The Invisible Giant: How Culture Makes or Breaks Company Growth

Meredith Bonk, president of OST, says the sustained growth of the Grand Rapids-based firm depends on maintaining a healthy culture.

Corporate culture is not like furniture. You can’t order it online and ship it to your new office location. But preserving the unique work environment that started it all could be your greatest investment, experts advise. There are methods for spreading a common business culture across far-flung locations, but it doesn’t involve a box.

Meredith Bonk, president of OST, says the sustained growth of the Grand Rapids-based firm depends on maintaining a healthy  culture.
Meredith Bronk, president of OST, says the sustained growth of the Grand Rapids-based firm depends on maintaining a healthy

Just ask Meredith Bronk, President of Open Systems Technologies (OST). The Grand Rapids-based IT consulting firm has been one of the nation’s fastest growing private companies for the past seven years, posting a three-year growth rate of 120 percent.  Since 2010, OST has added 70 new workers and three new locations in Ann Arbor, Detroit, and Minneapolis.

Bronk says the expansion would have been impossible without a strong focus on culture preservation from floor to floor, location to location, and making the right hires. In fact, when it comes to organizational culture, OST puts nothing before it. “Our finances aren’t first. Our culture is first,” Bronk said in an interview.  “Happy employees result in profitability.”

Reams of data back OST’s approach. In 2012, Gallup conducted a meta-analysis of 263 research studies across 192 companies, finding that those in the top quartile for employee engagement had 22 percent higher profitability than companies in the lowest quartile. That, plus 48 percent fewer safety incidents, 28 percent less theft and a 10 percent edge on customer ratings, helps cement the link between workplace culture and profits.

While it’s hard enough to cultivate a synergized workplace environment for small businesses, expansion presents a different challenge, one that can easily be underestimated.

The OST leadership team learned this lesson first hand in 2005 when the company made its first attempt to expand out of state to Ohio. On paper, all the numbers were right, but a crucial point was overlooked: there was no system in place to preserve the company’s signature employee-first culture. Ultimately, the Ohio location did not survive, but the takeaways were invaluable.

When OST opened its Minneapolis office in 2011, it made sure someone was ready to captain the culture transfer before they made any moves.

“It has to be a conscious effort,” says Michael Srodes, president of Kalamazoo-based Crux Move Consulting, a firm dedicated to employee engagement strategies with national and international clientele. “You need to protect what you get known for, especially during an expansion.”

First steps
The challenge with culture, unlike finances or logistics, is that it can be elusive and often subjective, thus hard to form metrics around.

To harness the non-tacit phenomenon that is culture and transplant it from one office to the next, there must first be a clear definition of exactly what it is, says Lynn Wooten, associate dean for undergraduate programs at University of Michigan’s Ross School of Business. An expert on organizational management, Wooten says one simple way to characterize business culture is to think of it as “the way we do things around here.”

Michael Strodes of Crux Consulting says protecting a firm’s culture has to be a  conscious effort.
Michael Srodes of Crux Move Consulting says protecting a firm’s culture has to be a conscious effort.

Chances are you didn’t wake up this morning making a conscious decision about which language to speak. It’s only when we’re addressed in a different language that we become aware of our own, notes business culture scholar Kim Cameron in his article, “A Process for Changing Organizational Culture.”

“‘Organizational culture’ is essentially the same structure of any anthropological study of culture,” adds Wooten, referring to a term that gained traction some four decades ago. “The same way we think about cultures in France or tribes in South America, that kind of thinking can be applied to organizations,” Wooten says, adding that organizational cultures are micro cultures within overarching societal norms.

One of the best examples of organizational culture may be Thanksgiving dinner, an event that every family goes about in its unique way, creating its own culture while doing so. On Thanksgiving, actions and expectations often go unspoken without designated rules reiterated or supervised within a family. We usually know, for instance, who carves the turkey every year. But in the office, it takes a well-woven leadership strategy and the right people to produce that type of environment and be able to move it with you during an expansion, notes Wooten.

Experts agree that while culture is not something that can be forced, it is something that can be crafted, although it’s by no means a one-size-fits-all proposition. As there are different systems in place for various business models, there are different cultural approaches as well. Before opening a new location, leaders must first have a firm grasp of the culture style that best reflects their businesses.

Being familiar with that cultural approach is the first step before vetting a job candidate, according to Bronk. At OST, hires are often selected more for their personality types than their credentials. “You can teach skills, but you can’t change who someone is,” Bronk says. “Some company cultures are based on performance and optimization, some are based on more close-knit personal relationships—so (leaders) have to make sure to get people in who are aligned to (the culture).”

Interviewing for personality type can be trickier than a glance at a resume or a call to a reference. Some companies – Google and Menlo Innovations, an Ann Arbor-based software design firm, both come to mind – have candidates spend time working with their prospective team as part of the interview process. “It’s part of the person-to-job fit; an assessment test,” says Wooten.

But when it comes to preserving culture, the right leadership is the cornerstone, says Srodes. And getting the right fit to guide the culture at a new location is key. Leaders must be able to cultivate ownership among workers. “You want [employees] to say, ‘We’re building this office together,’” Srodes says, adding that the leadership team’s responsibility is to build culture in layers and at a rate and manner they feel comfortable with. “Leaders have to share a clear vision: There’s where we’re trying to go; here’s how you can help us. It’s an invitation.”

Lynn Wooten says it doesn’t take her long to gauge the health of a firm’s culture.
Lynn Wooten says it doesn’t take her long to gauge the health of a firm’s culture.

When Wooten walks into a business, she says it doesn’t take long for her to gauge the health of their culture. The first thing she looks for? “Is the leader walking the talk—do employees respect the leader? Is it inclusive? As a leader, you have to ask yourself, “Am I using my culture as a source to achieve results I want?”

Only when the culture has been defined and leaders who are willing to make the move are identified does the next step take place.

“This is where training and consulting comes in: How do you offer opportunities to live the culture? Consulting could come from outside or from experts within the organization and could be anything from a training retreat to an HR evaluation to develop a system for accountability and a shared vision,” says Wooten.

A key point is how ethereal the very idea of culture in an organization can be.

“Culture is like a cloud,” says Wooten. “You can see it, feel it, but it’s hard to touch.”

What may not be so easy to overlook is the impact an ailing culture can have on the organization.

Employees may be timid around leaders, teamwork is forced, and when things go wrong, “you’ll see a lot of passive-aggressive behavior and a lack of trust,” says Wooten. By the time it’s noticed, it may be years before it can be fixed. And the bigger the company, the longer it takes to turn the ship around.

“Size matters,” Bronk says. “It’s not days or weeks, it’s months and years—that’s how I’d measure turnaround time.” Bronk notes that HP CEO Meg Whitman has been working for the past three years to revitalize the company’s culture with 300,000-plus employees, and the job is still a work in progress solely because of the size and nature of the company.

Metrics and milestones
On paper, the solid metrics—things like finances and market demand, which can easily be measured and noted in a report—can hold their own. But a critical part of any business expansion is identifying stepping-stones to cultural success as well—that is, what to measure and how to measure it. In his article, Cameron suggests creating a data gathering system to track progress toward the desired cultural outcome.

The culture at OST includes rallying employees around decidedly “non-business” activities such as a “March Madness” open house it organized.
The culture at OST includes rallying employees around decidedly “non-business” activities such as a “March Madness” open house it organized.

While culture may seem untouchable, like that ethereal cloud, there are ways to mark cultural milestones and metrics. With solid definitions of culture and strong leadership in place, plus a little creativity, a system to create and assess cultural metrics can become clear.

Because there is no ready-made form, and these cultural microcosms are unique to every business, milestones for one business might look completely different than that of another. A weekly in-house competition might be a goal for one company, but a milestone for another may be how many one-on-one conversations leaders have had with team members in a given week or month. The lifesaver during an expansion is being self-aware when it comes to how you do everyday things, says Wooten.

There is also power in celebrating little victories. Find something that is easy to change, like the color of the office paint, change it, then promote it as progress, giving the team a feeling of momentum that carries over into productivity, writes Cameron.

Communication and trust
It may sound cliché, but trust really is the heartbeat of a healthy culture.

Department“We treat people like they are adults,” says Bronk who says empowerment is key in an environment where people choose how and where they work. Add micromanagement to the equation and the results can be detrimental. For her part, Bronk describes the OST work environment as having “high, wide walls.”

“There’s a lot of room to operate but there are understood boundaries and limitations for work,” she adds.

Any change in a company, from expansion to restructuring, sparks fear. That is when trust can become the glue that holds the culture together. “You never can communicate enough in times like that,” Srodes says. “Even if you’re communicating as much as you think you should, people are still fearing the unknown.”

Fear abounded in 2008 and 2009 when the recession derailed many companies and workers along with them. But at OST, leadership opened all the stops when it came to transparency. “We told our employees, “Here’s how much we can lose before layoffs,” Bronk says. “We published our finances every month.”

What happened next? Amid a landslide of crash and burn stories, OST continued its upward trajectory, albeit at a slower rate. “We grew because people rallied and weren’t afraid or withdrawn,” Bronk says. It is when times are tough that culture can mean the difference between success and failure, she notes.

Keep the conversation going
Much of good communication is observation. Bronk said culture is not a stagnant thing.

“Listen for ways to communicate your culture because the culture is always changing,” she says. As an example, OST now invites interns and college grads to learn with the team, something they didn’t do a few years back. And working with young, curious interns has become a new facet of the culture.

Despite what would seem like no-brainers – trust and communication, for example – data shows that employee engagement is not so common. A 2013 Gallup report titled “The State of the American Workplace” showed only 30 percent of U.S. employees feel engaged at work. Worse, a meager 13 percent of respondents in 149 countries worldwide said they felt engaged.

“[Good culture] should be intuitive; it shouldn’t be that hard, but it is,” says Bronk. “It’s hard because there are competing pressures.” She also says finances and stress to compete for rapid results get in the way of culture’s long-term payoff.

“There’s some common sense things that have to be in place in every company,” Srodes adds. “Ask yourself this: Is everyone able to say, openly, ‘This is what I believe will make us all successful.’ Have an agreement to watch out for each other. Talk about it.”