Uber, the world’s largest ride services company, has captured headlines around the globe recently. With the resignation of Jeff Jones as president and CEO Travis Kalanick’s public apology after being filmed swearing at a company driver who complained about rates being cut, the company’s dirty laundry has been left out to dry for all of us to see.
The company is also facing pending internal investigations after a former employee described in a blog post that Uber was a workplace where sexual harassment was a common occurrence. Uber is also up against legal action after being accused of stealing designs for autonomous car technology from Google’s parent company, Alphabet (which it denies). To top it off, Uber has also admitted publicly to its previous use of Greyball, a secret technology program that uses data collected from the app to identify and circumvent authorities in cities which banned the ride service.
And those are just a few of the most recent bombshells that have been dropped about the company’s internal policies and issues. As with any startup, growing pains are bound to happen, but there’s an important lesson that all companies can learn from Uber’s troubles: Lack of company culture is a silent killer to success.
Quantifying the Importance of Company Culture
In a 2015 study headed by Shiva Rajgopal, an accounting professor at Columbia Business School, and three co-authors from Duke University’s Fuqua School of Business, it was found that an overwhelming majority of executives said healthy corporate culture is essential for a company to thrive.
The study, Corporate Culture: Evidence from the Field, attempts to quantify how executives view company culture’s effect on company productivity, creativity, value and growth rates. The team surveyed more than 1,400 North American CEOs and CFOs over a 13-month period, ending in October 2015. And while trying to quantify such a vague concept proved difficult, the 17-point survey found that across the board, regardless of how company culture is defined, it makes a difference in a company’s performance and value. Among the findings, it was found that:
- More than 50% said culture directly influences productivity, creativity, profitability, firm value and growth rates
- 92% of respondents believed improving their firm’s corporate culture would improve the value of the company
- More than 90% said that company culture was important to their firms
- Only 15% said their company culture was where it needed to be
The majority of respondents clearly agreed that strong company culture directly impacts key elements of creating a successful organization. But, who should take charge in ensuring the culture is there in the first place?
Making the Change Happen
According to respondents in the same survey, 70% agreed with the statement: “Leadership needs to spend more time to develop the culture.” Change is never easy, especially change that comes from the top down. But without dedicating efforts to improve – or continue to improve – company culture, it becomes increasingly difficult to shift business objectives toward success.
Startups may have the advantage over older organizations to create a strong company culture, but that doesn’t mean older, more established businesses can’t restructure their approach toward culture. Harvard Business Review’s (HBR) article, Cultural Change That Sticks, outlines a five-step process that companies such as the Four Seasons, Apple, Microsoft and Southwest Airlines have used to help attain peak performance:
Align Culture and Strategy:
HBR argues that, far too often, a company’s strategy is at odds with the deep-rooted practices of its culture. Aligning the culture and business objectives is key, because as HBR states, “A strategy that is at odds with a company’s culture is doomed. Culture trumps strategy every time.”
Choose Your Behavior Battles:
Change isn’t easy, and even when we are faced with overwhelming evidence that change will improve the current situation, we still will resist. So taking on every seemingly negative behavior isn’t plausible. Instead, choose a few key behaviors to emphasize heavily and stay consistent in promoting them; employees will likely develop various additional ways to reinforce them.
Praise the Strengths of Existing Culture:
Rather than torching your current values and mission statements, find value in what can be reinvented. HBR says, “If you can find ways to demonstrate the relevance of the original values and share stories that illustrate why people believe in them, they can still serve your company well. Acknowledging the existing culture’s assets will also make major change feel less like a top-down imposition and more like a shared evolution.”
Focus on Finding Balance between Formal and Informal “Interventions”:
Many numbers-driven leaders or executives will lean toward formal approaches that can produce tangible goals and results and neglect the informal, emotional side of the organization. Find a happy medium between “reach[ing] people at an emotional level (invoking altruism, pride, and how they feel about the work itself) and tap[ping] rational self-interest (providing money, position, and external recognition to those who come on board).”
Find KPIs for Cultural Change:
Implementing measurement and monitoring of progress allows executives to identify backsliding, and the opportunity to correct the course. HBR says executives should pay attention to business performance, critical behaviors, milestones and underlying beliefs.
The first step to implementing a strategy such as the above is to admit there is an issue. Often times business leaders will look everywhere but at the core of the company to find the root of the problem. But when company culture is weak, a ripple effect begins to happen. Weak culture leads to low morale; low morale leads to lost talent; lost talent leads to weak internal stability, and so on.
Though Uber has a long road ahead of them, at least Kalanick (CEO) has acknowledged he needs help and is actively seeking a chief operations officer. If your success is slipping, seek the help you need and make a plan of action. As HBR said, “Simply put, rather than attacking the heart of your company, you will be making the most of its positive forces as your culture evolves in the right way.”