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Five Signs Your Corporate Culture Is Sick – And What To Do About It

May 28, 2013

I should have learned. But, this time I was SURE I was right. . .just like last time. I was arguing with my dad about this great company I worked for called WordPerfect.

But, they’ve got no corporate debt, they’ve got 93% of the word processing market. They’re a private company now, but, they’re going to go public.

Have they announced an IPO?

Well, not yet. . .

What percentage of their expenses are salary?

I don’t know. They threatened to fire us if we revealed our salary.

Their corporate culture is sick. I doubt they’ll ever go public.

What did he know anyway. Of course, they never did go public.

Actually he knew a lot. He recognized one of the signs of a sick company. There are many, but here are five that I’ve noticed in my career, and a prescription for fixing them.

1. Salaries are secret. I mean REALLY secret!
I’m not advocating publishing your salaries in the company newsletter, but, if your employees fear being fired for sharing their salary, you’ve gone too far. Salary discussions don’t have to be disruptive. Most places I’ve worked, and in fact in business in general, discussing money is considered gauche. A word my father would approve of. Often a gentle reminder will do the trick.

But, what if you have that employee who doesn’t get the hint? If it’s impacting people’s ability to get their jobs done, then it’s no longer a salary issue, it’s a productivity issue, and should be dealt with as such.

If you, as a management team are embarrassed to have salary information come out, either yours, or your employees, then you should consider why that is. Are you severely underpaying? Are you overpaying poor performers? Are you overpaying managers? How much is too much? That leads to the second sign of a sick company.

2. Your managers are paid more than their staff
This sounds counterintuitive. Shouldn’t those higher on the corporate food chain earn more than those below them?

It depends on what your company’s purpose is. Whose work is essential to the success of your company? Are you a software company? Then don’t just hire good, hire GREAT programmers. The great ones are expensive. Are you a sales organization? Don’t hire just good, hire GREAT salespeople.

I ran a couple of startup software companies, one as the Executive VP, the other as president. We were funded with investment money. My best developer made two and half times as much as I did, and he was working for less than he could have gotten elsewhere. I had a share of the company that we hoped would someday be valuable, but for straight salary, I was the lowest paid employee. Your managers don’t have to be the lowest, but they also should not be the highest.

Bill Gates as we all know, is the richest man in the world. What most people don’t know is that during most of his Microsoft career his salary was $250,000, and he was the only Microsoft employee who was not eligible for stock options. His wealth came because his company did well. His company did well because he was willing to pay others a lot more than he paid himself.

3. People are afraid to disagree
Last week, I talked about how a bad corporate policy was Turning Honest Employees Into Dishonest Ones. The problem I had was that WordPerfect did not exactly reward those who spoke up. I’m reminded of the executive who asked,

We all agree that ‘Yes Men’ have no place in organization, right?


The story of “The Emperor Has No Clothes” teaches us the dangers of self delusion. However, equally important, I think, is the danger of surrounding yourself with those who refuse to disagree. No leader is an expert at everything. Often we aren’t even experts at what we think we’re good at. Why would you go to the trouble of hiring great people and then refuse to listen to them?

One of my favorite Microsoft stories is the story of Microsoft Bob. Bob was one of the most spectacular failures in the history of not just Microsoft, but the computer industry. You’d think there would serious repercussions for failing that badly. The program manager for Microsoft Bob was a woman named Melinda French. You might recognize her by her married name, Melinda Gates.

The point is that people will never give you their best work when they are afraid; either of disagreeing or failing. Give your people the freedom to share ideas and let them know that you hired them because they know stuff. The worst they can do is not to disagree, the worst they can do is to be silent when they should speak up. This principal is why I got told by my brother, Now Would Be A Good Time To Shut Up.

4. Your company success is because you’re smarter than everyone else
It’s not and you’re not. I’m sure you are smart. You wouldn’t be where you are if your weren’t. But in the mercenary business of business, no one is smart enough to beat everyone else all the time. Okay, if you’re Warren Buffet, welcome to my blog. For the rest of us, we need to be willing to let other people learn our lessons for us, and then take advantage of their experience.

We don’t want to hire MBAs. We will teach you everything you need to know about the computer business.

It sounds crazy, but that’s an actual quote of what a WordPerfect vice president told me. Less than 5 years later they were no longer a company, and five years after that they were barely still a product. I never got a chance to check back with that VP. I’m sure that in 1994, when they were out of cash and had burned through a $100M line of credit, they could have used some of those MBAs to help them adjust their business to working in a market with much lower margins. As it was, the computer business changed and WordPerfect didn’t have time to relearn everything you need to know about the new computer business.

This one is easy to fix. Check your ego. Be willing to learn. Be willing to recognize the fact that others know more than you do on certain issues. That’s why we have CPAs. It’s why a lawyer who represents himself in court has a fool for a client.

5. You manage with appeals to emotion
One of the underlying problem with My Manager From Hell was that he got offended and then made decisions based on that emotion. We’ve all known people who were “hot-heads.” But, when the hot-head is the manager, it’s a recipe for problems.

I worked one summer for a custom cabinet making shop in Western Washington. There were quite a few things wrong with the company. One of them was that the guy who stained the cabinets and doors would come back from lunch stoned, and as a result we’d get a wide variance in the color of the stains. Normally this didn’t cause a huge problem since we did lots of piece work. But, one time we got an order for ten 36″ solid oak doors. Each door was probably $500 or $600. Our stain guy did what he always did and sure enough the doors were slightly different shades of red oak. Since they were going in a long hallway, the mistake was pretty obvious. The owner called a team meeting. It was the first time I’d ever even talked to him. He gave us a sob story of how he couldn’t afford to pay to fix these doors on his own. He guilted us into coming in on Saturday and redoing the work for free.

It’s not only the sob story, how many times have you seen stories of the manager who rules through intimidation and fear? And that’s not even touching on the more romantic emotions and the fact there is no room in the workplace for them.

I know there are other signs of sick corporate culture. The real point is not what the exact sickness is, but being willing to recognize it and then work to correct it. Sometimes new management, or getting rid of a problem employee can fix it. Other times, sadly like WordPerfect, the disease kills the company. I’ve talked with some former WordPerfect executives over the ensuing years. Some of them clearly saw then, and see now what the problems were. Others are still convinced it was just bad luck and bad timing. Not surprisingly “luck” and “timing” are some of the reasons they had any measure of success in the first place.

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