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Can you define "culture?" 80% of HR leaders fail the test 

Justin Yoshimura
December 2, 2021
Can you define "culture?" 80% of HR leaders fail the test  Can you define "culture?" 80% of HR leaders fail the test 

“How do you define company culture? For us at CSC Generation, this is one of the most important questions we ask HR leaders during interviews, yet 80% of responses fail to meet our standards. Most candidates place varying emphasis on employee engagement, team morale, corporate policies, and even personal benefits and perks. These answers feel like they define culture, but they don’t. When we move beyond first order thinking it becomes clear that these are either inputs for or results of culture. Rather, Alfred Lin said it best; company culture is the everyday core values and actions of each team member in pursuit of the company's mission.

Beginning from a company’s infancy, culture must not only be consciously nurtured, but to promote durability and success, it needs to evolve in harmony with the corporate mission. Amazon and Apple offer two contrasting but relatable examples of how different cultures, each tightly aligned with their respective missions, produced two of the most successful companies in history.

Amazon has consistently been one of the world’s most customer-centric companies due in large part to their culture. From its founding to a trillion plus dollars in market cap, management established policies (an input of culture) to align with their north star, even if those policies required employee sacrifice. As an example, while even unprofitable startups threw lavish perks at employees, Amazon has required that virtually all employee travel be done in economy class. As Andy Jassy said, "If you're flying everyone Business and First Class to meet customers, it's a pretty substantial expense, and none of that benefits customers." In other words, every day, thousands of Amazon employees act to promote their culture of frugality to ensure that their customers could continue to benefit from low prices and fast delivery.

At almost all companies, culture has nothing to do with their offices. At Apple however, Steve Jobs and Jony Ive personally devoted countless hours designing the company’s famous spaceship campus from the ground up, to offer a visual day reminder to tens of thousands of Apple employees that beautiful, functional design is greater than all else--fitting for a company whose mission is to create the world’s best personal computing products. Furthermore, their obsession with every detail resulted in a budget overrun in the billions of dollars, but they refused to make any design tradeoffs to come closer to budget. 

Pivoting back to CSC, our mission is to enable brands to successfully transition from the "analog" world of stores and catalogues to "digital," and beyond. We believe that at some point in the future, the majority of brick and mortar and catalog retailers will require serious restructuring and a shared core infrastructure because they won't be able to invest enough to compete with Amazon. 

Below are some of the actions and values that define our culture:

Think in decades: In an increasingly competitive job market, many fast-growing companies are taking aggressive actions to attract talent. One such carrots being offered are “no-cliff” equity grants, which means that an employee can earn stock (a long term incentive) without any time based vesting milestones. This might attract talent, but probably not the right ones; enduring companies are rarely built overnight, and anyone that is afraid of committing to 1+ years is simply not the right hire. 

One of CSC’s competitive advantages is our long-term orientation and indefinite investment horizon. In fact, many brands that we acquire have become distressed in the first place because private equity is incentivized by short-sighted fund structures and predetermined return horizons. Our ability to invest and operate with a long-term focus would be impossible if our employees were incentivized by short-term gain. I imagine it is likely now unsurprising to learn that CSC goes against the grain by structuring equity grants with 18-month cliffs and three-to-five-year vesting schedules. 

We are proud to be non-traditional and the individuals who make it through our entire interview process appreciate that today’s “market terms” are much less valuable than what we, as a team, can accomplish by rewarding long-term value creation. This is our $5 billion spaceship campus :)

Promote from within: One of the most common reasons why private equity acquisitions fail is because the long time founder/CEO (who may not have an impressive resume on paper) is replaced by a more impressive yet less than competent corporate executive with a fancy resume, and the new owners do not catch-on until it’s too late. To avoid falling into this trap, we have built a talent acquisition machine that selectively recruits and invests in extremely capable Associates, Directors and VPs who can grow into the General Manager/President role 1-3 years into the future. In other words, while I don’t know exactly what company we will acquire 3 years from now, we are investing heavily in a bench of talent who could step up to run it when we do, that we can vouch for not just because of their resume and interviewing skills, but because we actually worked together. 

Remote first: Beyond the obvious fact that talent is everywhere (not just in high tax urban metros :), since CSC acquires companies all over North America, being located in a centralized office is actually a disadvantage (because we would all be spending so much time and money traveling to far flung cities where the action and value creation is actually occurring). As such, since our founding 6 years ago, we have always been remote FIRST. This means that as a policy, posting/recruiting for a position in a specific city (as opposed to remote anywhere in North America) is not allowed without senior leadership approval. Though many hiring managers were initially uncomfortable, I now regularly hear them say things like, "wow, I didn't know there were so many great people in Indiana," or "Mississauga is just a talent goldmine." 

The right kind of ambition:As defined by Andy Grove, "the right kind of ambition is ambition for the company’s success with the executive’s own success only coming as a by-product of the company’s victory." In other words, it's extremely important to us that we hire people who view their success in the lens of helping us achieving our mission, not in something foolish such as obtaining a "fancy title." We simply do not hire people who are job hoppers, or who are focused (during the interview process) on increasing their professional title, no matter how qualified they may be. By accepting this cost and avoiding such candidates, we have consistently hired amazing teammates who promote long-term group success above all else. As an example, one of CSC’s most senior engineering leaders has refused to change his title from “software engineer,” because he wants to lead by his actions (such as putting in the most hours and “donating” his entire bonus to the rest of his team). On the other hand, despite being one of the greats, there is a reason Allen Iverson never won a ring…

As a company grows from start-up to fortune 500 and beyond, management will inevitably have less and less say in the day to day decisions that the organization makes. Leaders that are intentional about defining their culture will not only build the most enduring organizations, but one that they are proud of. 

Credit to my colleagues Rebecca Jacobs and Sam Herzig for their invaluable input and editing.

This blog was originally published Dec. 2, 2021, on LinkedIn.

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