If you ever have to wonder about the importance of company culture, think back to the defunct U.S. energy-trading and utilities company Enron — the face of a scandal revealing one of the biggest accounting frauds in history.
Enron’s executives created a culture where pushing the limits was accepted (and expected), the stock price was the only thing that mattered, and employees were pushed to make deals at any cost.
The result was extravagant employee spending, a “push rules as far as possible” mentality, and a competitive backstabbing work culture. This environment created the perfect storm for the crimes which would later destroy the company.
Contrast Enron’s failures with the corporate culture of Facebook or Apple. Openness, creativity, and respect are key values which make great companies great. And startups and small businesses can also create a culture where customers and employees can feel respected.
Here are five key steps for entrepreneurs who want to create a solid company culture from the very beginning.
1. Clarify your company’s vision
Countless successful people can tell you that if you start a business with the sole reason to make money, you are going to fail. Smart founders start a business because there is a problem they want to solve and people they know they can serve. Their “why” is at the forefront of how the company promotes itself to both customers and employees. Make sure that employees understand the company vision and work to live up to it.
2. Hire for character, teach for skill
As Elon Musk observed, when it comes to hiring people, “… it matters whether someone has a good heart.” You cannot create a great company culture by yourself. If you are a saint but hire five sleazebags, the sleazebags will impact morale and move your company in a bad direction.
In order to create a strong company culture, you need to hire good, honest and open people who will buy into the company vision.
Far too many founders will pass on a quality individual in favor of a misanthrope because the misanthrope has more skills. That may work over the short run, but it will spawn a company filled with misanthropes and a toxic company culture. Instead of looking for talented individuals, hire employees who are friendly, open, and work hard. If they have a good work ethic, you can teach the details.
3. Show employees that you have their back
Do you want unhappy employees? Then belittle them by always taking the customer’s side in any dispute between a customer and employee. One of the key elements in establishing a strong company culture is to create trust between you and your employees.
And one way to gain trust is for your employees to know that you will have their back. That means listening to disputes and making a proper assessment of the facts instead of just blindly taking the customer’s side. By showing your team that your trust is real, the result will be better communication, both between you and your employees as well as your employees and customers.
4. Start real conversations
This is easier said than done, but it’s the key to building a solid company culture. Talk with your team often and most importantly … listen! “Leaders who take organizational conversation seriously know when to stop talking and start listening. Few behaviors enhance conversational intimacy as much as attending to what people say. True attentiveness signals respect for people of all ranks and roles, a sense of curiosity, and even a degree of humility.”
5. Don’t ‘set it and forget it’
One of the best books ever written about the fall of Enron was The Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron, by Bethany McLean and and Peter Elkind. One thing McLean makes very clear is that there was not one moment where Kenneth Lay, Jeff Skilling, and the rest of Enron’s leadership sat down and decided “We are going to break the law.”
Instead, Enron’s key players kept pushing the line, both on what was legal and by prioritizing short-term success, greed, arrogance, and deceit. The result was a company culture that slowly evolved into a scandalous monstrosity and eventual collapse.
Maintaining a strong company culture is not something you can do over a weekend. It requires constant work, leadership, and communication. Without that work, it can degenerate overtime into something toxic.
Always think about your company values, and always think about how your business decisions can best emulate them. If you stay honest with your employees and colleagues and hire good people, the result will be an honest business. And contrary to popular myths, honesty does pay over the long run.
This article has been edited and condensed.
Simon Crompton is a freelance journalist and entrepreneur running several online businesses including his marketing firm, Threecolors.blue. Simon spends the majority of his time blogging about business startups and consulting on web development. He has launched multiple online companies. He is also a dedicated follower of fashion, and has written for the Financial Times and GQ. Connect with @PermanentStle on Twitter.