Mark Loftus, founder and CEO at CharacterScope, on why company culture really does matter.
James is searching for a new job just a year after starting what he thought would be his dream position in his dream business.
He works for a rapidly scaling new media business, which is four years old. After a couple of years testing the market, the business hit a vein of gold with its YouTube content and grew quickly, building out its teams to cover content writing, video production, audience development, business development, and so on.
Early joiners over these first couple of years quickly found themselves managing as well as doing. Cash positive, the business secured significant additional investment, giving them the scope to expand internationally. In the UK they’ve grown from 40 people to over 120 in just 12 months. Their international expansion is under way.
And now people are leaving. Sound familiar?
Let’s turn to a second rapidly growing business, in the apparently much less fast-paced world of wealth-management. Set up by experienced business leaders from one of the big banks, it has grown over six years to 260 people. It was acquired earlier this year and continues growing with its own distinct identity and culture, with the acquirer taking the view that it doesn’t want to interfere with a good thing. It pays no more than market average salary and bonus, yet has no problem attracting and retaining some of the best young talent around.
What’s the difference between these two businesses? And what can we learn from the apparently sleepy world of wealth management to apply to the dynamic world of tech-enabled startups and scaleups?
You’ve probably heard it all before, but let me re-emphasise that creating and nurturing culture really does matter. And in this, the character of the founders gives a strong clue as to the culture that will emerge.
The CEO founder of our new media business is a tough-minded, executional leader who has a real entrepreneurial flair, seeing and capitalising on opportunities that others miss. But he has little interest in the people behind the opportunity – for him it is about moving at pace to capture value. He now has a large office and people come to him.
The wealth-manager CEO is similarly fast-paced and entrepreneurial, but is charismatic rather than executional. He loves to charm people and inspire them with a sense of their potential. He has a large office, but it is used as a meeting room because he is rarely in it, preferring to be out around the business and with clients.
This difference in founder character has steadily become embedded in the culture of the two businesses. So, if you’re a founder, be clear about the nature of your character and be vigilant about how your accidental character quirks can become deeply embedded in how your business gets things done.
Recruit for future potential
When you’re drinking from a fire-hydrant, all you want to do is find someone who knows how to turn it off. The temptation under pressure is to recruit for immediate competence, to go for people who can hit the ground running. It’s also easy to leave hiring decisions to those closest to the issues: we’re now meant to empower our teams, right?
What is interesting is that the wealth-manager CEO has been involved in every hire made into the firm, from junior receptionist and admin to new graduates and senior leaders. His view is that the individual doing the recruiting is best-placed to work out who is the best-fit candidate for the role. But he can do two things that are hard for the less-experienced to do: tune into the candidate’s future potential and sniff out their culture-fit. He can also keep an overview with his HR lead on the emerging diversity of their business.
When a business is growing fast, particularly in the early phase, it is imperative that you hire people who have stretch potential, because their role is guaranteed to become rapidly more complex and multi-dimensional. Hiring for current competence is simply not good enough.
Diversity, shared values and purpose
It’s become a commonly held piece of wisdom that diversity is a good thing. Our experience in working with hundreds of teams is that a more diverse team will outperform a less diverse team… providing they have a strong sense of shared values and purpose. And the more diverse the team, the harder it can be to uncover and celebrate this sense of shared values and purpose, the force that unites.
People will excuse many things: lack of role clarity, unclear targets, even an incompetent manager, but will ultimately vote with their feet if the purpose of the business is unclear or seems only to be to make the founders wealthy.