Not that startups that initially tolerate brilliant jerks are doomed. Here are some best practices — behavior-moderating tactics, actually — which, in my experience, lead experientially and demonstrably to better results.
Institute gender diversity in leadership.
With gender diversity in leadership, it is far less likely that a company will develop bad culture. In short, the company puts women in senior positions. Women seldom tolerate the bro-culture behavior born of the locker room. Back when I was at IBM, I recall how all the inappropriate behavior exhibited by my male colleagues (myself excluded, of course!) came to an embarrassing halt when we got our first female boss.
Make smart moves with your chain of command.
First off, separate the chairman and CEO positions. Give the CEO a strong coach who can guide the company’s culture development without interfering in the running of the business.
Also: Consider a two-in-box CEO structure to give your new CEO the comfort of a peer sounding-board for advice and counsel. When Business Objects was acquired in 2008 –and when, as CEO of the company I became a member of SAP’s executive board — I learned the wisdom of this strategy.
The strategy went forward in the context of SAP’s corporate governance system. We had a great structure for collaborative and engaged decision-making. SAP’s co-CEOs acted as co-chairs of the executive management group, with one focusing on product and the other on field matters. While this perhaps slowed the decision cadence, it provided a check on these individuals’ respective egos and was excellent in terms of generating alignment and focus.
Make “respect for the individual” a core business value.
Ask employees and customers for feedback on their perception of the company’s performance on this point. “Respect” means: taking the time to understand different views, tolerating constructive dissent, giving people a chance to speak up, delegating authority and responsibility, having objective measures for the health of the company culture and not destroying people’s self-esteem by delivering negative performance reviews in a public setting.
This was a lesson I learned as a junior leader in a very experienced management team at IBM. It would have been easy for my seniors to ignore or denigrate my feeble efforts at participation, but I was never made to feel inadequate. When I was wrong, they took the time to explain why. Forty years later, I still consider this my most impactful learning experience.
Remain aware of feedback.
Invite outsiders on to your board.
Have a strong, diverse, and independent board of directors that looks beyond the business results. In the long run, poor company culture will destroy even the best strategy. In start-ups, the board usually consists of founders and investors. When an outsider is introduced — perhaps a partner or a customer — that move brings a new perspective on the business and its culture.
The older the company, the higher the ratio of independent outside directors it should have. I founded Visier in 2010 to transform business analytics, starting with the HR function. Initially, our board was composed of two founders and investors. However, in 2014, we asked the chief human resources officer (CHRO) of one of our most sophisticated customers to join the board.
This was Gabrielle Toledano, then the chief H.R. officer of Electronic Arts. Today, Toledano is chief people officer at Tesla. With this impressive background, she has been able to help us look at our business from the outside in, providing a vital perspective.