Note: This article is part of our ongoing series based on some of the 200-plus interviews by Walton College Dean Matt Waller for his BeEpic podcast.
An organization’s culture is alive and, therefore, ever-changing. As my friend Steve Farber once noted, “It can no more stay the same than a caterpillar. Unfortunately, it’s not always morphing into a butterfly.”
Keeping up with the changes in the culture is no easy task for leaders. Jeff Simmons, the CEO of Elanco, told Walton College Dean Matt Waller that, “Culture is like water is to a fish. You don't know it’s there until it’s gone or it really changes.” That’s why the best leaders are proactive about watching for warning signs in the waters around them.
The leaders interviewed on Waller’s BeEpic podcast regularly discuss different aspects of culture, including these five factors that inevitably influence culture for better or for worse.
1. When You Hire New People
Carter Malloy, CEO of AcreTrader, echoed a common refrain from leaders when he talked about hiring not just for skills but for cultural fit despite the temptation to rush the process and fill open slots.
“We have never made compromises intentionally,” he said. “And the temptation is insane, right? Where, oh, We just need to get this salesperson hired. Gosh, we need him so bad. We needed him yesterday. And this is the 15th person we've interviewed with, and they're good enough to get the job done. Let's just go ahead and hire him. We need him. And … I believe that is one of the worst, if not the worst, decision you can make as a business.”
Malloy described the hiring process at AcreTrader as “more than rigorous” and to the point that it can offend some job candidates.
“We ask them to do big projects for us, we ask them to do technical interviews, then come in the office and interview with a dozen more people, then go through finals,” he said. “And that turns some people off. Great. We want people that really want the job, that are really excited to come work here and are willing to go through a rigorous process. And for them and for us, it weeds out a lot of candidates.”
2. When You Acquire New People
When J.B. Hunt Transport launched its Integrated Capacity Solutions (ICS) division, it had no choice but to hire outsiders who were experts in the brokerage business but unfamiliar with the trucking company’s culture. So Shelley Simpson intentionally put together a team that used a mix of internal and external hires.
“We really ran everybody side by side,” she said. “So while I was learning and my leadership team was learning, so were the people that had come from outside the organization. They were learning from us, as well – our culture, why we are the way we are. And they were really a culture add that was important to us; they could add to who we were. We were proud of who we were. But we knew that we needed to think differently. And that really started our cycle of innovation.”
Another significant way culture is impacted by mass additions is when one company acquires or merges with another. Tom Tedford, president and CEO of ACCO brands, is one of many guests on the podcast who has experienced this when leading acquisitions.
“We do business in over 100 countries and our top 12 brands represent roughly 75% of our sales,” Tedford said. “And many of those brands have been acquired. It's important to ensure that when we go down a path of acquisition or inquiry to a potential target that it fits our strategic and our financial requirements. Both are equally important. As we think about businesses, it's not just simply the financial results that the business yields. We have to make sure it fits into our long-term strategy. We also think very carefully about how it fits and how its culture is consistent and fits with our culture.”
3. When There are Significant Shifts in the Leadership Team
Doug Parker was CEO of US Airways when it merged with American Airlines, and he and most of his management team formed the nucleus of the new American leadership team. In that case, the merging of cultures began at the top.
“We had to work to make sure that we didn’t walk into the larger airline acting as if we had all the answers, and we worked really hard to make sure we didn't do that,” he said. “We kept the best of the best from American and let them know how much we needed them and that we needed each other. And then we brought in a lot of people from outside, which, taking all that together, you have the best of the best from in the two airlines. … But I think we built a really, really nice team. Very happy with the culture we have in place now.”
4. When You Step into a New Leadership Role
Sometimes it’s the leader, not the employees, who are new to an organization. Delano Lewis, for instance, had spent much of his career in law, politics, and telecommunications before being named president and CEO of National Public Radio in 1993.
“It was it was quite a culture shock in many ways,” he said. “I was managing (around) 3,000 people in the telephone business. And I thought, okay, I'm going to be managing around 400 people, dealing with 600 station managers around the country, this is not going to be that difficult. Well, it was one of the most difficult jobs I ever had, because it was not only a reputed, well-respected media organization, but there were a group of journalists who really didn’t want to be managed.”
Rather than try to change the culture, Lewis recognized he had to “understand the culture and be able to work with the culture.” He hired a consultant and spent time listening to station managers and other leaders in the organization before pushing for some much-needed changes in the organization.
5. When Your Organization Faces Significant Changes
Keeping the cultural ship steady and on course isn’t easy in the seas of change. Regardless of whether they come from political forces, competitive shifts, technological breakthroughs, unpredictably calamities like a pandemic, an organization might need to change to stay relevant or it might be creating change and experiencing hyper-growth, which was the case for Acxiom Corporation.
Charles Morgan founded Acxiom, a database marketing company, and grew it from 25 employees in Arkansas to more than 7,000 employees globally with $1.5 billion in revenue. Morgan said his initial focus was on hiring smart people; Acxiom’s culture grew organically and the lack of attention eventually cost them.
“We had all kinds of issues with leadership and organizational structure,” Morgan said.
At one point, for instance, they realized they had 13 levels of management in one area. And when you start translating leadership direction to that many levels, Morgan said, “there is no real true communication across the ranks.”
The reorganization that Acxiom endured in the 1990s provided Morgan with painful lessons that he kept in mind when he got involved with his next tech startup, First Orion.
“We had about 75 people (at Acxiom) who had title of director that went all the way back to associate,” he said. “So we cut levels out, and it was painful. I didn’t want to do that here at First Orion. That was a big mistake. And when building this business, I’ve been able to learn from mistakes.”
