How to Improve Company Culture: 4 Tips for Managers

This article is an excerpt from the Shortform book guide to "Delivering Happiness" by Tony Hsieh. Shortform has the world's best summaries and analyses of books you should be reading.

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Do you get a bad vibe from your company? Are you looking for tips on how to improve your company’s culture?

Knowing how to improve company culture can greatly benefit your employees’ work experience. According to former CEO of Zappos Tony Hsieh, there are four ways to make your company’s environment positive and healthy: listening to your employees, creating a list of cultural principles, hiring employees who will uphold the culture, and protecting your company from bad investors or board members.

Find out how to improve company culture with these four steps.

1. Listen To Your Employees

How can you assess how healthy your culture currently is? Hsieh suggests asking your employees. Because everyone involved in a company influences its culture, gaining every perspective on that culture is important.

(Shortform note: While Hsieh says it’s important to gain every employee’s perspective on culture, he doesn’t say how to ask employees for this feedback. Some HR experts argue that surveys are the most effective method of gaining employee feedback. Use comprehensive yearly surveys and short weekly or monthly surveys to gain perspective on your entire company’s culture. Yearly surveys let you track large-scale problems, and shorter, more frequent surveys let you track smaller issues and catch problems before they escalate.)

This includes gaining negative perspectives, Hsieh adds. Employee complaints about culture act as an advance warning of more serious problems in the future. For example, if an employee complains that there’s not enough communication between teams, you should encourage teams to communicate more often. If you don’t solve the problem, it’ll worsen. For instance, imagine your sales team fails to communicate important order details to your production team. Your production team will be unable to quickly create the correct products, and customers will become frustrated with the delays and cancel their orders, costing your company profits.

(Shortform note: When receiving these complaints, look deeper than the surface issue. Sometimes, one issue is actually a symptom of a larger problem. For example, if a manager complains that her employees aren’t meeting their deadlines, you could incentivize the employees to meet said deadlines. However, if the employees are slow because their tasks aren’t clearly explained, then incentives won’t help. You must address the bigger problem to fix the symptoms.)

2. Create a List of Cultural Principles

Once you’ve gained an understanding of how you will improve company culture, you can work to nurture its good qualities. Hsieh recommends formalizing your culture in a set of principles. Some common principles include prioritizing customer experience, embracing change, and taking personal responsibility. Making a list concretizes your culture and makes it easier to communicate and enforce the principles that’ll support your company’s mission. 

This step should also rely on employee testimony: You’re not establishing a set of principles you think the company should have, you’re discovering those good qualities your employees believe the company already has so you can nurture them.

Hsieh emphasizes the importance of living by your cultural principles once you’ve formalized them. For your principles to actually nurture your culture, they must determine which employees you hire and fire, and you must uphold them in your daily operations. This may seem obvious, but many companies don’t live by their principles. Instead, they project a certain cultural image through advertisements but don’t adhere to that culture in reality.

Resist the urge to project this kind of fictional culture, Hsieh warns. You’re working to understand how to improve company culture, not create a fake image of one. Customers will notice this discrepancy between your company’s cultural principles and real practices. They’ll lose trust in your company and take their business to your competitors instead. For example, if your company says customer service is its primary goal, but then provides bad customer service, your customers will stop believing you and go to a more honest company.

3. Hire Employees Who Will Improve Company Culture

A company can’t impose culture on its employees, Hsieh says. Instead, a company’s culture stems organically from employees. Therefore, Hsieh argues, you must hire people who improve and uphold the desired culture. Zappos achieves this through its two-part hiring process: First, Zappos interviews potential employees for their skills and ability to complete their roles. Then, they interview those who passed the first stage to see if they fit Zappos’s culture. Zappos only hires employees who pass both stages, no matter how talented or valuable the potential employee seems.

Enforcing this two-part hiring policy is important because employees who don’t uphold the company’s culture can change or damage that culture. Hsieh says most businesses encounter this problem because they hire employees that’ll bring them high profits without considering how these employees will work against the principle of improving the company’s culture. Most of these employees only focus on making money, rather than supporting their coworkers and the company. This influx of money-focused employees degrades the culture from a supportive, enjoyable environment to a miserable one.

(Shortform note: Companies that focus too much on profits rather than developing a healthy culture develop “toxic cultures” that push employees to meet impossible standards of profit and efficiency. To meet these standards, employees take shortcuts and illegal actions, such as lying on balance sheets to make the company seem more profitable than it really is. When these illegal actions are exposed, the company usually blames individual employees instead of the culture. They distance themselves from the issue to save face and refuse to acknowledge the larger, systemic problems: the lack of support and toxic culture that inspired the employees’ actions.)

4. Protect Your Culture From Unhealthy Investors and Board Members

This policy of considering how to improve company culture when choosing personnel must also extend to choosing investors and board members: Hsieh recommends ensuring that all stakeholders will uphold the company’s principles and focus on maintaining a healthy culture. Investors and board members have a lot of sway over a company’s operations because they control the company’s resources. A board comprised of the wrong people can withhold resources, ruining the culture by forcing the company to focus on profits above all else.

(Shortform note: Hsieh suggests finding a board and investors that support your company’s culture. But what if your company already has an established board and investors that aren’t supporting your culture? In The Innovator’s Dilemma, Clayton M. Christensen suggests creating a subsidiary—a company owned and controlled by another company. Subsidiaries have enough distance from investors and board members that they can take risks on less-profitable activities, such as developing culture. If the culture-focused subsidiary succeeds, investors and board members will be more willing to focus on culture throughout the parent company.)

How to Improve Company Culture: 4 Tips for Managers

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  • Former Zappos CEO Tony Hsieh's guide to workplace happiness
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  • An exploration of the psychology behind happiness and why it leads to success

Katie Doll

Somehow, Katie was able to pull off her childhood dream of creating a career around books after graduating with a degree in English and a concentration in Creative Writing. Her preferred genre of books has changed drastically over the years, from fantasy/dystopian young-adult to moving novels and non-fiction books on the human experience. Katie especially enjoys reading and writing about all things television, good and bad.

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