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Chapter 24 Values and Culture

Driving alignment on values and culture will guide you in nearly everything you do. Your values help you find and hire the right people, reward and recognize people and behaviors, influence your organizational structure and operating system, and help you make decisions. Your values also shape the things you don't want to do, or shouldn't do: they prevent you from hiring people who don't fit your company, they guide you on the markets you'd like to enter, or ones you don't want to enter, and they frame how you select vendors and customers. Your values also influence the culture that you build.

Culture is the sum of the everyday behaviors of employees—how work gets done, how people interact with each other, and how they exemplify the values. For example, if leadership team members make every decision themselves without including others, you'll soon find that the culture of the company is one in which everyone waits for a leader to make a decision before they take action.

You may run into a CEO who just wants to build a business and isn't interested in the culture. They may believe that business takes priority over culture, that culture is just “soft stuff,” or that it doesn't add value. There's a quote attributed to Peter Drucker that “culture eats strategy for breakfast”; as Chief People Officer, it's important for you to help people understand the importance of culture to support the business strategy. I don't advocate for culture over strategy. It's just that many executives focus only on strategy, and you can help them add culture to their perspectives. If you're in this situation, you can help paint the picture of what the company will look like if you aren't focused on culture and values from the very start. You are going to have a culture, and the options are to build it intentionally or let it happen by chance!

Every person you hire at an early stage has an outsized impact on the culture. If their values don't match those of the CEO or executive team, they won't be successful in the organization, or they will build a toxic subculture that is hard to dismantle. Until they leave the company, there will be tension and unproductive conflict which wastes time, resources, and impacts productivity and engagement. For example, suppose you have a CEO who values transparency and direct conversations and you hire a leader who is more political and is not transparent with their colleagues. That individual is unlikely to be successful, and the reverse is true as well.

Being able to hone in on the values and culture your team wants is an iterative process, and the starting point will differ depending on how strong a vision the CEO/founders/leadership team have about culture. The number of people involved in the initial process can make a difference, too. If you have three people, you can become aligned more quickly than if you have a dozen people. To get things going, have conversations with a small group of people, just the CEO and founders or, if the team is small, the full leadership team. Start with a conversation about what matters to the stakeholders: What do they care most about and what's the best culture they can envision? Or, you can start by asking what legacy the CEO/founders would like to see the company have. Here are a few topics you can ask about:

 How do you think about hierarchy and decision making? Do decisions need to be made at the top, or do you want people to feel empowered to make decisions themselves?

 What is the level of transparency that you want? Do you hold this as a value? Would you rather be fully transparent about everything, or operate on a “need‐to‐know” basis?

 Will you embrace a remote culture, or do you want people to work in the office? (This topic is especially important right now, as we manage through the global pandemic. It's an opportunity for companies to rethink their priorities and explore whether a remote culture works for them.)

 How important is diversity to you? If important, what does it mean to you?

 How do you feel about corporate social responsibility? As a startup, how much effort do you want to focus on this?

 How innovative do you want or need to be?

 Do you value speed over quality?

 What's your financial model? Will you reinvest any profits in growth? What responsibility do you feel for sharing profits with employees?

 Do you value a work hard/play hard model or do you want to focus on more of a work‐life balance?

 Do you have a preference for building everything in‐house, or are you willing to partner or outsource?

Your role as Chief People Officer is to help continue that conversation, to facilitate it so that alternative voices are heard, until you have enough content to articulate that culture. Once you're comfortable (as a team) on the culture, shift your focus to values. Look online to find lists of company values—either through articles or looking at different companies' websites and pull together a starting list of values for the team to explore. The list should be broad and encompass some of the diverging viewpoints you heard. You'll want to have another conversation with the CEO/founders/leadership team about values. Your aim in this conversation is to narrow down the values list to the most important three to seven values.

Getting alignment on culture and values is the best use of your time as a startup Chief People Officer and the results will carry the company far, since the culture and values impact every facet of how you work together and how you approach and solve problems. Your company's values need to be ingrained within the people in your company and it's something that you, as Chief People Officer, will measure, evaluate, champion, and help course‐correct as your company scales.

As you grow, you'll want to build deep skills in the company on how to talk about your values and tell stories that demonstrate your values in action. This helps to make values part of your company's DNA and when you grow, the values will grow with you. While people may have an intellectual understanding of values, they'll also need to be able to see them in action concretely, and you'll have to help them recognize and reward values‐based behaviors. At Return Path, we built values into every people practice: we interviewed people on values alignment, we had story‐telling sessions during onboarding, all our rewards were based on a value, we highlighted people who embodied the values, and we evaluated values‐based behavior in promotions and performance.

You'll also periodically evaluate whether the stated values still accurately reflect the actual and desired behaviors. Generally, values don't change over time but they might if you've experienced a change in leadership or if you realize that you missed or misstated some values at the beginning. It's not uncommon for the leadership team to refine the values over time, to help them be more clearly understood by employees. This is especially important if you're growing very fast, if you have remote workers, or if you're geographically dispersed.

At Return Path, about 10 years after our founding (in 2008), we experienced a large growth spurt, including international growth. We weren't sure if the mission and values we started with reflected who we had become. We ran a company‐wide values exercise to better understand what was most important to employees. Everyone at the company joined one of a series of small‐group brainstorming sessions where we discussed current values and mission and recommended changes. Matt took the results and recommendations from all those sessions and crafted our revised values framework. It turned out that the revised values weren't too different but were reframed in a way that was easier for people to understand.

You can find many examples of values on company websites; here are the final values from Return Path; you can see that Matt had some fun with the acronym!

 Our Path to Going Above and Beyond the Call of Duty for Everyone. We are…

 Owners

 Unconventional

 Results Oriented

 People First

 Agile

 Transparent

 Helpful

 Appreciative

 Business Focused

 Collaborative

 Data Driven

 Equity in Opportunity

A few other companies that have impactful values include:

 Sendgrid: “We value a culture centered around 4 values: Hungry, Happy, Honest, and Humble.”

 Twilio: In the buckets of “How We Act,” “How We Make Decisions,” and “How We Win.”

 Moz: Transparent, Authentic, Generous, Fun, Empathetic, and Exceptional.

 Bolster!: We wanted to make sure that our values were very clear and easily remembered, and also raised the bar. Some values that we articulated at Return Path are just table stakes for us here, so we were diligent about articulating values that are really clear and explicit. We also distinguished between values (rarely changing) and operating principles (dependent on stage). Our values are:Always Have Heart: We treat everyone with respect and value the unique individuality of our employees, members, and clients. We are helpful and thankful, inclusive, and assume positive intent.Be Transparent: We help others understand our thought process; show our data, and facilitate honest and open feedback.Continuous Growth: We are intellectually curious, and this helps us to grow. We strive to be and to develop high‐performing individuals, teams, company, members, and clients.Do the Right Thing: We always err on the side of high integrity and putting company, members, and clients above self, even when that is difficult.

The work that you do as Chief People Officer on your company values and your culture will be some of the most impactful work you do. You'll need to revisit the conversation over time to make sure the values and culture are still relevant as you grow. Values generally don't change over time, but your culture may. Either way, you'll have to be intentional about revisiting conversations on culture and values.

What I Look for in a Chief People Officer

Scott Dorsey

Managing Partner, High Alpha

My dream HR and People leader embodies a unique blend of characteristics, skills, and experiences. Just like the CFO, this startup leader needs to be honest, ethical, and have strong character. Trust is the foundation for this role.

Building on this foundation, I am then looking for the right mix of tactical and strategic HR experience. On the tactical or transactional side, the leader needs to be proficient in getting key systems and processes running smoothly—payroll, compensation, benefits plan, performance review process, performance improvement plans (when needed), employee handbook, employee onboarding, etc.

Stretching further, I am looking for this leader to build HR into a strategic function, not just a transactional function. First step is helping the CEO develop core values and a culture framework. And most importantly, working to reinforce these values through actions, behavior modeling, and excellent company communication. Next up is recruiting with urgency, discipline, and high standards of excellence. Is anything more important than attracting the best talent possible and helping them achieve their full potential? Building diverse teams and an inclusive culture has never been more important.

Most of all, I am looking for the startup Head of HR to be an amazing business partner to the CEO, to the leadership team, and to the company at large. This person needs to take care of small problems, bring positive energy, surface new opportunities, keep a pulse on the organization, and build trusting relationships. All these tasks are a critical part of the charter. In many ways, the HR and People leader is the glue that brings every functional group together. And cross‐functional collaboration is imperative to company success.

As an investor and Board member, I sleep better at night knowing that our portfolio company has a star HR and People leader who is extraordinarily trustworthy and reliable and will make the CEO, team, and company better every day.