Transcript
Jason Randall [00:02]
Culture is the most expensive thing to rebuild and the easiest to let slide. Because nothing on your dashboard tells you it's eroding until your best people are already halfway out the door. Yet when you strip away the posters and the perks, culture is something far more concrete: the quality of the decisions people make when no one is watching. This is the third segment in the 3 C's framework of clarity, customer experience, and culture, and the consequences that follow when each one breaks: chaos, cost, and churn. We have covered clarity and customer experience, and today we finish with culture, the sneakiest of the three, and the one most tied to whether your results can continue beyond the initial contributions of the people who produce them. So returning to guide us today is Questco's Chief Product Officer, Kim Diorio. Kim, welcome back to the conversation.
Kim Diorio [00:56]
Thank you, Jason. Happy to be here.
Jason Randall [00:58]
Absolutely. Now, I know you have a rich background in this area. I was hoping you could fill us in on some of the ways you've studied culture in the past, and how you've applied that to your learnings in practice.
Kim Diorio [01:09]
Sure. So first and foremost, we work for a company that provides HR solutions, so culture is central to that. I also studied organizational psychology at the master's level, specializing in how teams operate, how culture is built, and what great leaders do in an organization. And I've spent time as an HR business partner on the internal side of HR in PEOs, helping them build their internal culture.
Jason Randall [01:39]
So obviously a passionate topic for you, and for me as well. It's something I've spent a lot of my career focusing on, trying to get right, sometimes actually achieving that, other times falling short. So I'm really looking forward to this conversation. Kim, culture is one of the most frequently used words in business, and it can mean a lot of different things to different people. So when you strip away the platitudes and the perks, what do you actually mean by culture in this context?
Kim Diorio [02:07]
So there's somebody, and I'm not going to remember who said it, who coined the phrase that culture is the way we do things around here. And I think of it in terms of decision making and judgment, how organizationally decisions are made, and whether that's transferable or not. Culture is often perceived as a softer benefit, a feel-good type of thing. But what I'd love to dive into today is how it actually has hard benefits, and is one of the things most related to enterprise value at the end of the day.
Jason Randall [02:45]
I think it's really insightful to lever on the decisions aspect of culture. I haven't heard that before. And specifically, you've referred to it as the quality of the decisions people make when no one else is watching. How do you find that framing useful in this context?
Kim Diorio [03:04]
So if we think back to the prior two topics, where we talked about clarity, and the owners, the executives, the leaders getting clear on who a company serves and what results they deliver to them, those are all decisions that have been made. And there are decisions about how we make choices on behalf of our customers, what we choose to do or not do. All of those things are critical to the delivery of the company. And when you strip away all of the ideas and the things you think of when you think culture, it comes down to how people are operating in their day-to-day when someone's not telling them what to do and how to do it.
Jason Randall [04:06]
This concept of extending the reach of leadership beyond what we can directly touch and feel, so that it goes on without us, it's paid forward. And that's one of the things I really wanted to nail down: from your seat, what's the difference between a company that has a strong culture and one that just has strong personalities or vibrant leadership?
Kim Diorio [04:29]
This is a great question. So with strong personalities, people may show up in certain ways. They may do certain things that are unique to that company. But when something is embedded in a culture, you have values that are transmitted and transmit to the customer. And decisions are very early on made through osmosis, because you're smaller, people are closer to the decision makers. But when you have a strong culture, that decision making has become institutionalized. You've systematized it in a way that everyone who comes into the company gets the same understanding of how we operate, how we do things, how we make decisions, and so on.
Jason Randall [05:18]
Kind of like turning mindset into a system, right? You don't have to have been present in the conversation to pay it forward. So it's not just the inspirational speech or the one-time heroic act, it's a process, and really an institution, that you're referring to culture as.
Kim Diorio [05:34]
Exactly. And it's also, in my mind, ongoing sharing. One of the things I love to see leaders doing is talking through stories and examples, certainly of great customer experiences, but I think a main opportunity is what tough decisions were made, how they were made, and what the results were. Was it a good decision? Did it play out as intended, or were there unintended consequences? And shaping the decision making collectively by sharing how they do it.
Jason Randall [06:09]
There's this idealized world where everything is transmitted. It starts with osmosis and turns into something more institutional, but that's hard to actually accomplish, right? So let's start unpacking why culture thins as a company grows and matures, especially fast. Why is it the natural weight of things that culture thins out, especially when a company is growing fast?
Kim Diorio [06:34]
Typically it's because of a lack of systems. As I mentioned a moment ago, when you're a small company, you're in contact with each other much more frequently. Leadership is closer to the front lines, and that is transmitting by osmosis to some degree. When you start to hire fast, the company can't do that in the same ways. So your new hires aren't in contact with the same leaders as they were before. You have different layers of management that come in. And sharing what used to work, or what does work systematically, with everybody as they join the company becomes a challenge.
Jason Randall [07:17]
So some things actually break in the handoff when a company is hiring and a lot of newcomers are coming in who weren't part of the original osmosis culture, and then they need to pay it forward. So what is actually breaking there?
Kim Diorio [07:33]
So what's breaking is the communication, essentially, and the transmission of history and that decision-making process. The principles by which you make decisions, the standards, the guidelines, and the guardrails. Because you can't be in every room or in every conversation making every decision on behalf of the entire team. But if you have a strong set of standards and guardrails and guides for people to use to understand what we do, what we don't do, and how we think about things, it becomes easier for them to operate within the culture that you want to have.
Jason Randall [08:16]
Is there a part of the organization that's most vulnerable to this? Is it more likely to be in sales versus finance, or is it just wherever the growth is manifesting the most, or the headcount is changing the most? What do you actually see out there?
Kim Diorio [08:29]
In my experience, it tends to show up most frequently with the sales team and with the service team, or the delivery team. Certainly in your back-office functions it may happen, but it becomes much more present and relevant when you have humans out in front of other humans, either selling something or delivering against expectations that they didn't necessarily set, that the sales team set, and that the company is likely setting through marketing, through sales, through the whole experience. And having all of that transmittable and clear is where it's very, very challenging.
Jason Randall [09:14]
It really resonates with what you're saying, to me personally. Our part of the organization has invested very heavily in sales. A lot of new people come on in a very short period of time, and there's a lot of pressure to get this right. We've done well culturally in the past, but that's no guarantee that we do so in the future, for exactly the reason you're pointing out: it doesn't happen automatically. It has to be intentional. And I think one of the ways to prevent the breakage is to know the signs ahead of time. So I'm curious, what are the earliest signs that you're getting stretched, that the culture, if not breaking, is at least bending in a way that's uncomfortable, before anybody even identifies it as a problem?
Kim Diorio [09:59]
Some of the things I've typically seen are that new hires take longer to become effective. You start to see ramp times extending, and you start to see the onboarding process looking like people struggling on their own, trying to figure out what to do. You may not have a buddy system in place. Especially in our disparate, remote work environments, it's much harder for a new hire to come into the company and understand what to do. Another sign is that if you look across different teams, the same types of work may look different. So if you have a service team with multiple managers, or a sales team with multiple managers, the production and the delivery may look very different across teams. That's a pretty clear sign that the culture, the process, and the decision making aren't systematic.
Jason Randall [11:06]
Yeah, I think a lot of people would see inconsistency and go to process. And you're going more fundamental than that. The process follows the outputs from the culture. Am I understanding that correctly?
Kim Diorio [11:14]
Yes, exactly. And then the other thing that I think is the signal to pay most attention to is discretionary effort. Where you may have gotten a great deal of discretionary effort before, people start to do less. You start to get less of that discretionary effort. Different people may be carrying less of the share than they used to, or you have the best people carrying significantly more than their share and picking up the pieces for others.
Jason Randall [11:52]
Is that the kind of comment like, well, it doesn't feel like the same place it used to? Is that why the discretionary effort doesn't follow, or is there something more fundamental than that?
Kim Diorio [12:00]
I think there's an element of that, but beyond that, it becomes harder for them to do a great job if they don't know what good looks like, if they don't know what the standard looks like, or if you don't have the clarity, as we mentioned in the first session. People start to disengage. And that's where you often see the imbalance: your best people, who may be more tenured and closer to that original manifestation of the culture, end up carrying more of the load than the new hires coming in, because it's not transmitting properly.
Jason Randall [12:41]
One of the things that's striking about this insight, Kim, is that by the time the survey might be done internally, it might be insufficient, or not timely. So I'm wondering, for those leaders out there thinking, well, wait a minute, I survey my people, I'm on top of this, or I like to think I am, where are the limitations of what I'd call a traditional methodology, where we survey our people, we have regular check-ins, town halls, open-door policies? Why isn't that enough to keep culture from breaking?
Kim Diorio [13:16]
It's a great question. It's not enough because just asking the question and asking for the feedback isn't enough, if you're not systematizing, if you're not intentional about understanding, clarifying, and then outlining for everybody in the company what the culture looks like, what decisions we make, how we make them, and what the standards are. People don't love to be told what to do, but in a way they do. They want clarity. And so asking the questions, how is our culture, how are things feeling, they may not even know how to pinpoint and show you where the problem lies.
Jason Randall [14:08]
And I think there's an important distinction we're drawing between culture and employee satisfaction. This isn't just about smiles and the highest scores possible, but something more aligned to mission. I'm hoping you could clarify that a little more for the audience.
Kim Diorio [14:23]
Sure. So in my mind, satisfaction comes from people coming to work knowing what success looks like and how to be successful, and having the resources and support they need to do that. Generally, if you have happy employees who feel supported, you have happy customers. I think we've all heard that. And most people come to work wanting to do a great job. People succeed if they can. The satisfaction is in knowing exactly what good looks like in this company.
Jason Randall [14:58]
So culture doesn't mean one thing to every organization. There are a variety of different cultures that can be wildly successful. We see that in business today. So it's not as simple as have the happiest, most engaged employees possible and good things happen. It's more, is that aligned to mission? Is that aligned to the growth plan, to really make sure the culture stays relevant? It goes well beyond the individual employees being happy in the moment.
Kim Diorio [15:23]
Very much so. And I think it's tailored to your customer selection. Who are you serving? What results are you delivering to them? What value are you delivering? The culture should be a function of the outcomes you're trying to deliver.
Jason Randall [15:44]
So there would be widespread agreement that culture is, on some level, important. I don't think most leadership would say culture is unimportant. But I don't know that the consequences are crisply defined, at least the way you think of it as an expert. So what happens if we don't get this right, Kim? What are the consequences of not having culture buttoned up, appropriate, and aligned?
Kim Diorio [16:07]
So as I mentioned, there are hard benefits, or hard costs, to not getting this right. And we've summarized it with the phrase churn. So you see churn of your people. You see churn of the discretionary effort, even before the people walk out the door. You see churn in terms of the knowledge people are carrying. And if knowledge is in one person's head and they leave, you lose that institutional knowledge. You also lose it even if they move within the company, because they're not on the team they were in, they're not having the same direct impact and influence on that piece of the puzzle. So when culture starts to break, and the decision making starts to become fragmented, those are the types of costs that you see. And then ultimately, we mentioned enterprise value at the beginning of the session. Having decision making be transferable, and the knowledge not being in the head of the founder, the CEO, the owner, is directly tied to the value of that company, the transferability of that company, and so on.
Jason Randall [17:31]
So now we're getting at the heart of this notion of durability, paying it forward, having it be institutionally driven, as opposed to something that resides in one person's head or a charismatic leader's individual performance. The enduring value component, and tying culture specifically to that, is something we help businesses with ourselves, and it's also something we have to keep in mind in our own organization. When performance lives in individual people, what happens to scale? It's implied by our previous conversation, but what does that look like?
Kim Diorio [18:11]
Very simply put, the company becomes more fragile, and growth becomes more fragile. Because you don't have the robust way that you need to bring new talent into the company, help them understand how to operate as rapidly as possible, and sustain the level of quality and delivery to your customers that your business depends on.
Jason Randall [18:36]
So if I'm summing this up in a very hard-nosed way, culture, paying attention to culture, can be written off as a soft skill, or unquantifiable, or something that, yeah, it's important, I'll have the party, I'll do things, but I'm not going to keep it top of mind. And what you're articulating is something fundamental. This ties to enterprise value, durability, the ability to achieve a higher multiple. The business becomes literally more valuable, because you've translated human behavior into something larger than oneself. And that's something I really want the audience to hang their hat on today. This isn't culture because it feels good, or because we like our employees to be happy. It's really not about that. This is about dollars at the end of the day.
Kim Diorio [19:22]
Very much so. Investors and buyers pay for execution, and they pay for predictability. So when you think about a fragile culture, you have a good deal of heroics, you have knowledge in individuals' heads, the results aren't repeatable, they're not predictable, and the growth is fragile in turn.
Jason Randall [19:48]
And another aspect of it being unfragile: if you achieve this culture, let's say your ambitions aren't for accelerated growth, there's still a lifestyle and peace-of-mind factor here. The business can survive without you as the senior leader, or thrive without you, because you've invested in cultural mechanisms to make this transferable.
Kim Diorio [20:10]
Absolutely.
Jason Randall [20:12]
So that's a pretty good jumping-off point to our last segment, around how great leaders ensure that this actually happens, that culture becomes something that is paid attention to. So if a leader is hearing this topic and recognizing the challenge or the opportunity in their own business, what should they actually do first, or next?
Kim Diorio [20:34]
So I would recommend making the standards explicit, writing down what good judgment looks like. I also love the idea of creating a decision log. When you're making significant decisions as a team and as a company, write them down, and write down the logic that was used. Then people can refer back to that and see, for similar decisions, what did we decide a month ago, a quarter ago, two years ago? And make that more durable and more leverageable, so you're not making isolated decisions that don't pay dividends over time. Certainly focus on onboarding, and look at how you're building those standards and guardrails into onboarding, helping people understand as rapidly as possible what good judgment looks like in the company. And systematize the knowledge. Get it out of individuals' heads and into processes and systems, making it democratized and accessible.
Jason Randall [21:43]
Around that systematization, I think it's important to know that this isn't just the HR department's job. Nowhere have we implied that. This is not just, hey, HR handles the culture. What you are explicitly saying is that this is every leader's job, and every teammate's job to support.
Kim Diorio [22:02]
Absolutely. So when you think about the HR team, and if we think about Questco, the predictability and durability we bring is in terms of certain processes and compliance, and taking certain decisions off a company's plate so they can focus on their growth. But that's one piece of it. When you're looking at your business operators, their job is contributing to this culture and making their piece of the company as durable as possible.
Jason Randall [22:38]
So I heard you say write things down, check in systematically, institutionalize these things. And I know you feel so strongly about this that you developed a tool to enable this to happen. So I was hoping you could walk our audience through the culture self-assessment piece that you've developed.
Kim Diorio [22:55]
Yes. So we shared the clarity self-assessment and the customer experience self-assessment already. This is similar. It's another five-minute self-assessment. It walks you through a number of questions and signals to understand if there's fragility or fragmentation in your culture, and gives you a number of ideas of what you can do. I'd recommend picking one thing over the next quarter to make things more durable. And collectively, you have a complete diagnostic with the three tools.
Jason Randall [23:33]
So this is a companion piece to the clarity self-assessment as well as the customer experience self-assessment. So there's a lot of intellectual property we're giving out there for free to really help guide the leadership of growing businesses. Kudos to you, Kim, for being so thoughtful. I think there are some unique points I haven't heard discussed a whole lot before, and it's just a refreshing dialogue. I've sure gotten a lot of value out of it myself.
Kim Diorio [24:02]
Thank you, Jason. This is my pleasure.
Jason Randall [24:05]
Absolutely. And to our audience, thank you for tuning into this episode of Up In Your Business, and for following the full 3 C's series. If this conversation gave you better language for what culture actually protects, please share it with another leader whose business might still run on a few key people or heroic moments. You can find the culture self-assessment and the full 3 C's self-assessment toolkit in the show notes. And with that, we complete our series with Kim on clarity, customer experience, and culture, the consequences when each one breaks, and how to help each one flourish so that your organization does well. Thank you so much. We'll talk to you soon.
.png?width=525&height=525&name=Episode%206%20-%20Brandon%20Hartsaw%20(3).png)
.png)
.png?width=1200&height=1200&name=Episode%206%20-%20Brandon%20Hartsaw%20(3).png "Episode 6 - Brandon Hartsaw (3)")
