A few months ago, the Harvard Business Review published a cover story titled “Culture Is Not the Culprit,” in which authors Jay W. Lorsch and Emily McTague interviewed a handful of experienced business leaders and determined, according to the leaders’ real-life corporate transformations, that “cultural change is what you get after you’ve put new processes or structures in place to tackle tough business challenges…the culture evolves as you do that important work.” In other words, cultural change doesn’t result in business change – it’s the other way around. With respect to these business leaders’ respective experiences, I’ve got one of my own to share – that changing culture proactively, and making a decision to change corporate culture – can absolutely transform a company’s performance. Changing culture can, indeed, solve business problems. And my company, Bullhorn, is proof of that.
The Bullhorn Journey: A Case Study in Cultural Redefinition
I co-founded Bullhorn in 1999 as a cloud-based software company, and our core offering evolved into a CRM platform for relationship-driven businesses (like staffing and recruiting, PR, and consulting organizations). When we started out, we were laser-focused on delivering a great customer experience. We knew that we could only be successful convincing customers to move their critical data to the cloud if our first customers were singing our praises to our prospects. That passionate, whatever-it-takes attitude for customers drove us to win more and more business and by 2007, we had pulled way out in front of our competition and were growing by more than 100% each year. We started receiving awards – Inc. 500, Deloitte Fast 50, EY Entrepreneur of the Year. We started to believe our own press. We were the best and our growth was the result of an unassailable lead in the market. I allowed this “Bullhorn’s the best” attitude to permeate our culture. As we grew, our culture devolved from a passionate, close-knit team focused on customer success, to a team that was obsessed with financial success and little else.
Growth hides many sins. When you’re doubling your sales every year, no one stops to ask, “do our customers still think we’re the best?” In 2011, we stopped surveying our existing customers for customer satisfaction: “why bother, it’s always a love fest? The complaints are trivial.” And rather than spend our R&D dollars on enhancing our existing products, we focused on highly speculative new initiatives in hopes to sustain our meteoric growth rates. Imagine if Google stopped investing in the quality of its search engine to focus exclusively on self-driving cars. That’s essentially what we did. Meanwhile, the scathing customer complaints poured into executive inboxes. Yet we dismissed them under the belief that “we have more customers, so of course there are more complaints. Would we really win 80% of new deals if we were actually doing a poor job?”
By 2012, customer satisfaction was in the toilet. Employee satisfaction also dropped into an adjoining toilet. There was nothing wrong from a financial standpoint – bookings growth was still strong, and we were profitable, but we were getting a Comcast-like reputation on user review sites. My first customer ever – a woman I admired tremendously – was on the verge of firing us because she, like many other customers, was tired of our attitude. That specific customer conversation was the tipping point for me. It was as if I suddenly saw my company as outsiders did for the first time and I hated it. “Is this the kind of legacy I want to create? A profitable company that’s reviled by its customers?” I decided that I needed to attack the problem at its core. I needed to change our culture.
The first thing I did was to announce that I was changing the company mission statement at a town hall meeting. I stood in front of 300 employees and announced that we were going back to our roots as a startup and our mission was “to create an incredible customer experience” and accordingly, our annual goals would reflect the renewed focus. I eliminated our revenue, profit, and sales goals and replaced them with a goal for customer satisfaction scores and another for employee engagement. Lastly, I published a revised set of core values and announced that every employee, including executives, would be graded on each of the values and bonuses would be tied to these scores. All of this was highly controversial. People asked: “what about creating shareholder value? What about being #1 in the market? How can you do away with our financial targets? Our customers hate us, how can we be held accountable for making them happy?”
It took a few weeks, but slowly, people started to adjust their behavior. For example, the leader of our technical support team noticed that because our support reps were rewarded for the speed at which they “resolved” customer complaints, many were simply rushing to end calls, in some cases even hanging up on customers and hoping they wouldn’t call back. So he changed the compensatory framework to reward customer satisfaction with conflict resolution. A few weeks later, our customer satisfaction scores started to rise. At the next town hall meeting, I highlighted these results and sang the praises of a few of our front-line tech support representatives, calling them out by name. They were blown away that the CEO knew who they were. A few weeks later, our engineers began to survey our customers about the product. They realized that our user interface was in desperate need of an overhaul, so they threw themselves into a massive project to rebuild the product from the ground up. Six months later, they unveiled the product to rave reviews from customers. “Bullhorn is back!” declared a customer in my inbox. So I highlighted our engineers at our town hall meetings. Lastly, our sales team decided to dedicate time equally to existing customers and prospects, which was a material shift for them.
I never told people how I wanted them to achieve this nebulous and ever-evolving goal of customer success; I simply told them how I would measure it. It was up to them to figure out how to make it happen. And they did. Our customer satisfaction scores went from rock-bottom all the way back up to where they were when we were a tiny startup. Our ratings on Glassdoor, a site for anonymous employee reviews, went from a low of 3.0 out of 5 to 4.5. It turns out that when your customers have a great experience with your products and service, your employees have a great experience too. Finally, our sales doubled. In fact, by prioritizing customer experience over growth, we actually accelerated our growth rate. This increased growth led to us hiring more people – we grew from 380 employees to 550 in 2015. All that hiring led to more than 120 promotions, which in turn, made our culture even stronger.
“Culture First” Can Unite People
A common argument against proactive cultural redefinition is that changing culture is easy when a company has followed a linear path of progression – but what about organizations comprised of acquisitions? Large-scale cultural transformation must be nearly impossible when you’re mashing different companies together and expecting them to play nice. Bullhorn acquired four companies in four years and absorbed them all – no independent subsidiaries. We ourselves were acquired in 2012 by a private equity company, in the midst of our acquisitions. Now, in 2016, all four of those companies we acquired are seamlessly part of Bullhorn, and the companies’ employees are Bullhorn employees regardless of their geographic locations. There was no formal cultural programming or training at any of the acquired companies. We didn’t try to bribe employees with shiny, frivolous perks, or even worse, with threats of ramifications or stack ranking.
We focused on creating a culture of personal accountability and positive reinforcement. We also made sure that our leadership team shared a common vision of human centricity, that they were optimistic and non-toxic, and that they cared deeply about doing right by our customers. They, in turn, inspired their respective departments, and the mantra we had just one day decided to implement really became the core of what we were doing. Having a leadership team in place that you trust, and having that team be your voice, is what makes sustainable and proactive cultural change possible. If the leadership team you’ve put in place is credible and authentic, employees will follow suit and embody the culture you’ve set out to create.
This, in turn, led to growth in our customer base and stronger customer retention, which led to greater revenue and additional opportunities for hiring and career advancement for our employees, which resulted in increased employee satisfaction.
I could not have proactively changed the culture at Bullhorn had I not been a credible leader. My credibility largely stemmed from the fact that I was the founder of the company, and therefore employees paid significant attention to what I said. The examples cited in the HBR cover story, admittedly, are not of founder-led organizations. But just because a company is not founder-led doesn’t mean it’s precluded from cultural change. It just means that the CEO of that company needs to engender trust and credibility with his or her employees and people have to want to follow that leader. Focusing on authenticity, as opposed to oligarchical force, is what will separate a successful cultural rebrand from a pointless edict.
Art Papas is the founder and CEO of Bullhorn, a company that provides CRM and productivity solutions for relationship-driven businesses.