Culture as a Catalyst for Scale

RHR International worked in collaboration with founder-CEOs to identify the main challenges they faced when scaling their companies. From that research, we identified the seven navigation challenges for founder-CEOs. As companies scale, there are a few leading indicators that founders need to pivot their leadership approach, including immense personal stress, an increase in organizational debt, and cultural drift. In high-growth companies, culture should be a competitive advantage, but as more people are added, you risk diluting the very thing that makes your company special.

Is your culture deviating from course?

Every company has a culture. You get it by design or by default, and if you’re not intentional about the culture you’re building, someone else will inadvertently do it for you. The first symptom of cultural drift is when you and your team start lamenting the loss of close connections you felt with the founding team. Secondary symptoms of cultural drift include lack of focus, lack of accountability, immature leadership behaviors, an inability to hire well, and a disengaged workforce.

Key indicators that company culture is a competitive advantage as you scale include:

• Employees actively recruit for you; they also bring energy and ideas.
• People feel like they are part of something bigger than themselves.
• People easily articulate company values.
• You and your key leaders hold yourselves accountable to the behaviors you expect others to demonstrate.

A strong culture is a beautiful thing. Inspired people bring their best thinking, energy, and focus to the task at hand. As with any scale-up, there will always be moments of existential threat and anxiety, but when these threats emerge, the leadership task is to guide and shape the environment around you and to help your leaders stay grounded and focused.

Factors that help build culture as a competitive advantage include:

• Monitoring your own actions. People will mimic what you do, not what you say. If you are conflict averse, you will get a company that’s conflict averse. If you speak poorly behind people’s backs, others will start doing the same. Conversely, when you hold yourself accountable and treat others with respect, a focused, respectful culture tends to emerge.
• Auditing the actions of the leadership team. The people you put around you are equally responsible for setting culture. Hire people who represent your values and buy into the vision. One or two rogue leaders can create exceptional damage to company morale and reputation.
• Hiring a strong chief people officer. Hire a chief people officer earlier than you think you need to. The best CPOs are not just administrative hires. They are strategic partners to the business who help shape talent and culture. Nearly every second-time founder we’ve worked with has said that hiring a strong CPO earlier than anticipated was critical to their success.
• Creating forums for people to contribute and grow. Don’t expect everyone to think and behave like you do. In early stages, groupthink can accelerate the speed of decisions, but it will stifle innovation as you grow. Attract and recruit alternative skillsets. Be clear with expectations, value people as human beings, and let them do their thing.
• Establish a clear purpose and values. Communicate a clear purpose and values that employees and associates can rally around. Cultures rooted in core values withstand stress better than cultures defined by fear, stress, and individual heroics.
• Reinforce positive actions. Create an environment that rewards the behaviors you want to reinforce. Each company is unique and will interpret this in its own way.

Do you have the right people around you to scale your company and culture? Are you building a team who lives and breathes the same values as you do?

When RHR coaches leaders in growth companies, we help them build strong cultures to enable growth and scale. Empowering People and Culture is one of The Seven Navigation Challenges of the Founder’s Journey.