes by 756% vs. 1% (Kotter and Heskett 11)

A few helpful notes from Corporate Culture and Performance book:

• Company cultures need to be adaptive, not self-interested

• Must have a value system that stresses meeting the needs of all key constituencies whose cooperation is essential to business performance - customers, employees, stockholders

• Managers value people and processes that can create useful change (leadership up and down the hierarchy)

• Managers take risks to ensure change for constituencies to ensure their legitimate interests

• Use every possible opportunity to repeat key messages and values again and again

• Allow people to challenge these messages, establishing healthy dialogue

• Keep actions consistent w/ philosophy

• Great values lead to great behavior/practices lead to great performance

So whether you’re in it for yourself, your team members, your family, the board, your shareholders or investors, or the greater good, having a great corporate culture gets you there.

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APPENDIX - Employee InterviewsAt AG, we interviewed 14 employees from different levels and positions in

the company about their experience with corporate culture. The interviews were conducted by an intern in the office, not a C-level executive, so there was little to no pressure to answer questions a certain way.

She asked the following 11 questions:• How long have you worked at AG?

• What is your definition of company culture?

• What is your experience with company culture in other jobs?

• What's your experience with the company culture at AG?

• Do you think company culture affects your performance? Why or why not?

• Do you think company culture impacts your productivity? Why or why not?

• Do you have any suggestions for how to improve the company culture here?

• In your opinion, will more companies embrace company culture in the future? Why or why not?

• Why do you think AG Salesworks does what it does with the culture?

• Why did Paul and Pete found the company?

• Anything else you’d like to add?

The employees’ definition of company culture fluctuated. Many identified it as “the atmosphere or vibe of an organization,” “the overall attitude of people in a company,” and “the psychology of the workplace.” One employee went a step further to define it as “the vision of senior leadership and how it flows to the operations level.” While all the above are acceptable answers, in this eBook we show that the atmosphere, attitude and psychology of a workplace are morphed by the senior leadership’s own values.

The employees’ response to the culture at AG Salesworks was overwhelmingly positive. Phrases used most often to describe the culture were “supportive,” “happy,” “comfortable,” “relaxed,” “open,” “focused on success,” and “work-hard, play-hard.”

Here are a few quick facts about the outcome of the interview:

• 100% said the culture affects their performance positively

• 85% said the culture affects their productivity positively. The others explained that their level of productivity depended on other factors.

• 100% who had jobs before AG thought the company culture here was better. One employee even came back after leaving AG for a year because of the culture.

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All employees interviewed think that more companies will, or at the least should, embrace strong corporate culture in the future, especially for jobs where competition and retention of talent is key to success. But they agreed that each company’s culture is unique in its own way, depending on its leaders, its values and its goals.

Only a few employees had suggestions for improving the company culture. One advocated for finding ways to get new employees more involved in the culture earlier. Others asked for more intimate cubes, with a half-wall or a glass top, in order to increase productivity. Another advocated for a nap room, which might encourage employees to stay later, feeling rejuvenated after a ½ nap during the lunch hour.

Our goal in creating AG Salesworks was to make people’s lives easier. When we asked employees “Why did Paul and Pete found the company?” most of them knew the answer. “Their experience could allow them to be successful in serving others,” one BDR said. “They’re positive people who care about others’ happiness, and want to give others the opportunity to be happy at work,” said a DCO. “They saw a unique opportunity with cold calling and created a spirit throughout the office. Their spirit is who we are; it reverberates through the AG walls,” said another.

We’re glad that we’ve been able to inspire our employees,

allowing them to see the importance of a strong culture firsthand.