Why businesses should join culture club

There are companies whose compass never wavers far from the bottom line of the balance sheet. Others – sustainable and successful – profit from a different currency: their people.

People power is brought into sharp focus in a key session of the BLN Growth Forum 2011 in Cambridge on July 5 when Martin Leuw – former CEO and current non-exec director of software powerhouse IRIS – leads a ‘People’ session discussion with Peter Bauer (CEO Mimecast), Ariel Eckstein (MD LinkedIn EMEA) and Mark Gerhard (CEO JAGEX). It promises to be electric.

As Leuw explains, getting the corporate culture wrong can be potentially fatal, undermining morale, alienating clients and torpedoing fundraising. Leuw will discuss the do’s and don’ts of setting and scaling an appropriate culture within your business, why it matters and how it can go horribly wrong.

He and his guests will consider how to build an effective culture from the outset, how to engage and motivate employees in large, rapidly growing organisations and keep teams focused on a priority agenda during good times and bad. Leuw said: “At different stages of growth you need different types of people. You also need to recognise early what your needs are and ensure your teams are not stretched beyond their capabilities.

“The difficulty is building to 30 people, then 100 and so on without sacrificing the culture you had at the outset when you were a small business. You need to keep your people engaged and active even if they are working in different countries or continents. And if you don’t get the culture or ethos right then your business simply won’t grow.

“The danger is that when you are small you assume the transition just happens; that’s not the case. You have to work at it constantly. If you are growing really quickly you will probably find that the mix of people you started out with doesn’t always dovetail with the culture of the people you are bringing in.

“Or you may have acquired a business. Either way, the culture of the companies the joining staff have come from will usually be much different. Re-educating the newcomers and integrating them into your culture is a challenge and one that must be addressed as a matter of priority. Everyone has to focus on one vision, one goal and the best companies involve as many people as they can to fashion a successful culture.

“Human beings tend by nature to stick in the past, with what they know and are comfortable with. Sometimes it can be a culture shock, as it must have been for Russian people adapting from the strict communist regime to a more enlightened capital economy via perestroika.”

Leuw has run private equity and Venture Capital based businesses and well appreciates how the right corporate culture can enhance funding opportunities and how an unhappy ship can militate against securing growth capital.

Productive employees are regarded by funders as essential stakeholders in a business – indeed enlightened companies have employee share ownership schemes in place. You therefore ignore your people and their welfare at your peril.

“It’s all about balance. Your stakeholders are your investors, your customers & markets and your employees. If you get the balance wrong and focus solely on investment you can end up disappointing the customer and additionally disenfranchising your employees.”

In a new age of super-sophisticated communications, now extended by social media, there is no excuse not to maintain good dialogue with customers and staff, Leuw argues. “It’s dangerous not to have regular interaction,” he says. “You cannot live in your own myopic world.”

Leuw said it was important to measure employee relations and corporate culture. It was something IRIS did exceptionally well, to the point where – using similar metrics – they match up to Apple in many regards, such as customer loyalty, level of referrals and so on.

Using similar metrics to those used for the Sunday Times ‘Best Companies to work for’ survey, IRIS was able to benchmark customer loyalty and employee engagement. “This benchmarking gives you a reality check and banishes complacency,” he says.

“A lot of the best ideas for new products or service standards come from employees, not senior management.”

For that reason, companies can benefit hugely by promoting their best people into management positions; if they have the talent and are also immersed in a good company culture they adapt as managers and then act as coaches for the next generation of risers through the business, Leuw says. This ‘grow your own managers’ approach can be a Godsend in sectors such as engineering and technology where the talent pool is shallow, he adds. “Yet this process is so often overlooked. If you have a good guy – or girl – promote them to a management position: Job done.”

CEOs have a key role in finessing corporate culture: It is important that they reward and encourage good employees and don’t allow poor managers to sit and fester like bad apples in a barrel, just because they were promoted to a role years ago and it is simpler to let things be.

Leuw says he ‘quite likes’ a flat management structure and loves to see a high level of mentoring from senior management with outstanding prospects. With several fast-growing Cambridge companies in the audience for the BLN Growth Forum, for which Business Weekly is a media partner, the ‘People’ section could prove a game-changer in installing better employment habits.

The Growth Forum – being held at the Hauser Forum from 9 am to 6pm on July 5 – has some brilliant speakers, all briefed to stimulate debates that will enable delegates to expand their businesses with more assurance and less risk.

There is a 20 per cent discount for Business Weekly readers booking online. Go to http://growthforum2011.thebln.com/ and quote this code to qualify for your 20 per cent discount: BLNBW.

• Photograph shows: Martin Leuw – former CEO and current non-exec director of software powerhouse IRIS